Diary of an Ocean Vagrant II
Wednesday 23rd February 2011
It was a frustrating night of fluky and contrary winds. We should be in Gibraltar by 4pm nonetheless. Yesterday we sailed past one of the most bizarre expression of modern industrial farming: the greenhouses on the southern Spanish coast near Almeria. An entire coastal plain into the foothills of the mountains in one pane of glass. Inhabited by indentured Ecuadorians no doubt. This glass covers an area of Murcia so extensive you can see it from space, should you happen to be in space. And for what? So that the lardy English, abandoned to sloth, X factor and obesity, can get their fresh strawberries in February. But soon the rivers of southern Spain irrigating this monster will run dry. Then what?
Luxury:
There is a theory of Utility in which there are useful items and useless items. For example, buying a normal car to get to work is useful. Buying a Bentley transports no more people and therefore all the money and resources used on the difference is a loss to the useful economy. It’s reached a scale where it’s having a profound effect. All the luxury items, the super yachts, the cars, the planes, the 10 million dollar parties. Not to mention all the Kitchen and bathroom refits in all the mac mansions. Useless and really uninteresting.
But in SuperWorld this is the standard of the infrastructure. Everything must be perfect – all the time. Legions of chauffeurs, executive security agents, deckhands, concierges, cleaners, stewards, PA’s, you name it, scuffling around the ‘family’ and the guests, and God forbid there should be a hair, a napkin, a screw, anything, out of place. While we’re happy to send First Recon Marines into Iraq in clapped out hummers with no armour, it is absolutely imperative that Mr and Mrs SuperClass be cocooned in perfection at all times.
Super Residence:
The hubs of SuperWorld consist of parts of major cities like London, New York and Paris. Then there are the tax residences like Monaco, Islands in the Caribbean, Isle of Man, The Channel Islands. And the resorts like Gstaddt, Davos, and Aspen. Naturally there are parts of the Middle East, and Asia (especially on the edges of China) where a new section of the SuperClass is gathering. America is probably still home to the majority of it, although the European countries have their fair share. These residences are either physically or financially separate communities, and many of the locations are out of the spotlight. These are not celebrities in the newspaper sense of the term. While they may hire Beyonce or any of a host of other celebrities to entertain them for a birthday party, they generally prefer a quieter life, out of the media glare.
Super Education:
Education is handled by private schools , tutors and private universities – much the same as it always has been, but on a larger scale.
Super Medicine:
It’s in the area of Medicine where the SuperClass really are becoming a separate species. Medical technology is advancing rapidly, but in most of the developed world access is either becoming prohibitively expensive (US) or the National Health Systems are coming apart at the seams (UK, EU). In SuperWorld there exists a range of services, both cosmetic and otherwise, and in luxurious surroundings in private clinics, unimaginable to anyone on an NHS waiting list.
But the frightening part is in the near future. The gap is about to widen appreciably, extending useful lifespans, and…abilities. It’s anyone’s guess how far we are from real enhancement BioAI, but it’s not more than 10/15 years. If DARPA gets in first it’ll be the military, but a hop skip and a jump behind it’ll be the SuperClass who will be enhanced. It’s very possible China gets to functional AI first, then it’s hard to tell how it will play out. But any physical or IQ enhancement available only to the SuperClass will be a major change in the way our species operates and evolves.
Thursday 24th February 2011
We got too close to running out of fuel just before Gibraltar, and spent the night in Duquesa, just up the coast. I love Duquesa, the fuel dock is open 9-9 and there’s a real little town half a mile from the fish and chips and thai cafes in the marina. We walked along the beach and sat next to the church of Stella Maris, drinking beer in a bar called The Refuge. A perfect hidden gem.
Tuesday 1st March 2011
I haven’t had a moment to write while we’ve been in Gibraltar. We’ve been working on the mast, the sat phone and half a dozen other things. Spending time in some of these little islands of ennui in the old empire is educational. The old guys with their roll ups and beer guts, first beer at 10am. A cross section of women with inch think foundation and goldie chains, sundresses and slippers. Forever young living out their pensions in these marinas, catching the soccer on the flat screen in the waterfront bar. Shoot me.
