"From Global Warming to Voodoo Economics" by Andrew McKillop. FSO Editorial 02/03/2010

FSO Editorials

From Global Warming to Voodoo Economics
by Andrew McKillop
Strategic Analyst and Advisor
February 3, 2010

Dire Warnings

Global warming has pride of place among the claimed harbingers of catastrophe which a large and growing range of prestige institutions, agencies, political leaderships and economic deciders describe as so menacing, so imminent that only massive and forced transition can save us. In their 2008 draft declaration on the "State of Global Emergency", published by the Club of Budapest, writers Ervin Laszlo and David Wolfson gave a long list of resource limits near final overload and ecological damage taken to critical and catastrophic thresholds. The report's overview linked these dire warnings to Mayan prophecy on the end of the world:

The acceleration of critical trends and cross-impacts among them indicates that the
‘window of opportunity’ for pulling out of the present global crisis and breaking through to
a more peaceful and sustainable world is likely no more than four to five years from
the end of 2008. This is close in time to the Mayan 2012 prophecy
for the end of the current world. http://www.worldshiftnetwork.org/media/downloads/declaration.pdf

Global warming as the key vector for massive global change is focused by the Club of Budapest's sister organization, the Club of Madrid. Both of these clubs, with extreme powerful leading members, speakers, advisers and writers are part of the Club of Rome's World Shift Network (see: www.clubmadrid.org/en/programa/global_leadership_for_climate_action ). To be sure, the network has kept a low profile since the failure of the COP15 conference in Copenhagen, with no binding worldwide agreement to radically cut CO2 emissions and develop alternate energy being obtained, but when Springtime warmth returns this will surely change.

Major published reasons for the "climate summit" failure were the rejection by China and India of emissions limits uniformly applied worldwide despite their present much lower per capita consumption of fossil fuels than OECD countries, but other reasons are easy to add. These probably include Chinese and Indian rejection of a global carbon currency, as proposed by the Club of Rome and its affiliated organizations as a dynamic first step towards a massive one-way change of the global economy, habitat, society and culture.

Better than Voodoo Economics

George Bush Senior once described the earliest versions of 'Reaganomics' as voodoo economics, but he would likely be speechless if asked to comment Global Warming economics. A short extract of published World Shift Network economic and social engineering goals, to save the world from "climate catastrophe", is sufficient:

We support the development of sustainable, decentralized, that is local, high-tech production, combined with local use of local resources, and the redesign of our monetary system according to a fourfold model: 1) economy of gifting (a basic matriarchal feature), 2) counter-trade barter economy, 3) complementary local monetary systems for regional trade, and 4) unified currency (for example called “Terra”) for inter regional and global trade. In our eyes compound interest has to be abolished. Also the concept of “owning” land must be reconsidered.” http://www.worldshiftnetwork.org/action/subsistence.html

Other, even more extreme versions, or visions of the future sustainable world are supplied by the 'Gaian' advocates, led by James Lovelock. To be sure, the most recent version of "Terra" money is carbon currency. This forms the lynchpin in proposals for shock treatment to attain the basic goal, that is "sustainability", through enabling worldwide, controlled limitation of fossil based energy consumption, through limiting CO2 emissions. Definitions of "sustainability" however vary, in the World Shift Network's case also integrating subsistence, but this basic goal is now a driving theme and rallying call for political party and corporate leaderships in all G7 countries and most G20 countries, if not worldwide.

Sustainable Economics

Little remarked as to what "sustainable" means other than the opposite of present living, this goal however reasonable or rational, however desirable is increasingly sold to media and public opinion as an apocalyptic, no alternative, final solution. This ironically fits in well with interpreting the degenerate, violent and self-destructive Mayan civilization's very precise calendar system as being able to predict the end of the world as we know it in the year 2012, rather than simply being the end of one of the Long Cycles generated by the Mayan calendar system.

The Club of Rome and its global warming catastrophe advocates are obliged to make suggestions as to what the sustainable economy would look like, in which sustainable living for the populace will be assured. While first wide public knowledge of the Club of Rome started with its 1972 report Limits to Growth there are few limits, today, on defining or interpreting what the sustainable economy will be - other than a near opposite of the present, and starting with the energy sector.

