Saturday, November 1, 2008

The Infinite Economy

Note: This is an essay I have written for my soon to be launched website - My current goal is to have it up and running by mid-November, but that might change if I'm lucky enough to find someone who actually wants to hire me for a real-world job. Anyways, I'd appreciate any feedback you have for this article. Also, if anyone knows how credit cards receive the authority to loan money or if reserve requirements differ for savings vs. checking accounts, I'd love to learn more.

Ever wonder why the business world seems obsessed with growth? Open up the Wall Street Journal, Forbes, The Economist, or the business section of your local paper. Growth, increasing profits, and expanding markets – this is the objective. When businesses don’t grow at expected rates, stock prices plummet and CEO’s get canned.

From microeconomic perspective, the point of view of the individual, our society offers countless reasons to work for growth. A salesman who sells more makes more money in commissions. A mid-level manager drives his employees to perform at a higher level so that one day she can be promoted to corporate. A CEO might point to his legal duty to increase the company’s equity for stockholders. A self-employed contractor knows that without building more homes, he cannot afford to send his daughter to private.

At just about every level, we are a society oriented toward growth.

I believe an unending growth economy is impossible in a finite world. An always-growing economy requires an ever increasing number of resources. Thanks to the laws of physics, we have little hope of creating an infinite world, so we best stick with creating a sustainable economy.

In this series, The Infinite Economy, I will examine various parts of our economic system and growth-oriented society. Once we’ve had a chance to explore our current system, we will be in a better place to forge a new economic paradigm.

First, a bit of background: I have been intrigued by business, the economy and investing for my entire life. My parents were especially careful to make sure I learned to be responsible with money. I was probably 8 years old when I opened my first savings account. The idea that someone would pay me to hold my money sounded really good. When I was about 10, I used a 1-year CD with my paper route money, since that paid out even MORE money than my savings account. When the year was up, I took the money and purchased shares in a mutual fund. This past summer I opened up an IRA and bought stock in several companies.

What does this have to do with anything? I’m not someone who has an innate dislike of business or investing. I am not morally opposed to corporations. When I say that our monetary, financial, and economic policy needs to be completely rethought and overhauled, I almost feel as though I’m condemning a loving uncle, someone has been good to me my entire life. Yet when I consider the facts of the world, I see no other alternative.

The Infinite Economy – Banking and the Creation of Money

Money is the primary median through which business is conducted in modern society. Most people think money is created by the government. I did. I’ve seen pictures of the mint and the printing presses. I’ve read the text on the bills: “This note is legal tender.” Its got those little fake signatures from the Secretary of the Treasury and the Treasurer of the United States. Its government created money, right?

In a sense, this is right. Through laws and judicial enforcement, the government maintains this faith in the dollar by declaring any debt paid in dollars fulfilled. The money is deemed worthy by government fiat. But just as the FBI and Justice Department don’t create the laws, the government doesn’t create dollars, even if it facilitate its existence and enforces its acceptance in the market.

The responsibility for creating money is the duty of the quasi-governmental Federal Reserve and private banks. More importantly, the system these banks use to create money requires a growth-oriented economy to function.

I used to assume that for every dollar a bank loaned out (in the form of a mortgage, car loan, or what have you), was a dollar someone else had deposited at the bank. I deposit $100 in the banks, and they pay me a 2% interest rate. Then they turn around and loan out my $100 at 6% a interest rate and keep the 4% difference to pay operating costs and keep what they can for profit.

But that’s not how it works, at least not for members of the Federal Reserve system.
Modern banking operates on what is known as the fractional reserve system. A typical fractional reserve rate is 9:1, about the rate modern commercial banks operate under. This means that for every dollar of high-powered money a bank has deposited at the Fed, it can loan out nine dollars to customers. For this loan, Bank A must pay the Fed the going interest rate as determined by the Federal Reserve Chairman, currently Ben Bernanke. As I write this, the Fed’s interest rate is 1.0%, which is unusually low.

(Aside: Not all banks are members of the Federal Reserve system. As of April 2008, about 75% of all bank assets (loans) at FDIC-insured institutions are with member banks, so member banks make up the majority of domestic banking. Non-member banks include many small savings and loan institutions and credit unions.)

Lets start with a hypothetical Bank A, a member of the Federal Reserve. The Fed deems it necessary to increase the money supply. To start this process, they purchase $100,000 worth of high-quality securities (U.S. government bonds) on the open market from Hannah the stock broker. Hannah then deposits this money in her bank, Bank A.

When Mohamed the insurance salesman comes into Bank A and asks for a $90,000 loan to put an addition on his home, the bank types the loan into the computer and writes him a check. At that moment, the bank has created $90,000 that didn’t previously exist.

Next, Mohamed takes that $90,000 and gives it to his contractor, who in turn deposits the money in his account at Bank B (it could be any bank, as the cumulative effect on the system will be the same). So, when Jose the financier goes to Bank B and asks for a loan to buy herself a fancy new sports car, Banker B can say, “Sure, here’s $81,000. Knock yourself out.” Why $81,000? Bank B must keep a 9:1 reserve ratio for all deposits, the same as the Fed. Bank B is required to keep $9000 as “reserves” and may loan out the other $81,000.

Bank B’s loan to Jose creates another $81,000 in new money. Remember, Mohamed’s contractor still sees the full $90,000 in his bank account, and he can withdraw that at any time.