I’ve got my books from the marina free library (give one, take one). I’m reading Generation Kill, by Evan Wright, and it’s a ripper. How we really went into Iraq, as told by the members of First Recon Marines. Some of the best war reporting I’ve ever read. I also got a mint copy from 1974 of The Limits to Growth from the Club of Rome. I haven’t read it in years and it’ll be interesting to read it again to see how the numbers stack up.
Back to SuperClass:
So now we have a small (< 1% ?) class of incredibly wealthy individuals who, through corporate boardrooms and private equity organizations like Carlyle, effectively own a significant percentage of the world’s capital and more importantly its resources. The rate of privatization in the developed world has been heavily criticized for a long time, but continues apace. The effect of this is privatization has been to turn Earth into a virtual farm system. You’ve been livestocked. You are a domesticated consumer animal on a giant farm. They own everything you need to survive, so in effect, they own you.
Friday 3rd March 2011
After a ridiculous week in Gibraltar we finally got underway. We picked up 750 litres of diesel and got out of the harbour past the assorted tankers and cargo boats and motored down by Tarifa at sunset and out into the Traffic Separation Scheme. We listened to the Tarifa multilingual epithet fest on VHF as the tanker crews cursed each other in broken English: You stupid, move to starboard! Where did you get your license you idiot? And the sun went down and fell into the sea.
The Traffic Separation Scheme (TSS) was as busy as usual and so the night’s watches were nerve wracking as we made our way across to the south side until we could turn to our course of 240 ° and head for Gran Canaria. I woke at 0600 for my watch, the sun coming up through cumulus anvils piling up like mad sculptures at 25000 ft and it looked like squalls and thunder on the way.
I talked to my old friend Jed Riffe on FB, and he’s researching this whole issue of the SuperRich as well, and maybe there’s a film in there somewhere.
I’ve been reading a piece by John Mauldin, a finance newsletter guy, for the last day or two. It’s by Dr Michael West, called “New Cardiovascular Systems”. Dr West is CEO of Biotime Inc., and has launched a subsidiary called ReCyte Therapeutics, to commercialize endothelial stem cell therapies to reverse senescence in the cardiovascular and immune systems. For some reason this has been largely ignored by the press, which I think is incredible. This is a huge deal. He can reset the telomere clock, and do it from adult cells. Whoah! Assume that this technique works and is available in 3 years. Will it be available on the NHS, or on the health plans offered by most American HMOs, or the Tunisian Health Service? I doubt it. Hell, the NHS is balking at knee replacements for the boomers, much less cardiovascular replacements. So who will be the first to have access to ReCyte’s Telomeric reset? The SuperClass, in a private clinic in Switzerland – or maybe the black clinics of Chiba.
Never mind the wrinkle creams darling, this technology will reverse aging. The one consolation for the poor has always been that at least in the end the rich were mortal like them. You know, the whole “you can’t take it with you” thing. Suppose the ubiquity of mortality is obsolete. Not only will the rich live better and a little longer or enjoy better health, they’ll become a different kind of being altogether. Let’s assume that the technology gets more sophisticated, what’s the limit? How long can you extend life? The SuperClass will not only be separated by comfort and luxury, they will become a super species. The rich really will be different: yearly full body MRI, cell repair, cellular nutrients, cloned organs…Are these the first immortals?
Recyte is typical of a range of accelerating medical advances, which will be taken advantage of by the SuperClass, and they will begin to leave the rest behind. The average lifespan in India or Africa will stumble along at around 40, and the lifespan of the SuperClass will be 150. That’s an unbridgeable gap. The SuperClass will be able to keep their money for decades longer. What this does to families is anyone’s guess. What if Rupert Murdoch lives to 150? He’ll own planet Earth and call it EarthCorp.
Saturday 4th March 2011
Running down the Moroccan coast on a sunny afternoon, about to cross the 35 deg N latitude. Thinking about being a little south of San Francisco and the life there in contrast to the life a little east of me. The southern Mediterranean is on the boil and Europe is going to be swamped. And as any survivor of the Titanic will tell you, desperate people will sink a full lifeboat trying to climb on board, and then everyone dies. The history books are rife with stories of ancient states being inundated by refugees from famine and collapse.