Advocates of 'world shift' place this sector on the high ground. As the focus of a forced march to energy efficiency, energy saving and transition away from the fossil fuels, energy spending typically takes 50% of proposed and massive investment effort for transition to sustainability. In the lower income developing countries, accelerated and massive growth of alternate energy is presented as the major target for a new and global Marshall Plan, if only to reduce oil demand growth in poor countries while creating new subsidized markets for alternate energy technology.

As we know, the December 2009 COP 15 conference was likely programmed as the launch platform not only for "Terra" money, or CO2 Bancor, but more certainly for a Marshall Plan to develop alternate energy in lower income developing countries. This is now (Jan 2010) covered by a special IMF initiative, aiming for the creation of a new "green funding facility" with up to USD 150 billion, able when needed to link with a new and global single currency, secured with carbon finance and renewable energy assets.

Defining the Sustainable Economy

Sustainable living for most persons, and in most media and communication is primarily a cultural and social, even philosophical and moral concept, not economic and financial. This has massively changed in the last 5 years, to increasingly detailed concepts, policy and proposed legislation for transforming global, regional and national economic systems, structure and management.

Undisclosed drivers for this change almost certainly include "carbon protectionism" or tariff barriers set by OECD countries with carbon conscious leaderships, and rising unemployment and national budget deficits, to prevent or limit further growth of trade deficits with the mainly coal-fired export economies of China and India. This can be called the goal of "sustainable trade". Disclosed drivers are detailed by many different reference sources, but mostly generate from concern on natural resource depletion, energy cost and supply, population pressure on resources, environmental damage, and aspirations for "post-industrial" lifestyles in OECD countries. All of these concerns and drivers include or arise from cumulative change through the last 25 - 35 years, and have given way to a huge range of literature, film themes, political policy campaigns, and citizen association activity. This is now joined and reinforced by national economic and corporate strategy.

Other drivers for transition to the sustainable economy as defined in publications by the Club of Rome and affiliated organizations focus global macroeconomic issues. These include the much slower growth, and relative decline of the OECD economies compared with the emerging economies, accumulated fiscal and financial mismanagement by government leaders, currency instability and increasing financial dependence of OECD countries on loans from capital surplus China and capital surplus oil and gas exporter countries.

Since 2000-2005 this cumulative process has reached extremes. As of Nov 2009, for example, China holds about USD 790 billion in US Treasuries, around 22% of all US debt held overseas. Converting some or all of this to stable long-term sustainable holdings in a purpose-designed new world reserve currency secured by real resources including energy, is a rational goal for China. Spreading risk away from dependence on strategically ambitious, possibly hegemous China is prudent for the US. Within a few years, OECD country dependence on loans from India may also become part of the global finance scene.

OECD Political Consensus

The main difference, today, in the sustainability debate is that advocates of a massive and radical shift to the sustainable economy now include the political and corporate leaderships of most OECD countries and increasing numbers of emerging economy leaderships. All resort to apocalyptic descriptions of the near-term future economy and society, if sustainable economy principles and processes, and especially the global and rapid transition to "clean energy" are not applied in a forced emergency program backed by legislation. The main focus for all proponents of 'The World Shift' or green new deal, the forced transition to sustainability, and arrival of the 'Gaian World' is through proposing new, and massive change to the economy.

The growth of carbon finance and emissions trading enables relatively precise, coherent and quantifiable measures and standards for judging the innocuity or nocivity, in Gaian terms, of any resource, activity, production or commercial service. These can all be reduced to the single standard of CO2 emissions per unit weight, volume, value, duration or other variable, eg. per kWh for electricity production or per unit of GDP. On these bases and without surprise, the explosive growth economies of China and India are still far behind the slow growing, but high per capita consumption OECD economies - but can easily surpass them if economic growth continues.