The cycle can continue indefinitely with shrinking amounts of money. Each round of lending creates new money. From the original $100,000 securities purchase, a 9:1 fractional reserve ratio has the potential to create upwards of $1,000,000 in new money. Before the 2008 financial crisis, some investment banks were allowed to have reserve ratios upwards of 30:1, though I don’t think they could borrow from the Federal Reserve.

Another interesting aspect of the current financial system is that if, theoretically, all debts were paid, no money would remain in the system. When a bank takes on a depositor, it creates a liability on its balance sheet, since it owes this money to the depositor. A loan, on the other hand, is an asset. It is money that is expected to come into the bank. Once the debt is paid off, the bank can “pay off” the liability, and keep the interest as revenue. The asset (money) that was created when the loan was written, disappears. Debt creates money. Payment of debt eliminates money.

I don’t take to the position that this system is an inherent sham, that creating money from nothing is somehow a moral failing on the part of the financial sector. Like every monetary system developed by human society, this system is based on symbolism. The money created by the fractional reserve system is just as valuable as the shells, stone disks, or gold coins used as money in the past. All of these are equally as good at feeding your family and keeping them warm in the winter (ok, paper has the edge there).

The problem with the current monetary system is that to function, it requires perpetual economic growth.

Banks don’t just give out money as a service for the good of society. They expect repayment of the principle, with interest. If all money is created as debt, where does the money to pay the interest come from?

The answer is that it comes from the creation of more debt. Debt/money increases exponentially while the economy – the number of products and services available – remains at a constant level or even contracts. In a world without growth, this system would soon collapse under the weight of inflation.

(Aside – Of course, instead of taking on more debt, the percentage of loans equal to the interest rate could default. But that wouldn’t lead to a functioning system, would it?)

Growth allows this system to function. Money is a claim on real things. If the economy is producing more and more goods and services every year, there is more stuff for the increased money supply to lay claim upon.

The unending growth that is required to support our economic system is not possible. As the supply of oil, timber, fish, fresh water, and fertile soil plateaus and decreases, our ability to grow ceases. We need a new paradigm, a system for living that is tenable over the long run.

Note on sources – Much of my analysis in this article is inspired by the video, “Money as Debt.” You can view it here. While I don’t agree the implications made in the video’s last few minutes and haven’t been able to verify all of the video’s assertions, it is an enlightening video. If anyone can send me (E-MAIL Link) an authorities source on the use of “high-powered” money as discussed in the video, I’d be much obliged. I’d also like to thank Wikipedia and the Federal Reserve Bank of Chicago for publishing this helpful booklet

Monday, October 20, 2008

Where My Moral Compass Points

As I alluded to in a comment on the previous thread, outlining my moral compass last week has really helped put some things in perspective. It helped me to realize that energy/environmental/economic issues are very important to me. For whatever reason, these are things I think about (and have always thought about since at least 8th or 9th grade). When I brainstorm business ideas, I think of these issues.

So I've decided, for the present, that this is the area I want to put my energies. I'm applying for a canvasing job with a local environmental group (not my ideal thing, but its a start and its a job). I've also been working on a business plan for starting a web page about these issues. I'm still working out exactly what tone I want to take. Maybe you have some thoughts? My overall goals are to 1) Provide balanced information and and analysis of issues, and 2) Propose solutions and discuss them with readers. Something like, but covering a wider variety of topics and having more accessible content.

I am also interested if anyone would like to help develop the site, contribute writing, etc. The reason I want to put ads on the website is to possibly eventually support myself (or ourselves) enough to dedicate more time to the project. I am somewhat concerned with moral implications of this, etc. I'm really not sure exactly where I stand on the issue.

Anyways, here is the business proposal. I've spent the week writing this and about a half dozen other partial or whole articles, which is why this is the week's "essay."

Business Plan

Description of Business

The business is an educational and entertaining website that teaches readers about all issues relating to this issue: “We have a finite world. Our economy is designed for ever increasing growth. How do we transition to a sustainable way of life? The site will cover environmental issues, propose solutions, promote activism, evaluate important news items, and offer numerous how-to articles and product evaluations.

The tone of the website will be serious overall, with bits of sarcasm, recurring references, and humor to add life and create a feeling of humanity and community.


Content will initially be divided into three subsets: 1) Essays 2) News 3) Evaluations. Essays will be published 2-3 times per week, and will cover a variety of issues. They will be longer, and address macro topics as well as micro. Most “Green” websites concentrate on micro issues, and many of them propose new, “green” products to help us change our ways. While this is a step in the right direction, the value of such things needs to be closely examined. This business will do that. It will also work to pose solutions, even if they need some work, to these problems, and not just identify the problem.

The Finite Planet wants to move beyond the generally agreed paradigm of the Green movement, which consists of small communities, locally grown foods and a local economy in general, recycling, renewable energy, (ADD). The Finite Planet sympathizes with these ideas, but finds them lacking in many regards and in need of explanation and expansion in every regard.

The format in which news is presented still needs to be determined. We will mostly cover important scientific discoveries, oil, environmental and economic related news.

The website will do some book reviews and product evaluations. Book reviews will be done for recent as well as older books, with the goal being that I only write reviews for things I like and can recommend. If I do negative reviews, they will be for popular products, like bottled water, and the tone would be more sarcastic. Product reviews will concentrate on the following questions: How oily is this product? How necessary is it? How oily are the alternatives?