I’m about half way through The Limits to Growth. In case you don’t know it, it’s the seminal ecological analysis circa 1972 written by MIT faculty for the Club of Rome, and derided by conservatives ever since for its inaccuracies and flawed predictions. There are no predictions in the book, and it was meticulously researched. All I’ve come across so far is some carefully worded analysis, that looks, with 40 years hindsight, incredibly good. Ferchrissake, they were doing this stuff on computers in 1971! Do you know (or remember) what computers looked like in 1971? It was before monitors! They must have done this stuff on keypunch machines, and a lot of the numbers still look very good. That’s good, but in a bad way. They were right on about population, CO2, pollution – not in an exact quantitative way, which they weren’t aiming for, but as a human behaviour pattern. And the general drift is that for the first time in human history we’re hitting hard limits. I wonder what would have happened if we’d taken them seriously.
Saturday 5th March 2011
We’re about 40 miles or so off Casablanca, doing 5 knots under a dull grey sky on a dark flat sea.
Limits to Growth: It’s when you get to Chapter 3, Growth in the World System that the most important ideas in the book are laid out. The “standard” world model and its feedback loops have been explained and to my eyes it seems sensible and scientifically prudent. They include energy, resources, capital, population, and food. All this is put together and it’s clear that, exact details aside, the general behaviour of the model leads to the end of growth and the collapse of industrial civilization before 2070. They run a series of alternatives, some of them patently nuts, such as limitless resources, perfect birth control, zero population growth etc., and the behaviour of the model is more or less the same: collapse. As they say about the graph of it all (figure 35), “let us begin by assuming that there will be no great changes in human values nor in the functioning of the global population – capital system as it has operated for the last one hundred years”. It’s 40 years later and no, we didn’t change how we operate. Looking at figure 35 it’s clear that by the early 21st century resources are declining exponentially and after a while population crashes. And that’s exactly what’s happening.
Afternoon watch, 1430.
We’re going in towards the coast at 140 deg, trying to pick up some coastal wind. We just saw the yacht Velsheda, on the bow about 2 miles off. It looks like she’s on the way to Las Palmas to fuel up on her way to the St Bart’s Bucket regatta on 24th March. The Bucket is a tremendous gathering of the SuperClass for a 3 day race round the island. The world’s largest sailing yachts, millions of dollars worth of some of the most advanced materials and design available. If only NASA could still afford technology like that, we’d be colonizing Mars.
It’s ironic that at this moment I’m reading “the basic behaviour mode of the world system is exponential growth of population and capital, followed by collapse”. I wonder if the authors foresaw what the peak would look like and whether they imagined the degree of excess. Back in 1971 the Super Yacht industry was in its infancy. Oh baby, look at ‘em now.
Sunday 6th March 2011
I finished Limits this morning. The last chapter is called The State of Global Equilibrium: they foresaw that the way out of our predicament was to initiate a world culture of stable equilibrium. Boy, it’s lucky that’s what we did, huh? Oh no, wait, that’s not what we did. It’s as if the politicians, business titans, et al, who read this book in 1972, if they read it, plainly decided that just because some folks from MIT with IQs twice their own thought they knew what they were talking about, they knew better. Yeah.
We might have had a shot if we’d listened. In 1950 the population of Africa was around 221 million and India was around 330 million. Even by the 1970s it would have been manageable. But it would have required a fundamental and rapid shift in 5000 years of religion, superstition, cultural beliefs and assorted mumbo jumbo. Maybe it would have taken a kind of cognition of which humans aren’t capable -yet. Even harder, we would have had to persuade the Corporations, who were just getting their teeth into the idea of “global” (read the advantages of authoritarian labour management), and for whom growth is a religion on a par with anything the deserts of the Middle East have inflicted on us, to understand that infinite growth inside a closed system is unrealistic. Or to put it another way, silly.
So we ignored everything the good MIT folks who wrote The Limits to Growth told us. And nothing bad happened. No population problems, no resource shortages, no pollution issues or climate disturbances. Ha! Stupid MIT people.
Soldiers on the School Run
Last night I was at the Royal Geographical Society for the annual IRC-UK lecture, ‘Soldiers on the School Run: Sensible Strategy or Disastrous Compromise?’ This is the latest in a series of events trying to define what it is we’re up to in the business of humanitarian interventions. It’s clear to honest professionals in both the military and the aid industry that the way we are dealing with complex emergencies is not working and needs to get a lot better – fast. There’s no choice. The rate of State failure is accelerating. We simply cannot afford too many Somalias.