Carbon currency proposals also draw on the acuity of financial and monetary crisis in most OECD countries. As shown by the "keynesian recovery" programs of nearly all OECD countries through 2008-2009, this deficit spending has perhaps averted "economic catastrophe" but has surely driven national debt to unsustainable highs. This not only creates serious threats to currency stability but also likely slows and limits economic recovery and growth potentials, either short-term or long-term. Extreme national debt raises the attractiveness of a "clean new start", through forced introduction of a new world reserve currency linked to energy, which may also be able to amortize future energy shocks through spearheading energy transition.
The short-term advantages of a sudden shift to "CO2 Bancor" or a global reserve carbon currency are quite extensive, for hard-pressed political leaderships in the massively indebted OECD countries, but the goal of restoring and sustaining economic growth to amortize cumulative debt is unlikely to be satisfied by the sustainable economy. As all or most definitions of the long-term sustainable economy underline, this is a one-way shift to austerity when compared with current and recent per capita consumption rates and standards in OECD countries. Defenders of the 'world shift', to be sure, either avoid this debate or claim that 'green growth' can replace current 'black carbon growth' but removing comparative yardsticks, through suppressing all present currencies, will certainly help the task of selling austerity as a new form of wealth.

Distribution and Equity

The sustainable economy as predicated on a permanent low emissions basis essentially requires revolutionary social change and revolutionary economic change, as well as massive technological, scientific and industrial change. The short extract from the Club of Budapest is sufficient to see the revolutionary scope, at all possible economic levels including money systems, interest and interest rates, private property, social security and all the rest. Other publications from the Club of Rome's network and from its high level speakers and writers, including Bill Clinton, Al Gore, Bill Gates, Prince Philip and many others focus the previously "not politically correct" question of population control. Within the new, 'apocalyptic vision' of man-resource-environment and climate relations, the goal of reducing population growth to zero and 'decentralizing' cities now features.

Elsewhere, Worldshift Network publications delve into social engineering as deep as the "Deep Ecology" movement that is close-linked to the prime mover organizations which advocate the 'Gaian world'. This full-scale social engineering extends to the political process, with arguments for the suppression of 'conventional politics', and its replacement by village councils of elders, by prayer, and by deep personal reflexion - obviously needing large amounts of 'guidance'.

Many UN agencies now carry the same messages, sometimes in scarcely hidden coded language, which can be explained by the key figures within the UN system, and recently high placed in the UN system (such as Maurice F Strong and Kofi Annan) who are open defenders of this revolutionary change of society. Certainly due to the high ground attained by the 'Gaian view' since the late 1990s, the 'Gaian consensus' has consistently gained ground. This is despite the business of refuting or denying ecological extremism also tending to extremes, and the perhaps temporary defeat of global warming catastrophe theorists at the COP 15 climate summit.

All proposals for "sustainability" in the high consumption, high throughput societies and economies of the OECD, and increasingly outside the OECD, imply or state that long-term sustainable per capita energy and resource utilisation would be lower than today. Understanding of this is sometimes called "the revolution of diminishing expectations", but without equitable distribution of diminished resource supplies and wealth, social tension and conflict will be certain.

Equitable distribution of future economic output is taken a lot further by resource supply and consumption proposals, which feature inter-generational equity as well as international equity considerations. Inter-generational equity is given heavy prominence by defenders and advocates of an emergency global program for transition to the sustainable economy and society, explaining that resource saving needed to assure adequate and equitable economic wellbeing for future generations will tend to further trim near-term future per capita consumption in the OECD countries. Estimates for the impact of long term inter-generational considerations on short-term consumption rates can extend to very high levels, for example a 75% reduction in typical per capita rates over 15 - 20 years, for key "carbon negative" consumer goods and services. When linked to the demographic question, equity proposals can generate yet more extreme proposals, for example eugenic programs for radically accelerating the shift to Zero Population Growth.

Key indicators and targets are published in, or derived from World Shift Network publications and these targets, we can note, closely relate to public addressesss by leaders such as Obama, Merkel, Sarkozy, Brown and others, in which they propose CO2 emissions cuts as high as 50% or 60%, or more in the period to 2040, essentially demanding similar percent cuts in oil and fossil energy utilisation. The 'related ecological measures', now increasingly built into party politics of the OECD countries, include water saving, reduced meat consumption, smaller housing units, the forced utilisation of public transport and introduction of electric cars, and other "sustainable" economic action. Adding the suppression of all national currencies and its replacement by "carbon money" enabling total control on each consumer's energy and resource demand, per capita cuts for key indicators, ranging from personal transport, water, plastics, metals and foods, could rise as high as 25% only in the period 2010-2020.