The website will also include an ever-growing compendium of internet resources, which are expertly indexed and organized. The main page will include a link to *NEW* resources.

Game Plan

Phase 1: Pre-Hosting

1) Write initial static content. As with all content, as much emphasis as possible should be placed on teaching. This is ESPECIALLY true for static or “pillar” articles. This includes the following articles:
a. An overview of our economic and credit system
b. What is peak oil? (Initial entry)
i. Cover the “what” portion, and save the “when” for further investigation?
c. The Green Movement
i. An article describing the mainstream Green Movement. Define it, talk about its good qualities, but also be critical of it.
ii. Make sure to cover the pros and cons of the merger between environmentalism and business.
d. (TITLE TBD) – This essay will be a sequel to the Green Movement essay. The first looks at where we are and how far we’ve come. This essay will lay out The Finite Earth’s core principles and try to show how we will move the conversation forward.
e. The Myth of Energy Independence (Essay)
i. Go after Obama, McCain, and politicians in general for misleading American as to what this would actually take. It might be a good political talking point, but its not a very effective way of thinking about policy.
f. An article discussing/defining what we mean by sustainability. Base this on Dan and my discussion, so include population.
g. A review of solar laptop chargers.
h. An “About” page and mission statement.
2) Write first six essays (about two weeks worth of material).
3) Compose an initial compendium of resources
a. Go through wikipedia entries on various renewable energy. Consider cataloging them, and search them for links to useful reports, pages, etc.
4) Begin to write out an index of technical terms such as kWH and EROEI, with explanations. This will be an ongoing project.
5) Hand-draw webpage layout
6) Investigate blog networks.

Phase 2: Pre-Launch

1) Install and experiment with different web software (Wordpress, Drupal, etc.)
2) Build webpage
3) Sign up for Google Analytics service
4) Figure out how social aggregator’s work and sign up for appropriate ones
5) Scout for possible pages, blogs, etc. on which to promote website
6) Find blog carnivals to submit essays
7) Have Morgan do a copy-edit
8) Ask friends to visit website and give feedback

Phase 3: Launch

1) Troubleshoot
2) Promote site (Need to determine how)
3) List blog on places such as Eaton Web, Globe of Blogs, BlogShares and Blog Street.
4) Sign-up for advertising.
5) Add an “e-mail your friend” option.

Monthly Goals



The business’ marketing campaign will be internet based, word of mouth. Quality and consistency in our content will be the main force of attraction. The business will experiment promoting through aggregators such as Slashdot, Reddit, Stumbleupon, Delicious, and Digg. Articles and pages will also have titles that are search friendly, though we will not optimize for search engines to the detriment of content.

We will support RSS feeds, participate in blog carnivals, and network with other websites.

The business will also investigate doing a newsletter to help remind people of the site’s existence and keep them coming back.

The business does not plan on spending money on any sort of advertising.

The Finite World is one part policy, two parts education and teaching. The latter needs to be emphasized especially, because that’s what is going to attract traffic and attention.

The general approach for each article needs to be: This is what you need to know, and I’m going to tell you.

Articles will have informative yet catchy titles. Formatting for articles will be very important. Experiment with different formats, but remember to take a look at Mr. Electricity’s webpage and others for inspiration on how to arrange subtitles, bold first lines, etc.

The website will be relatively personal. Not so much that its called or anything like that, but it will include catchy, snarky phrases. This will include things like Mark’s rules of the universe. Rule #4, for example, is “that people tend to believe the end of the world is upon us. This is only warranted when it comes to things like nuclear holocaust. Otherwise, we need to think clearly, keep a level head, and take decisive action. The end of the world as you know it is not the same as the end of the world.”

Marketing To-Do List

1) Find blogs that you like with comment pages and comment on them. If it is allowed, link back to your blog when relevant.
2) Research and possibly use Feedburner.
3) Create a newsletter
4) Participate in blog carnivals
5) Submit to blog/webpage directories
6) Submit to Google sitemaps (if you’re using Wordpress, this might be useful:
7) Browse for other blogs on similar topics, find ones you like, and smooze on message boards, etc.
8) Make sure that you do trackbacks.


Initial start-up costs are as follows:

1) Domain Registration: $10/year
2) Hosting: About $10/month, depending on which plan is selected.

Domain registration costs are fixed. Hosting costs will increase as site traffic (and incomes) increases.

The website expects to earn money from a number of different sources. Here are the four types of income streams I will probably begin with:

1) Adsense – I anticipate Google’s Adsense to account for the largest percentage of the business’s income.
a. Problogger recommends to wait a little while before applying to adsense, because they want your site to have a reasonable amount of content. On the other hand, how do all of the typo sites have advertisements if this is true? The post was from 2004, so look into this some more and see if its changed.
b. REMEMBER – NEVER click on your own ads or encourage your readers to click on them.
c. Center, top left, and the footer are the best places to put Adsense ads. In-text ads are also very effective, though you should experiment with them so that they aren’t annoying.
2) Adwords – Another part of Google-based advertising
3) Affiliate Programs – Links to Powells, Amazon, and other online retailers, where the business earns money when people click through to purchase.
4) Donation requests – Visitors can donate money via PayPal.

Listed below are some more methods of earning money that could be used.