On the one hand, the military is engaged in adapting to WW4 – the kind of battles waged or imagined in WW2 and the Cold War are history. WW4 is a counterinsurgency war. Neither the battles between national armies that characterized WW2, nor the long distance threatening of the Cold War are relevant to today’s forces fighting jihadists in the fields and villages of Afghanistan. It is a far more complex mission than previous forces had to consider. The WW4 soldier is expected to be part diplomat, part aid worker, and part nation builder. Panelist Ahmed Rashid believes there is a crisis between the military and the NGOs in Afghanistan. The rate of change in mission has been too rapid for the military to adapt its strategy from the Cold War, and their command structure is incompatible with the way NGOs work. But the heart of the problem is the very different perspective of each organization.
For the NGOs, whose objectives range from acute disaster relief to long term development, and who therefore expect to spend anything from a few weeks to years in a given place, the issue is how to maintain independence from the military on which they increasingly rely for logistics and security. It is axiomatic in the Aid industry that aid should be ‘independent, neutral and impartial.’ But in the management of complex emergencies there is increasing involvement of the military, and the politics of military intervention means that there is no neutrality or impartiality. The NGOs are fearful that the more they are identified with the military, their safety will be in jeopardy. It is well known that on this basis the Taliban considers Aid workers to be ‘American Slaves. Mike Young is IRCs director for Asia and the Caucasus, and he’s been at it for 12 years. He doesn’t believe in big plans, he’s all for local, which takes time and trust. He’s frightened that if the Taliban remain after the US and UK forces leave, the locals who worked with the Aid agencies will be killed as collaborators. He remains very doubtful of the long term effectiveness of military based Aid, but admits that we’re stuck with what we’ve got.
Major General (Ret.) Tim Cross, who is a veteran the Gulf, the Balkans and Iraq argued that for the military it wasn’t a question of whether they should be doing development and humanitarian intervention, but how. On balance he said that he thought both the military and the NGOs were doing ‘a reasonable job’, but that ‘we have to keep talking to each other.’ So they have very different missions, and very different ways of operating. But they find themselves working together out of necessity. And not only with NGOs. The US marines have been trying to use academics in its efforts for ‘hearts and minds’ and to avoid accidental civilian casualties. The Human Terrain Systems embed social scientists and anthropologists with combat troops to help tacticians with local knowledge. This new kind of counterinsurgency war/complex emergency situation is demanding rapid adaptation, and if that means embedding academics and /or humanitarian workers, so be it.
Uneasy bedfellows they may be, but it looks like they will be stuck with each other for the foreseeable future. Nation building is new and over the last 10 years it’s been pretty hit and miss. Perhaps what is happening is that two distinct mindsets are having to merge, because the prospect of large parts of Africa and Asia collapsing is too dire to imagine.
Links:
Street Fighting Man
Everywhere I hear the sound of marching, charging feet, boy,
‘Cause summer’s here and the time is right for fighting in the street, boy
Jagger Richards 1968
Finally I’m back. My Atlantic trip was extraordinary and I ended up doing two deliveries to and from France, so in all I covered more than 6000 miles.
Before I left I wrote a post called 2010: The Next Leg Down. I wanted to go over it and see how I’m doing in the trend forecasting business.
Oil and the Deep Horizon rig: I’m still waiting for the oil price spike. But the good people at BP are doing their best on my behalf, bless ‘em. Or rather, Transocean. Although Transocean is not well known publicly, it’s the largest rig operator in the world, with about 300 rigs. What makes this accident so important was that it was an ultra-deep drilling operation and if the US bans more ultra-deep in the Gulf of Mexico it will impact oil supply within a year. As the cheap easy oil disappears we are faced with difficult choices: Just how much ecological horror do you think you can stand to stay on the highway? We need to remember that Deep Horizon was no mundane oil operation. They were tapping into the Tiber field – 40,000 ft down. It was the deepest vertical well in history. You could lose Everest and have 13000ft spare in that hole. This was the Apollo mission for deep drilling. Was it dangerous? Of course it was. Whenever we take one of those giant steps for mankind, it’s inherently dangerous. But in all the fervour to get to the 70 billion barrels deep in the Gulf, we chose to suppress that information. What happens if we have a big hurricane season this year?
