Sustainable Civilization: From the Grass Roots Up
Sustaining civilization goes well beyond air, water, food, shelter, and new generations. It is also about education, specialization, development of technology, etc. Do you believe that a few friends in an isolated "village" can sustain civilization alone?
Village size organizations can function on a barter system, and may not have much need for formal laws, or a complex economy for internal purposes. Absent a large scale disaster, they could provide a healthy, nurturing environment for an indefinite number of generations. But villages appear to be limited in the amount of specialization that can take place, and if unable to communicate, and conduct physical exchange of unique products, development is so inhibited that mankind's progress would essentially come to a standstill, and most likely regress.
A stable population is essential. Children may be a joy to the parent, and of value to the eventual future of the community, but typically until adulthood they are a burden. And any children beyond replacement for the parents pose a threat. Yet despite wars, famine, pollution, resource depletion, and a crowded globe, most of humanity still doesn't get the picture.
In a limited resource (air, water, food, etc.) situation, the lower the overall population, the greater the amount of resource that can be expended per person, with surplus for experimentation, research and development.
In a group of free individuals, there is to some extent always a breeding program ongoing, where the wealthiest, best looking, most successful, etc., mate with peers, or can be more selective in selecting a mate. (Or the strongest and most prone to violence do what they want.)
We have however in the "developed" nations had an ongoing misguided program of expanding the numbers of the least-fit, those who without assistance would have never "made it" on their own, and from whom society never had any hope of any beneficial contribution.
Conversely, in growing numbers, those with higher education, significant earnings capacity, and better living conditions have opted for less than replacement level children.
This needs to be corrected. The physically and mentally fit must no longer be subjugated to the less fit.
To maintain a stable population level, yet improve humanity overall, there will need to be some form of restriction on breeding, whether bringing back "taboo's", economic incentives (or disincentives such as IMPOSING a tax on every child, vs granting tax deductions), or outright enforced controls.
We have governmental incentives to have more children, and other incentive programs which increase the population. While there is such government, THESE MUST STOP. In the end, these transfer the cost of children from the parents to unrelated families. Eliminate tax deductions for children. IMPOSE a tax on the parent of any child beyond replacement.
If people do not voluntarily address procreation, eventually either mother nature, or the government will. What if the government imposed a license requirement on having children? This would encourage creation of a market in parenting sales. Say NO parent has the right to more than their personal replacement child. "Wealthy" could have more children by buying the parent permission of the poor. The poor person(s) then does not have children, and the estate of the wealthy is divided among a larger "pool" of children, diluting how much each gets. Parenting rights cannot be "sold" until a person reaches a proper mature age (30?) A married couple, who decide to have only one child, could sell their remaining parenting right. Parenting rights can also be sold to the government, for example in exchange for old age care, or left by will.
THE BIG ECONOMIC PICTURE
The federal government is running $500+ billion annual deficits with trillions in debt on the books. If the baby boomers start to retire in 2008 as they become eligible, government costs in Social Security benefits will soar, even as tax revenues plummet. The debts of Social Security and federal pensions are not on the books, with estimates running from $57.8 trillion up to $74 trillion. Our "fiat" currency is already strained almost to the limits by the tax/spend & borrow/spend politicians.
U.S. consumer debt in 2006 is around $2.2 trillion dollars. Our desire for cheap foreign products sends $600 billion more OUT of the country every year than comes in.
As of late 2007, the sub-prime real estate finance “bail out” promises to be yet another millstone tied around the neck of the floundering U.S. taxpayers. (Apparently those in power in Congress, and the Whitehouse, have not read the history of the Great Depression. In both scenarios the bulk of the borrowers were essentially in zero down loans, and of such a financial status they could walk away. Those who took and made such loans knew the risks, but did so anyway.
Locations, such as China, that do not have the web of environmental, labor, wage & benefit, etc. laws and regulations in place in the U.S., are obviously at an "advantage" when examined strictly on the question of cost of production in currency.
For so long as products from such locations can be imported without application of a tariff at the U.S. border that brings the currency cost up to equal what internal production would cost, the typical consumer is going to continue to purchase the lowest price tag item. It doesn't matter whether the item is imported and sold by a large chain store, or a mom & pop store, it still has driven out some aspect of local production, and sent a significant percentage of the purchase price out of the community.
It is difficult to envision how the federal government can divert economic disaster, and individuals may not want the government to even try.