The Managed Economy

Achieving these draconian reductions in typical per capita average consumption in the present developed countries is very surely impossible without tight and constant control. All evidence through time, in any society or economy, however shows that depressed per capita consumption is always temporary. When economic conditions get better, or population falls, per capita consumption rises again. New technology can often result in a huge growth of per capita consumption, albeit usually also through large increases of energy supply. Per capita and national consumption also changes with recession-recovery cycles, which are well described from many standpoints including mass economic psychology changes, but can also be analyzed by resource and energy intensity. Since the 1970s, economic recession-recovery cycles have lower and lower "allowable thresholds" each time expansion returns, due to resource supply limits, the resource intensity of the global economy and accumulated debt, among the key factors.

World population trends are complex and are slowly changing, but with radical impacts even when considered only over the last 30 years, which has seen annual world population growth rates attaining an absolute peak (about 3.5% a year in the early 1990s), before steadily falling to about 1.2% a year in 2009. Exactly like the early discovery phases of world oil, with extreme high annual rates in the 1950s and early 1960s, followed about 40 years later by peak annual production and ever falling annual rates of oil consumption growth, world population can easily decline - with no form or type of apocalyptic catastrophe being necessary. Despite this potential for entirely natural ZPG, emergency action to limit population growth increasingly features in proposals for an emergency global plan to attain sustainable development.

As we know, mature and older population groups always consume less per capita than young populations, and this also applies to economies. The older or mature OECD economies now tend to experience low annual economic growth rates, and more easily tip into recession than the fast growing young or adolescent economies of the Emerging Economies. High per capita consumption in the OECD countries is now strongly driven by accumulated and established infrastructures, production systems and urban lifestyles, that is "forced consumption". Redistribution of economic production can as easily be easier, as more difficult in older and mature, supposedly more conservative societies, than in fast growing young economies and societies. This depends on many complex variables, including economic psychology, which together create major risks for any sudden and massive shift to a "global managed economy".

Continuing with the demographic factor, world population growth could naturally fall to zero, then become weakly negative, within as little as 10 to 15 years, but several decades of weakly declining population would be necessary to limit destabilizing impacts due to cumulative resource consumption and environmental damage, from previous growth. This is another argument utilised by defenders of a global emergency program for transition to sustainability, who argue like Paul Ehrlich and Prince Philip for massive intervention to accelerate the arrival of global ZPG and regular annual decline of world population. Present political leaderships, as witnessed by the G20 leaders, have "traditionally" avoided open discussion of eugenics and population control, as well as resource, energy or other limits on the economy. Global warming and CO2 emissions until recently have near-exclusively occupied the high ground, as the political rationale for an overriding need for a radical emergency shift to sustainability.

Rhetorical change and Real change

Recurring political talk focused only on 'global warming catastrophe', especially in cold winter conditions, is unlikely to maintain public acceptance for 'heroic change' of the economy and society on a one way, no return basis unless some major economic benefit is offered to voting publics. Other factors and drivers, especially unemployment, national identity and rights to citizenship, and the supply and price of key consumer items will increasingly be brought into the transition and transformation policy theme. For national economic deciders, global financial, trade and economic imbalances are likely in 2010-2011 to take over from political rhetoric, as real world drivers towards de facto sustainable strategies, features and characteristics of the global economy going forward.

Financial, monetary and trade imbalances can be easily interpreted as the key real world driver of widespread, almost general political acceptance why we need a new global reserve currency. Without the return of strong and above all sustained economic growth in a long list of OECD countries, including the USA, Japan, UK, Germany, Spain, France and others, recent growth of national debt can at any time trigger investor refusal to buy more sovereign debt, currency devaluation, runaway inflation and a tilt of the OECD economy into "stagflation". Return of global economic growth at anything like rates during the most recent "belle epoque" period, 2004-2007, can however drive a rapid increase in oil and other natural resource prices, intensify already massive trade imbalances, raise food and energy prices and force a quick relapse into recession.