Nukes: While the west mutters and hovers, Asia is going all out. It will be interesting to follow the split in attitude. Just this week, Monju, the giant Japanese breeder reactor was brought back online after a 14 years of repair. China, which has 11 reactors in commercial production, has 20 under construction. I’m waiting for the argument in the West to get much more heated as people start to wonder how we’ll compete with nuclear Asian countries in 10 years.
Immigration: I get a gold star. In the UK immigration has become the biggest issue in the election. It was an immigration argument with Mrs. Duffy that caused Mr. Brown’s worst moment in the campaign. As we hit the next leg down, and the European economy buckles under the sovereign debt bubble, which will make Lehman brothers look like the teddy bear’s picnic, immigration will turn ugly. Big right wing gains across Europe. As southern Europe goes into full street fighting man mode it’s only a matter of time before they decide that it’s the foreigner’s fault. Look out.
I’m off to the Frontline Club to have a glass of wine and watch as Britain has a revolutionary election, involving three white guys instead of two. No, really. It’s time for real change. Honest.
2010: The Next Leg Down
Before I go off on my transatlantic sailing trip next week I thought I’d make some forecasts for 2010: The next leg down.
Oil and Globalization: First thing is our reaction to the arrival of triple digit oil prices. Right now oil is at $80. I’m not expecting a miraculous recovery in demand, but a political crisis could easily drive prices into triple digits. If so, whether or not you actually believed the news tripe about recovery, oil over $100/barrel will begin the next leg of the post peak oil crisis. Right on schedule. The same process will be broadly applicable to most of Western Europe, the US and the rest of the developed world, but my immediate concern is Britain. This is the year when transport begins to trump labour arbitrage and the global part of globalization starts to look shaky.
On the face of it, this is disastrous. The OECD industries have come to rely on almost completely on foreign manufacturing sources, obviously for the most part China. But in fact it’s a tremendous opportunity, because except for bankers and entertainers, globalization has been a disaster for wage earners. The myth of the service economy has run its course. It was largely an artefact of cheap oil. It brought cheap goods, but the side effects have been an ecological horror. According to a recent report in the Guardian, major companies caused $2 trillion worth of environmental damage just in 2008.
Sir Richard, my new best friend: Probably the most important signal for Britain is Sir Richard Branson’s discovery of peak oil. Dollar short and a day late, but he may be the person to make it mainstream in Britain. He’ll be our Al Gore. It’s a pity that Matt Simmons, Colin Campbell, Jean Laherrere, and all the rest of the ASPO folk couldn’t get any traction for the last decade. Never mind, now that Sir Richard has noticed and the Industry Taskforce on Peak Oil and Energy Security has been formed at the Royal Society finally we’ll see some righteous panic.
Re-Industrialization: I’m expecting to see talk of the rapid re-industrialization of Britain. The flag wavers for the service economy will be ushered off the stage. Despite being the economic darlings of the last decade or two, suddenly they’ll be seen as hopelessly out of touch. Start watching for some new clever marketing speak. Right now in glass walled offices with aluminium furniture, there are eager young marketing drones with perfect complexions, dreaming up the sound bites for the new new clean energy renaissance: Social enterprise resourcing , Clean Tech revolution, Cloudsourced inventory control, AgroUrbanOrganic complex …it’ll be some such jabber. Especially watch for UrbanFoodCommunities.com and “Liveability.” And yes, I have trademarked all these buzzwords, so don’t even think about it, nasty little marketing children.
What it means is that if the bloody Chinese are too far away to make all our stuff we’ll have to remember how to do it ourselves.
Does that mean I’ll have to get mud on my Vivien Westwood?
Yes darling, I’m afraid it does.
Nukes: I’m expecting some real surprises around nuclear energy. I remember talking to Kjell Aleklett in 2003 about the nuclear renaissance. This is one of those issues that gets normally polite ecology people at each other’s throats. Whether or not nuclear energy has an EROEI to make it worth building is one thing, but the politics will be interesting. The current British Government is talking about going from 19% to 40% electricity from nukes in 20 years. I stand in awe of the nuclear energy PR machine that has completely turned the government’s opinion round from 2003 to 2006. Now watch for the demonstrations.