5) Custom Advertising – This is an option that I will probably only get into if someone approaches me, because this isn’t the place I want to put my time.
6) - This one in particular is recommended by Problogger.
11) Maybe some of these?: Azoogle Ads, Intelli Txt, DoubleClick, Tribal Fusion, Adbrite, Clicksor, AdHearUs, Kanoodle, Pheedo, TextAds, Bidvertiser, Fastclick and Value Click
a. Note: This list was taken off of a 2005 article, so you might want to look around for newer options. On the other hand, it should be obvious which ones of these are good by which ones have survived.

Possible Topics

- Shale Oil
- What is Peak Oil? (Series)
- Electricity
- Geothermal
- Solar Power
- Wind
- Extranaloties, externalized costs - Those things where something has a cost that isn’t included in the dollar estimation of it. I.e. air pollution from a car.
o Compare externalized costs as robbery with the argument used to say that graduated taxes are robbery.
- Why efficiency is so more important than increasing supplies.
- Natural Gas
- Coal
- Liquid Coal
- Ethanol
- Ethanol vs. Bio-diesel
- Cellulose-based Ethanol
- Fertilizer
- Industrial Farming
- Can organic farming feed the world?
- Transportation
o Cars
o Planes
o Boats
o Trains
o Buses
o Share-car programs
o Bikes
o Walking
o Scooters
- Water scarcity
- Collapsing fish stocks
- Forests, and why we need them
- Local food
- Gardening
- Small Wind
- Personal solar
- Solar thermal
- Drill heating (or whatever you call those systems that drill into the ground to heat homes)
- Metal
- Industrial energy use
- Helium
- Concrete manufacturing
- We need a world-oriented approach.
- Meat
- Energy efficiency and reducing use (multiple articles)
- Global warming vs. other problems
- Buy used, buy less
- Commercial buildings
- Plastics
- What’s the difference between bio-diesel and ethanol?
- Hemp and Marijuana
- Batteries
- The electric grid
- Water problems
- Building materials
- The Genuine Progress Indicator (See wiki article)
- Tourism
o What is “eco”-tourism anyhow?
- Ordering online vs. driving to the store
- Home size
- Growth economies
- The need for a new economic system (see:
- Two good, related articles for thinking of article ideas: 1) and 2)
- Netflix vs. Driving to video store vs. Walking to video store.
- Moving beyond the generally agreed paradigm of the Green movement, which consists of small communities, locally grown foods and a local economy in general, (ADD). The Finite Planet sympathizes with these ideas, but finds them lacking in many regards and in need of explanation and expansion in every regard.
- Eating out vs. eating in.

Monday, October 13, 2008

My Moral Foundation

This week’s post is a bit different. A thought experiment. A bit more personal.
I have been struggling, for at least my entire adult life, to find a moral compass. What should I do with my life? To reason out a direction for my life. What is the most logical action to take? I’ve searched for inspiration in books, in the lives of others. Who do I want to emulate? Whose path can I use for inspiration and guidance?
These investigations have not been fruitless. The conversations I’ve had with my friends have been priceless. The books I’ve read, informative and instructional.
The conclusion that I’m reaching is that this isn’t something to be reasoned or taught. Others can provide inspiration for achievement. The overall direction is something written deep inside the soul (for lack of a better term). My moral compass, the values that I believe in, has been more or less engrained inside me when I was young by forces I cannot really comprehend. Conditioning, or something like that.
And it is definitely, definitely a predominately emotional thing.
I don’t claim I can always follow every part of my moral compass. It would be untrue.
Below, I list as many components of my moral compass as I can think of, as I think of them. By trying to lay my moral compass out, I hope I can become more aware of my moral compass and use this as a guide to discover what I will find most fulfilling in life. I’d be interested to know what you think of this exercise, if you think I’m on the right path, if you think my premises are off, or how you have discovered what you may want to do with your life.

1) Promote understanding.
2) Do not hold every error a person commits against them.
3) Be responsible with money.
4) Do not live beyond your means.
5) It is important to work toward your goals.
6) Accept responsibility for your actions.
7) Value friendship.
8) Beyond meeting basic physical needs, fulfilling human relationships are the most necessary thing for happiness.
9) “Natural areas” or “the outdoors” are good and worth preserving.
10) Being greedy and selfish will not make one happy.
11) Privacy is a right.
12) A person’s actions should cause no undue harm on other people.
13) Polluting and littering are not good things to do and should be avoided.
14) People have the right to consenting relationships, to create, share, and promote ideas, and to assemble.
15) If one comes across another in need, it is good to help them out.
16) Every person has obligations to every other person. For example, we have an obligation not to torture.
17) My knowledge of the world is imperfect and subject to change when new facts present themselves.
18) When making value judgments or moral decisions, the specific circumstances of the situation should be taken into consideration.
19) Waste is bad. We should reuse and recycle. Energy should come from immediately renewable and long-lasting sources, such as the sun, wind, hydro, and geothermal.
20) Concerning government or society, a more long term view is always needed.
21) I believe in secularism in government (i.e. no religion is favored) and freedom of religion in private life.

I am sure this is an incomplete list, and I will update it as I think of more items.
Should I accept these as an unchangeable part of myself, like my height or the color of my eyes? Or should I strive to change my moral compass to something else? If so, how would a new path be chosen?

