Peak oil, peak food, peak metals, climate change. By over-exploiting the world, we have enjoyed tremendous improvements in the standard of living. And now the payback is coming. We’re clearly on a downward economic slope. Things have been going backwards for 3 years and the outlook is worse, not better. But it’s not the end of the world.
Make no mistake, a long period of successive recessions, accompanied by social and political upheaval is coming as a result of declining available energy, insufficient supply of raw material, most importantly food and climate change. We’re too late to avoid this, even if we focused our efforts on the task, which we show no sign of doing. But that doesn’t mean we should give up the ghost. What is coming is big, big, trouble, but it is not Armageddon.
New Zealand is the place to be
The oil age has allowed us to have more and more living humans in environments that previously were able to only small numbers. The growth of cities in the Arabian desert is the most obvious example. Not enough oil to provide energy for cooling, not enough food, and a changing cline will doom these cities, whose population will have to fall back to previous levels.
But in New Zealand, we’ve got heaps of growing land for our population, plenty of non-oil energy sources to tap, and plenty of minerals (even without digging up our most precious conservation lands).
The capital is built
In 25 years time, most of the built environment that is here today will still be here. That’s bad in a way because we’re stuck with capital that is designed for the oil age but it’s good because just losing income does not mean we’re losing wealth. We’ll face challenges in replacing worn-out capital as the economy shrinks but we will abandon stuff that is too oil-dependent and replace it with smarter stuff.
We can handle a fall in incomes
Available energy will fall at a couple of percent a year, and growing conditions will generally worsen over time but the economy is not going to completely collapse, taking us with it.
Since the Great Recession began, GDP per capita has fallen 3% since 2007, back to 2005 levels. But it’s still quite a bit – $44,000 a year per person. What if GDP per capita keeps falling for the next 20 years at the same rate? What if lose 25% of GDP per capita? Well, we would be back to 1993 levels – $33,000 a head. Which is plenty, if it’s distributed fairly. You could even avoid most of the population having to take a drop in living standard but the distribution of income would have to change dramatically. The top 25% richest could take all the hit and still earn today’s average full time wage and the other 75% of people wouldn’t have to lose out despite the economy being 25% smaller.
Even if the economy shrunk by half that’s still a huge per person productive capacity, on par with what we had in the sixties.
The new normal will become .. normal
The idea that economic growth should be a high priority for governments and society really only dates from eh great Depression. Elites realised that a growing pie, letting all slices grow, placated the masses, and disguised the fact that the elites’ slices were so big. Lack of growth and falling incomes had brought inequity into great focus during the Great Recession and prompted working people to support radical reform. The idea that growing the economy should be the sole focus of government and society is neoliberalism and is only thirty or so years old.
If a shrinking economy becomes the norm, we will get used to it. We’ll shed the luxuries of the oil age, the stuff that costs the most for the least benefit, while maintaining all the real gains that we’ve made in the past century. We’ll turn away from consumerism and invest, like we used to, more into infrastructure, and more into research.
On the other hand, we’ll also stop expecting that the future means more pollution, more ‘development’, more crowding. More or less steady-state societies have been the norm through-out human history with the exception of the last couple of centuries. We can get used to it again.
Progress isn’t just a dollar sign
Just because the economy isn’t expanding does not mean we aren’t advancing as a species. If we re-allocate productive capacity from consumerism to research and development we’ll be able to lessen and mitigate the troubles that we’ve unleashed on our world. We’ll still be able to push back the boundaries of science and engineering and develop new technology and practices to improve our lives. Eventually, we’ll have new energy sources on the needed scale too and we’ll be able to clean the carbon dioxide from the atmosphere (already possibly, with enough energy).
What this all means is that we shouldn’t be giving up and saying ‘we’re fucked’. We should, instead, be investing more in our future. In research, in a green economy, in a more equitable distribution of wealth.
We’re a hugely adaptive species. That’s what got us where we are. The next few decades are going to be rough but we will get through it. It’s not going to be pretty but it’s not going to be the end of the world.