Immigration is going to hit the big time: 2010 will be a tipping point in the collapse of Africa and the mass migration into Europe. For the last 4 decades, more or less since the independence of the last colonies, there’s been a tragic failure of Africa to adapt. As William Easterly puts it, “Spending $2.3 trillion (measured in today’s dollars) in aid over the past five decades has left the most aid-intensive regions, like Africa, wallowing in continued stagnation; it’s fair to say this approach has not been a great success.” A mixture of tribal identity, corruption, over population, infrastructure and ecological collapse combined with increasingly severe climate effects have initiated the collapse of sub Saharan Africa. The collapse seems to be propagating rapidly out of the Horn, and accelerating. The Africans are doing what populations always do in the face of collapse. They die or leave. In this case the death toll will make the term “Biblical” obsolete, by an order of magnitude.
It’s the leaving that’s the problem for Europe. The population of sub Saharan Africa and Europe are roughly the same; something over 800 million. Europe is already far past carrying capacity, probably by a factor of two, like Britain. The transport and agricultural infrastructure, health systems, education systems and societies of Europe cannot successfully cope with such an influx and remain viable.
I’m not suggesting for a moment that Africa is the sole source of illegal migration into Europe. If only. But Africa seems to me to be in the worst shape. Add in the populations of failing countries in the Middle East, Eastern Europe and the Indian subcontinent from which migrants will flood into Europe and the total is well over a 1.5 billion.
The cracks are beginning to show. In Italy last month there was a riot in Rosarno in which illegal immigrants from set fire to cars and shops. Italy’s demographic is changing very rapidly. At least 7% of the population, not counting illegal immigrants is now non-Italian. 1 in 6 babies is born to a non-Italian. Italians are about to wake up to the permanent changes in their country. I expect some desperate headlines as we head into summer. Naturally the cry of ‘racism’ will be the sure sign of backlash.
In 1997, the number of foreigners living in Spain was 500,000. In 2008 it was 5.3 million. That is an order of magnitude difference. In Catalonia 15% of the population is foreign born. The Spanish are now beginning to realize the full effects of such high levels of immigration on its school system.
In Greece, which is already close to financial meltdown, has a non-Greek population of 10%. Until recently most of that influx came from Balkan states, but as Africa’s situation deteriorates more of the illegal immigrants will come from Africa. Aside from street riots in Greece over the economy, expect a backlash over immigration.
The cultural, religious and ethnic divides in the new Europe have been ignored by a generation of politicians. There is even a rumour in Britain that the Labour party secretly decided to allow unlimited immigration to Britain during its tenure since they thought immigrants would be more likely to vote Labour in future. For the past decade it’s been almost impossible to talk about immigration without being silenced by cries of racism. I’d expect this debate to get a lot more difficult in 2010. For better or worse, Europe is now a fundamentally different place demographically than it was 10 years ago. How it fares in the 21st century with this starting population is anyone’s guess, but if history is any guide balkanization is a lot more likely than peaceful integration. I wish there was something vaguely humorous about this whole thing, but I can’t see it.
Fighting in the street: Whole areas of Britain, Europe and the US have fallen into decay. Along with it communities have been destroyed, and we are left with a vast underclass living on benefits. Add to that the tensions in the middle classes as the last of the savings dribble away. People can generally last about 3 years if they’ve got some savings, but now it’s down to the dregs. Living on the kid’s education money and worrying about losing the house. The last shops in the high street boarded up. No room at university for the kids anyway – and nowhere for them to go. 50% unemployment in the under 25s. The austerity measures announced from the balcony of some grand old palace by some unelected Brussels apparatchik with a bad comb over. The human mind can only stand so much. It’s impossible to predict the spark, but if it’s an el Nino hot summer, look for trouble in the streets.
Weather: I know that economists are the only profession with a worse record than weather forecasters, nonetheless I’m going to chance my arm. The la Nina conditions of the last couple of years have given way to a new el Nino. If it persists into summer 2010, as looks likely, we may be getting some exciting weather. As I said above, if it results in a very hot summer look out. Angry unemployed people and 40°c are a bad combination.