Traditional government means to manage the economy are spending, interest rate control, financial liquidity, etc. These tools work to tweak the economy away from inflation or deflation. Our federal government though simply has such a large amount of debt that it cannot be paid, even if the economy would remain robust, because any realistic debt repayment schedule would strangle a robust economy. Our government will not even slow down on adding new debt.
A problem presented in economic discussions with rising real energy prices is they are both inflationary and deflationary at the same time. Oil as energy and feedstock is a significant component of much of the world economy. Inflation as we have come to accept is essentially the government dumping more “dollars” into the economy, allowing the government to siphon off value for its purposes, even as it lessens value of the currency. As the real price of oil is driven up, so goes the real price of goods and services.
Real price increases force people to limit spending, some things just will not be bought, slowing the overall economy. Our government officials, accustomed to getting what they want in the way of their benefits, and handouts for their voting public, can be expected to rely on their favorite hobby of keeping the money flowing, further ruining the national currency.
Federal cash, or cash equivalents, fixed dollar payments, etc., could easily become useless. Although currency may become useless, you still need a local means of exchange that bypasses the gloom of the big picture.
THE LOCAL ECONOMIC PICTURE
Every community has drains on its income, some perhaps not so visible. Perhaps the largest drain on income, and indeed even accumulated wealth, has been inflation, followed by taxation. Add up how much of earnings is lost to Federal and State income tax, Social Security tax, Medicare, etc., vs the amount that returns to the community in viable benefits from these governments. I'll tie this back to what I allude to re pension or social security payments, where I expect the big picture to cause problems with traditional currency.
Even the most innocent appearing, "mom and pop" store, can be a significant drain on the local economy. A foreign product or service, is a foreign product or service. In a store selling for example items that are virtually all made in China, the only part of the funds spent there that could continue to flow in the private, local community are the after tax profits.
As bad as consumer spending on foreign produced products is, if the spending is financed, yet more money leaves the community. (Where do you send YOUR credit card payments?)
Do you have a company pension plan, 401(k), IRA, whole life insurance, etc.? How much of your money in these products do you think circulates in the local community? As a distinct example, purchase in the marketplace of stock of a local firm sends your money to the sellers account, NOT necessarily (or likely) someone local.
Another drain on local wealth I would conjecture that is often overlooked are those who earn income, live frugally, and send a significant portion of their income to family located elsewhere. It doesn't matter whether the elsewhere is another U.S. city, or a foreign country, it is still money leaving the community.
In 2006 the Miami Herald estimated that migrants sent over $300 billion in remittances to home countries. It’s nice to help relatives “back home”, just realize what you are doing to your “new” home. As an example, money drained from the U.S. economy and sent “home” to Mexico from the U.S. is the second largest aspect of the Mexican economy.
India ($24.5 billion) Mexico ($24.3 billion) China ($21.1 billion)
The money flow has become the world's most effective poverty alleviation program, said Donald Terry, a top official of the Inter American Development Bank (IDB). However, he also notes that, ``if you're No. 1 in remittances, you're not developing jobs in your local economy.
CURRENCY TO FACILITATE TRADE
Barter is typically thought of as a direct trade of goods or services. You grow a flock of chickens, and need a tooth cavity filled. Both you and the dentist are by your activities creating physical value. The barter exchange occurs when you and the dentist agree on an equal value, for example 8 chickens for a tooth filling. "Buyer beware" applies to determining the value to you of what you trade for. Your property and skills are your measurement and storehouse of value.
General acceptance of common means of value, i.e. grain or gold (grown/mined), or the modern equivalent of grain to feed an industrial economy, electricity, all permit less direct transactions. You raise chickens, the farmer grain, the miner digs the gold, and the dentist tends to teeth. You all create physical value. Whether you carry around grain, gold, or indefinable dollars, your transaction with the dentist is nevertheless still barter - a trade of a physical value for a physical value. "Buyer beware" applies to determining the value to you of what you trade for. While "buyer beware" includes the quality of the grain or gold, manipulation of the inherent value of the "currency" remains virtually impossible and taxation difficult. Your property and skills are your measurement and storehouse of value, some of which can be held in the more convenient barter/coin form.