Sunday, October 5, 2008

What Foreign Policy? Searching for a Coherent Foreign Policy Since the End of the Cold War

Its seems to me that the United States hasn’t had a coherent foreign policy since the collapse of the Soviet Union. With our “existential” enemy vanquished, we have become free floating, wandering in search of a purpose. While the Bush administration has put forth some opinions on foreign policy, I do not consider them to constitute a coherent policy because they revolve around the administration’s doctrine of the unitary executive.

From the late 1940’s or early 1950’s until 1988, U.S. foreign policy (as I understand it from reading in books) was to prevent to spread of communism and the influence of the Soviet Union. This logic influenced a number of wars we directly participated in (Korea, Cuba, Vietnam, Nicaragua and Afghanistan to name a few). It also influenced our relationship with Europe through NATO.

That’s not to say that fighting communism was the only pillar of our foreign policy, nor that it was followed in every case. But it was a coherent, understandable policy that was applied with regularity. Different presidents might have fought communism differently, but they still all fought communism with the same end-goal in mind.

The Bush Foreign Policy

George W. Bush would probably point to the following doctrines and say “This is our current foreign policy.” 1) preventative strikes, 2) preventing our enemies from developing or acquiring WMDs, 3) fighting for democracy, and 4) defeating the terrorists. While this might be our current foreign policy, it is not a coherent foreign policy.

The Bush administration’s theory of the unitary executive works to place as much decision making policy in the hands of the Executive branch, with the President as its unambiguous head. Though a unitary executive and coherent foreign policy are not mutually exclusive, Bush has used the former as an excuse to ignore the latter. Foreign policy, like most of Bush’s policies, rely solely on the pleasure of the president, and not on any reasoned or thought out policy that is transferable to the next president.

A coherent foreign policy provides U.S. leadership, across administrations, with the same outline under which to make decisions. A new president can change the former’s policy, but should do so in a form that they can hand off to their own successor. A foreign policy that is coherent can, for the most part, be carried out by the Secretary of State and her deputies down to the rank and file diplomats without the President’s direct knowledge or consent. With a coherent foreign policy, a lower-ranking official can make decisions if needs be at a moment’s notice and be fairly confident that their actions are in line with the overall objectives of the President and the country.

In his speech at the Republican National Convention, President Bush reminisced that he knows what it takes to be president, because every day he looks at the daily intelligence briefings, at the reports of attacks and threats to our national security. I am arguing that, while it is important for the president to be briefed and kept up-to-date with the state of things, he shouldn’t be spending his time pouring over daily threat reports, but should instead be considering the bigger picture.

Lets take a look at each Bush policy and see why none are coherent.

Preventative Strikes

The “doctrine” of preemptive strike is probably the worst. Bush’s doctrine of preemptive strike is based in what I call Rumsfieldian logic. Rumsfieldian logic is based on the fact that there are things you know, things you know you don’t know, and things you don’t know that you don’t know. If you know something, you can act on it. If you know that you don’t know something, the subject can be investigated.

But how does a leader deal with the “unknown unknowns?” Well, you strike before they strike you. Cheney explained how this logic leads to the 1% doctrine: “If there's a 1% chance that Pakistani scientists are helping al-Qaeda build or develop a nuclear weapon, we have to treat it as a certainty in terms of our response. It's not about our analysis ... It's about our response.”

I don’t even know where to start. Luckily, John Stewart has already did my job for me in his two-part interview with Douglas Feith, a proponent and enabler of the 1% doctrine:

I want to emphasize the fact that the 1% doctrine has not been followed through on. The Bush administration has not treated all . It is simply just another smoke screen thrown up to pretend that we have a coherent foreign policy.


The Bush administration’s efforts to deny our enemies access to WMDs would be a coherent policy if whom we considered to be our “enemy” could be determined by some measure besides identification by the President. Before Bush, this issue might have been handled under the coherent policy of non-proliferation. But Bush canned this possibility when he withdrew the U.S. from the nuclear non-proliferation treaty.

Spreading Democracy

A foreign policy that promotes the spread of democracy could conceivably be a coherent foreign policy, though it has not been under the Bush administration. For this to be a coherent policy, we would need a definition, or at least an outline, of what “democracy” means. Is a democracy a place where people vote? If so, does it count if women can’t vote? An answer of “no” would mean the U.S. only became a democracy in 1920. I don’t propose to set a ridged definition of what a democracy is because there are countless such issues. One important aspect of democracy as a governing system is its flexibility.

Another important reason why spreading democracy doesn’t count as a coherent policy for the Bush administration is that it has never sacrificed anything to promote it. “Fighting for Democracy” is just a veneer used to cover pre-existing policy. Until a month ago, Bush offered nothing but praise for Russia and Vladamir Putin. The invasion of Georgia sparked outrage from the administration not because it is a democracy, but because it is a U.S. ally. The U.S. stood by when ally General Musharraf ousted judges and otherwise ruled as a dictator. Musharraf only recently resigned as a result of internal opposition. The U.S. supported Palestinian elections, until they elected the wrong side.

As for the “War on Terror,” I’ve shared my thoughts here.