War: Rule number 1. Do not under any circumstances allow yourself to be drawn into an endless campaign in Asia. You are not that rich. No empire ever was, nor ever will be. You are thinking in years. They are thinking in centuries. From Babylon, with love, Alex@Macedon.
Anyone got a film crew they’re not using, I’ve got the oil film script re-done. Now I’m going to cross an ocean under sail for the first time. Wish me luck.
Dmitri Orlov MP3
The Local
First – Everyone has to watch this video. That’s an order!
You know, it’s funny how things work. Last week I asked for a new paradigm, or at least I wanted to start thinking about how it might look, and bingo, there it was. Jeff Rubin, the former chief economist at CIBC, has outlined it – and it’s what a great many of us have been arguing about for a long time: the end of globalization and the re-localizing of the economy. The difference is that Mr. Rubin is a mainstream economist, so it’s harder to dismiss his analysis.
Perhaps the most important point he’s making is the time factor. This is not something that’s a decade out. He’s estimating triple digit oil prices about 15 months away, with luck. It is almost inconceivable that any significant changes can be made in that time, even if his analysis is believed by policy makers and the markets. As Rubin points out, if the gains of labour arbitrage are eclipsed by the costs of transport – “Distance is Money” – then the entire edifice of globalization collapses rapidly.
As I was saying in Obsolete Paradigms, we need to start acting as if the laws of physics are true, by which I meant full cost accounting (The definitions here can be confusing. I mean accounting that includes the true cost of all resources used, ecological footprint if you like) and the end of artificial externalities. Full cost accounting will force our current model of capitalism to adapt. Certainly the model we’ve used for the last quarter century is, quite literally, bankrupt. Western Europe and the US will have to re-localize at an unprecedented rate. I think he’s right, but my concern is whether or not these economies can adapt fast enough or go through a severe depression towards a new structure.
The western version of globalization, the service economy – or what he calls the barista economy – is obsolete. The entire range of skills of the blue collar world, you know, people making stuff, which most economists have written off, will have to come back. Did any of us really think we were going to run a world class economy on coffee shops and back rubs?
The problems we have with rapid re-localization was driven home to me by an article in the Evening Standard, January 21. Britain is building the world’s largest offshore wind farm, called the London Array, 20 km off the Essex coast in the Thames estuary. You would think it would be a great opportunity for British firms and engineers. Not so. The majority of the contracts to build the London Array are going overseas. Britain has neither the skills nor the manufacturing base to produce the turbines. The major contracts have gone to Dong Energy of Denmark, E.ON of Germany, and Masdar of Abu Dabhi. This is no criticism of those companies. I was in Denmark recently and what they’ve done with wind power in just a few years is extraordinary. It is, however, an appalling indictment of the government’s and British industry’s short sightedness. Britain is the windiest country in Europe and the need for alternate energy sources has been obvious for years. Now with oil prices set to rise to above $100 if Rubin is right, we find ourselves with an army of media studies graduates and baristas to build a new grid for the 21st century.
I said in Recrimination vs Innovation on Christmas day, we have a workforce, what we desperately lack is leadership. These young people need new skills, they need new opportunity, and they don’t need to be burdened with £20,000 for a degree in something they’ll never get a job doing. This is not impossible, but it’s not trivial either. Danny Stevens of the Environmental Industries Commission has called for the Government to establish a National Environmental Skills Academy. I couldn’t agree more, but I would argue it’s on too small a scale. We need to mobilize this generation on a scale that hasn’t been contemplated since WWII. Since the war, Britain has allowed its position as a world leader in science and technology to slip away, preferring to rely on wage arbitrage and cheap transport to support a version of globalization which has benefited a tiny minority, while leaving the economy as a whole in ruins. That flapping you hear is the vultures coming home to roost.
So I’d like to ask the government to immediately establish a British Environmental Engineering Corps, (being that this is Britain I wanted to make the acronym come out as BEER, but Regiment seemed a bit severe), which will train people, for free, forgive the student debts they already have, and go about building a new energy infrastructure, reconfiguring our cities so that they are sustainable and liveable, and making the transportation infrastructure as efficient as the Japanese. In 10 years. Get a move on.
leave a comment