Breaking out of this stranglehold no-win situation is the objective of political and economic strategists worldwide, including the Chinese and Indian leaderships. The proposals for rapid and radical change towards the sustainable economy are the present default or No Alternative solution, but due to their huge scope, and the limited timetable, they would likely be so severe in their impacts they could "kill the patient along with the disease".

Inevitable Transition to Sustainability

More efficient resource utilisation, despite ever rising global energy use is a constant economic trend, both driven and opposed by factors ranging through technology, existing infrastructures, resource depletion, population growth and cumulative per capita consumption rates. Global economic adaptation and adjustment to peak oil impacts on world oil supply has driven the effective capping of oil consumption in several OECD economies since about 2005, with or without "low carbon" energy policy and strategies. To be sure, oil demand can weakly rebound during economic recovery, but the overall shift away from oil is underway. Also in a widening number of developed economies, agricultural output is quite rapidly moving towards lower water and irrigation intensity, away from massive fertilizer use, and away from pesticides and biocides. Metals and minerals intensity of economic output in developed economies also tends to go on declining, to be sure partly due to delocalisation and outplacement of industrial activity to emerging economies.

Underlaying these trends and apart from technology change and consumer awareness, we have the demographic impact of slow or no population growth in the majority of OECD countries, and the ageing factor. Potentials for relatively large, but not forced resource conservation and energy economy exist. Many examples can be given from studies by major consulting firms on the big potential future role of energy saving and conservation - demand side management - rather than supply side solutions. Urban transport energy needs, for example, could likely be cut 33% to 50% relative to present through as little as 10 years, with the right policies and programs and without economic damage or individual personal hardship. Large cuts in national electricity consumption, rather than substituting current thermal-based power with renewable source power in OECD countries, is also feasible given the right policy and program support. Many other examples be given for potential 'natural transition' towards sustainability goals.

The Real Limit: Time

The real limiting factor reinforcing calls for ever more massive and radical emergency action is time. Changes that could require 25 - 50 years if incremental, spontaneous, market-driven and voluntary are brought together in a long and radical wish list for urgent, immediate or short-term changes by advocates of imminent 'climate catastrophe'. Accumulated factors and drivers for the radical solution, which if it is applied will prevent any turning back, not only include long-term political inertia, laisser faire and decades of public and corporate economic mismanagement, but the growth economy and globalization itself.

Between the maximum extension of the globalized economy with intercontinental supply lines and production or processing stages, generating about 8 billion tons of marine trade in around 90 000 merchant ships in 2009, and the fully autonomous local-based "zero CO2" economy there is obviously plenty of room for setting the cursor. Managing and facilitating incremental change towards the sustainable economy through setting rational frameworks and criteria - not only CO2 emissions - can likely be a winning solution with much lower risk. These considerations are however sidelined by existing global financial constraints and limits, and their perception by political and corporate deciders.

National debt and budget deficit finance is a key example. As of Nov 2009, Chinese investors hold around USD 790 billion of US treasuries, about 22% of total US debt held overseas, making continuing Chinese financial support to the US vital. In early 2010, the Eurozone countries with extreme high national budget deficits and national debt set major challenges to the idea of the Euro being "strong money". Japan has the highest national public debt in the OECD group. All countries with high or extreme debt financing loads will tend to lower economic growth and intense competition for scarce investment resources to fund the extreme transition proposals discussed in this article.

The cumulative problems, constraints and imbalances may in fact now be so acute that political and economic deciders believe they have no option but forced and radical change. The current proposed solutions to resource and energy shortage, and fiscal deficits, that are offered by proponents of "climate change catastrophe" are only default choices, made without serious debate and hidden behind the smokescreen of a massive struggle to save the climate and environment. Forced passage to the sustainable economy, as it is currently defined and described by major policy advisers to global leaderships, will almost surely have high negative impacts on investor confidence, consumer confidence and economic visibility going forward. The first impact will be recession, rather than sustained economic recovery - indicating the potential for both national conflict, and international conflict which advocates of "sustainability" have mostly ignored in their rush to generate extreme proposals for change.

Contact Information

Andrew McKillop | Author & Consultant | Email