Americans, and especially their political representatives, like to say that the United States is the greatest or most powerful country on Earth. Whether we are or not is a matter of taste, a matter of how you measure things. What is true, I believe, is that acting like we are the greatest country is not smart foreign policy. In order for the world to progress

Politicians from both political parties spew more platitudes relating to foreign policy than almost any other topic besides the economy and the War on DrugsTM when its in. Why do these topics attract such brain numbing commentary? Because unlike issues such as abortion, education, the environment, veteran affairs, and national infrastructure, the Federal Government can’t really do as much about foreign policy.

As far as the economy goes, the Feds can indirectly effect change through monetary policy (interest rates, money supply, etc.), trade policy, tax policy, and by regulating interstate trade. While that may sound like a lot, the Feds can’t really do a whole lot to “help” or “save” the economy (as is often claimed) without major shifts in the country’s attitudes (in which case you can throw out almost everything I’ve written on this blog as no longer relevant). For reasons why the Feds can’t effect drug use, see my essay here.

Likewise, the United States government has very limited control over other countries without military intervention. This is increasingly becoming the case as the economic success of China, India, the EU – just about everywhere – limits the amount of impact sanctions and other sorts of financial actions have.

Wednesday, August 13, 2008

Rational Stewardship: A Way Forward?

I wrote in my last essay on some of the philosophical problems at the foundation of the modern environmentalist movement. Specifically, that Nature is currently defined as something opposed to Man and his Civilization, and that this dualism is counterproductive to the goals of environmentalism and not an accurate way to describe the world around us. In this essay, I will offer an alternative, albeit incomplete and in development: Rational Stewardship.

Infinite Capitalism

The market economy is the most efficient social system the human world has ever witnessed. It allows resources to be allocated quickly with a minimum bureaucracy to maintain the money supply and curb abuses. The system, however, has a built-in problem that if left untreated, will lead to the system’s collapse.

Most people believe that for the market economy to remain healthy, it must grow. There are two ways for the economy to grow: to produce more, or to produce the same amount with greater efficiency. However, greater efficiency in one area usually ends up freeing capital and labor to go produce more somewhere else. In the end, a growing economy means more consumption.

This would all be fine and dandy if there were an infinite (or at least ever-growing) number of resources to be turned into consumable goods. The problem is that there isn’t. Oil, coal, natural gas, and the other hydrocarbon fuel sources take millions of years to produce, and are definitely a non-replaceable resource on the scale of time on which human Civilization operates.

Our renewable resources, our food, forests, fish stocks, and fresh water, are only renewable to an extent. A 2002 study by the U.S. National Academy for the Sciences estimated that world consumption exceeded Earth’s replenishment capacity of renewable resources around 1980.

One of the elements of the market economy that makes it so efficient is that many of society’s wants and wishes are reflected in it. Instead of a political leader guessing what people want and assigning resources to produce said item, the market provides products and sets the price based on supply and demand. Producers can then react accordingly to produce what society “wants.” Though this is horribly simplified telling, this remains the core appeal of the market economy and it is a tool that any would-be reformer ignores at her peril.

However, the only costs reflected in an items price are those directly relating to its production and distribution. Environmental costs, health hazards, wars fought to preserve access to resources – these represent untold costs that the market economy fails to incorporate into the cost of its products. In the case of a car and the gasoline it takes to run it, some hidden costs include environmental damage caused by mining, health problems associated with obesity, respiratory illness caused by smog, and dealing with natural disasters due to carbon-induced climate change. In the United States, non-drivers subsidize the costs to drivers by paying taxes for roads and other infrastructure that they rarely use and to pay police officers to patrol the roads.

The problem is not just for us as citizens. As businessmen, only a very short-sighted view allows for continuing our present course. History has shown that the most successful businesses are those that look to the long term, recognize lasting trends, and change accordingly.

Consider if a mining company knew that at their current rate of production, their mineral reserves will become depleted in 75 years. No new mines are likely to be found or become available. The company’s board of directors have many choices. One director proposes that the company invest current income in increased production, which will increase efficiency and income. When the minerals run out, the company can simply sell off its equipment and close up shop. This option, the director says, should result in a higher stock price (“Mr. Market can’t see more than 3 feet in front of him,” the director quips) and make them all substantially richer, enough to pay off the second vacation house and leave some money to their kids.

Another director, an older gentleman who helped found the company, disagrees with his younger colleague’s assessment. Why cash in now, he asks, when millions more could be made if we take a longer term view. I already have more money than I need, and my children have careers of their own. If we enact this plan, the stock that I hope to leave to my grandchildren won’t be worth as much, for surely in 10 or 20 years investors will see the impending collapse of our company on the horizon. Instead of investing in more mining capacity, we should diversify. We already have drilling and digging equipment, and employ several geologists have been looking particularly bored recently. Why don’t we research geothermal electricity? If there are adequate sources below our mines, we would have already done much of the work necessary to develop these resources.

This is the sort of choice we currently face. If we want our great Civilization to continue, we must honestly consider the long-term view in everything we do – even if it means less profit over the next hundred years.

Rational Stewardship

To become rational stewards, we must “be present in the brutality of truth.” (This is a phrase I have shamelessly co-opted from my friend Ben Colahan). “Truth” is a concept with which I have had a rocky relationship, as I have written about before. To be present in the brutality of truth means that we accept our understanding of the truth for all it is, not just what we like about it. It also means staying informed, being curious, and investigating the world to reveal more of its truths, whether they be good, bad, or just plain strange.

Not everyone need be an expert in everything – the division of labor is still a vital part of rational stewardship. But being present in the brutality of truth means learning to trust expert opinion while trying to maintain a healthy skepticism. Experts might not always be right, and they will almost never agree 100% on any given issue. But to ignore their opinion because it does not fit preconceived notions or wishful thinking is not rational, and it is certainly not being present in the brutality of truth.

Here is just one cogent example of NOT being present in the brutality of truth. According to the International Energy Agency, as well as the U.S. Department of Energy, world oil consumption stood at about 85 million barrels a day in 2006. Both agencies project that consumption will reach about 120 million barrels by 2030. With the recent spike in oil prices, it seems reasonable to assume that the demand for 120 million barrels a day will be a reality in 2030, if you assume that we can produce 120 million barrels a day.

The problem with this projection is that there is no indication that such a production level is possible. Many experts are skeptical that we will be able to maintain current levels of production, let alone add to capacity. The problem is that there is no evidence that we can increase production. There are few wells under development, and almost no large oil fields have been found in the past 30 years. At the same time, oil production in mature wells, such as those in the United States, continue to decrease.

For these reasons, I do not consider our government’s estimate merely optimistic (one who is standing in the brutality of truth can and hopefully will remain optimistic), but negligently and wrong.

I consider the “rational” part of rational stewardship to be closely linked with this idea of bring present in the brutality of truth. Rationality has many aspects to it and I will not try and fix a firm definition to the word, if only because to be rationality is in part practicality. An important part of being practical is being adaptive. Being rational is not being fatalistic, but to try and enact some sort of control over the given situation. On the flip side, rational people should be reflective, and always recognize their limits of influence. The rational steward should have a firm moral foundation, though the frame built on top should have enough give so as not to crumble in an earthquake.

Stewardship means promoting sustainable life. Though humans will naturally place sustainable life for humans as a higher priority, I believe that what is best for a long-lasting Civilization is good for the rest of life on earth. This means clean water, large forests, and a stable and healthy atmosphere.

There are rules of the physical world that all rational stewards must keep in mind. The most important of these is that there is a constant, but limited supply of energy available on our planet. We cannot continue to use more than this amount indefinitely without crashing.

Some argue that some wonderful new technology will dig us out of the whole we’re in. One of the most popular of these fantasies in the last few years has been cellulose-based ethanol. While this technology is worth strongly pursuing, we should not expect it or rely upon it to save our car culture. To allow a possible future technology to drive our government and social policy is not rational, but speculative and akin to gambling. Some small technological advances can be relied upon, and it is possible some wonderful technology might save us, but for now the smartest thing to do is to proceed with the technology we have as we invest responsibly in future technological advancements. To do so otherwise is unnecessarily risky.

Humanity has basically three resources to deal with. The first is the physical elements on and in the Earth’s crust. Some, like iron, are limited in supply but may be recycled. Other, rarer elements such as helium are extremely limited in supply and cannot be easily recycled. In the long term, we will almost assuredly run out of these elements.

Another key supply is water. Like iron, we are unlikely to run out of water. However, fresh and clean water is a bit tougher to come by. Lakes and streams can only be filled as fast as the rain can fall, and underground reserves take hundreds of years to replenish once depleted.

The second basic resource is the energy provided by the Sun. In terms of human time, this source may be considered steady and unending. The Sun’s energy is captured by plants, which use it to fix atmospheric CO2 into the plant matter that we consume for food directly or indirectly through animals. A very small amount of the sun’s energy is also harnessed in the forms of wind, hydroelectric, and solar power.

The third resource we have is the energy contained in the bonds of weak nuclear force, currently provided to us by nuclear fission. Because fusion reactors require rare heavy metals such as uranium to operate, they cannot be considered unending like the Sun, though for now it doesn’t seem like we’ll run out in the near future. Though they are a real and possibly useful energy source, they are expensive and produce deadly waste that takes thousands of years to decompose. I believe that nuclear power should not be ignored, but nor should it be relied upon as an “easy” solution. Another theoretical source of energy is nuclear fusion, which also takes advantage of the huge amount of energy stored at the atomic level. The ITER Fusion Reactor, an international effort to create a model for a viable fusion reactor, is currently at the very beginning stages of construction and is not planning to enter operation until 2018, which is optimistic given the track record of large-scale, international science projects.

The word “sustainability,” like “green,” has become a buzzword in the past few years, a decentralized effort to brand the environmental movement. This branding is incredibly important for bringing rational stewardship into minds of consumers, voters, and policy makers. However, these words faces a constant threat of dilution from companies that adopt them to brand products that are assuredly not green or sustainable.

As a step toward solving this problem, I propose a definition of “sustainable” that can be used to evaluate whether or not the branding is appropriate. A sustainable product or service is one that consumes materials and energy at a rate equal or less than the replenishment rate for those materials and energy sources. That means, of course, that a sustainable Civilization will be free of hydrocarbon and nuclear sources of energy. This doesn’t mean that these energy sources should be discontinued immediately, but knowledge of their future status can help us determine how to make the best long-term investments we can.

I have tried to keep this definition simple so that it can be applicable to a variety of situations. The industrial mindset has achieved much for human Civilization, and still remains useful. Its mechanistic approach tacks us toward homogenization and one-size-fits-all approaches. Achieving Civilization sustainability, however, will require flexibility and regional solutions. Development and transportation plans that mold themselves to local geography, localized food sources, and building low-consumption buildings are just some examples.

For a long time environmentalists have reminded us how an ever-rising global population is a threat to the Earth and its environment. However, the measurement of population alone is fairly useless when considering how to build a sustainable Civilization. Following Professor of Geology Jared Diamond, author of Guns, Germs, and Steel and Collapse, the statistic policy makers should focus on is the population multiplied by consumption per person. This kind of analysis shows that, even if population growth could be magically halted, sustainability is threatened as populations with high consumption rates try to maintain their high standard of living while poorer populations play catch-up.

I hope that research is soon done on what levels of population and standard of living are possible with current technologies and sustainable supplies. While this kind of research will be politically fraught and will assuredly be open for debate, even ball park figures will be useful to estimate what economic activity is sustainable and what is not.

Sustainability should be a goal for every rational steward.

Science in Rational Stewardship

The scientific method is an essential tool for rational stewardship. Technology, without which we would have no hope of maintaining humanity’s current position, is tied to the hip with science. Scientific studies tell us how the planet’s biological and weather systems work, and help us make informed decisions about how best to be rational stewards.

In order to use science most effectively, we first need to understand the distinction between strategic and tactical decision making. Generally speaking, strategic decisions relate to how overall objectives are decided. Should maintain a large troop presence in Iraq? Would it be best to keep the ship maintenance division of our company, or sell it off and concentrate on constructing cranes? Do I want to have children? Strategic questions are the bigger, longer-term decisions that drive future actions. When answering strategic questions, it is important to consider what we value most, and what we consider to be morally correct.

Tactical decisions answer the question, “How do we accomplish X?” where X is the strategic decision that has been decided upon. This basic question will produce many more tactical questions, as well as more strategic questions. Lets say our strategic goal is to bring oil independence (defined as producing all oil requirements domestically) to the United States. “How do we become energy independent?” is the basic tactical question. Suppose we decide this can by accomplished in two ways: reducing demand and increasing domestic production. Some sub-strategic questions could then be posed: “Should we allow off-shore drilling? Drilling in Alaska’s nature reserves? Should we force people to drive less? Should the government increase its tax on gasoline?”

In order to achieve a strategic objective, the rational steward should ask many of these how questions and evaluate as many different angles are reasonable. Quality, scientifically gathered data should play an important role in considering these questions. Accurate information is of the utmost importance when trying to make educated and informed decisions.

However, there is one thing that science should not do. Science, that is the reports and collections of data collected by scientists and others, should not be used to pose the answer to a strategic question. Scientific data can be used as evidence to support one opinion, but the answer for a strategic question should be based in values and moral outlook. We should strive to keep the scientific data separate from our values and moral outlook.

This effort will never be pure, simple, or 100% successful for the simple reason that all scientific theories and collections of data are effected by pre-determined value systems. Quantum mechanics provides the clearest, physical proof of this phenomenon that reaches into every branch of the sciences. Quantum mechanics states that the position and velocity of an electron (or any particle for that matter) is most accurately stated as a probability, a range of possible positions. Depending on what method of observation we use, the electron’s position will be ‘fixed’ differently. There is no definite physical reality outside of our observations. In biological or medical studies, our definitions for specific concepts, the questions asked, and the methods used can all have a profound effect on the conclusions reached.

If scientific data is already laden with human value, then why try and keep it separate? When unconsciously mixed, it becomes harder to see the value-laden judgments and how they effect scientific research. Analysis leads to answers that do not necessarily reflect the state of the natural world, but reflect instead the state of the researcher’s mind. This is why I am suspicious of any answer to a strategic question that includes the reason, “Because science says so.”

Rational stewards need to be open and honest with themselves and others about where their values lie. Otherwise the best results will not be reached. That said, there are plenty of unscrupulous people who will misrepresent their true feelings and lie about yours. We should not sink to their level, but fight back with ever greater effort.


The Ishmaelists are losing. I do not believe their innate moral system exists or is actually innate in the world. The problem is that this line of thinking and defining the terms of the discourse still has tremendous sway within the environmentally-minded community, even among people who might also take issue with the Ishmaelite approach.

In the case of invasive species I mentioned last week, many are harmful not only to our environment but to human life. One source estimated that they cause $137 billion of damage to the U.S. economy every year, though that estimate seems a bit high to me. On the other hand, most crops in the world are invasive species, and I don’t think it would be very wise to be rid of them.

Why are environmentalists always trying to “save the planet?” This enforces the dualism between the “Natural” planet and humans. We are not independent of our planet, but reliant on it. We shouldn’t be trying to save the planet as it once was, but mold it to promote life in general, which will in turn promotes our own livelihood. We shouldn’t be saving the planet – we should be saving ourselves, and have the wisdom to recognize that to do so means preserving Earth as a place that is fertile to life.

In the end, we are a species competing for resources just like any other. Our greed, tenancies toward conflict – everything the Ismaelites hate – are short-term evolutionary competitive advantages. To maintain our position, however, we must evolve. I do not expect a revolution in the classical sense, but a swift repositioning of our greatest assets – our educational system, our creativity, our rule of law, our reason, our kindness, our love. Humanity must use its most important competitive advantages – cooperation, communication, and problem solving abilities – to bring rational stewardship to our most valuable resources – our land, water, and air.