The next step is a receipts (debt) currency. The grain, gold, or power is held in some secure manner, and some token representing the commodity is in circulation. In theory the currency still represents barter; the receipt can be exchanged for the agreed item of value. This step in economics introduces though relative ease of fraud - you cannot tell a "real" receipt from one with no value behind it. For example, if the grain silo owner, who issues grain receipts, knows the silo is never empty, there is ready temptation to write an extra receipt that lets the silo owner perpetrate a fraud on his neighbors - create economic value, without any physical value or cost to the silo owner (at least no cost until caught). Your property and skills are your measurement and storehouse of value, some of which can be held in the more convenient receipts/token form (if you trust your silo owner).
When you get to an un-backed/fiat currency, such as is in use in virtually every nation on earth, the numbers on the currency represent nothing, which government officials love. You still raise chickens, and still need your tooth filled. There is (for now) still a marketplace where people will pay you dollar$ for your chickens, and the dentist will probably still accept the money. The government can though print as much currency as it likes, and typically does. The extra money in circulation - people with more money - leads to increased spending and rising prices. With higher prices the government prints more money. Those who lose are those who have an income defined in some fixed dollar amount, or those who hold economic value in the form of dollars vs. physical assets.
A backed currency is one where the connection between the stated currency value and the barter item represented remains stable. As with grain, gold, or kilowatthour the item you agree upon as a basis for barter does not need to be fixed in quantity; in fact you might want it to be something easily increased, IF such an increase means an increase in the capabilities and therefore physical wealth of your community.
A primary goal of establishing a local currency is to facilitate ongoing local economic activity irregardless of economic fluctuations (money confidence problems) elsewhere.
All exchanges between parties are, in effect barter. Currency functions as a common means of exchange, allowing exchanges to be multi-step, item/service to currency, then currency to item/service, vs direct exchange. The currency unit must be easily understood, and accepted by the community. In essence, the only viable method to fix a currency value is to denominate it in some clearly definable "commodity". The currency in essence then serves as receipts for such a commodity, or a promise to deliver such.
To disconnect from the fluctuations, and potential crash of the present national fiat currency and the looming global crisis, the unit of the local currency must NOT be directly tied to the national currency, nevertheless there needs to be a means of converting between the two.
Does the barter backing have to be a physical object, such as grain or gold? The author presents an argument for currency based on the kilowatt-hour (kwh). In the modern world, electricity is the premium type of power. It is a "commodity" that can be created and used to perform valuable work, or entertainment. It is clearly defined, readily measurable with the right tools, and virtually impossible to "counterfeit".
Virtually every modern community is already wired and metered to measure the physical withdrawals, and in growing cases deposits in the flow of kwh. The power can be sold to those using the national currency, adjusting for the fluctuations of the national currency, while keeping the local connected economy completely separate from the fluctuations of the dollar. Those who want to opt in/out of the kwh currency just come or go based on the kwh price in external currency as of the time of their transaction.
1 - kwh 1-kwh
Power To Build The Future
1 - kwh 1-kwh
As a receipt, the power company issues such whenever it receives a net deposit from local generation, fuel sold to the bank/generator, etc.. The power bill would be paid by the same note.
The chicken grower takes the birds to market, and receives the kwh notes in exchange for the birds. The notes function as any other currency, at least within those entities who accept them pre-crash, such as the dentist.
THE INDIVIDUAL PICTURE
How secure is your job or business?
What are you invested in?
Are you planning on retirement with a pension from a private sector employer, or the government, or a stipend from Social Security? The federal government can, if it elects, cease Social Security, make it means-tested, or perhaps worse, pay everything promised in useless printing press money. For now, private firms that default on their pension plans might have the deficit covered by the federal government, with the same eventual printing press challenge.
You need to understand the financial markets and products, and realize the risks you may be taking by going along with the crowd.
RETHINKING THE LOCAL ECONOMY
To become sustainable means to integrate our economic and social lives into the environment in ways that maintain and enhance it rather than degrade or destroy it; sustainability is a moral imperative to pass on our natural inheritance not necessarily unchanged, but undiminished in its ability to meet the needs of future generations.
Sustainability also includes the concept of carrying capacity, which means finding the balance point among population, consumption, and waste assimilation. Carrying capacity applies to the economy, taxation, and government programs as well.
Sustainability is NOT per se an environmental movement, although preservation of nature is an aspect. It is more about creating a sensible stable human community. At the present, while the benefits of growth accrue to the few, not necessarily even local, the costs of growth tend to be distributed across the community. The cost of growth needs to be borne by those who benefit from such.
Every decision one makes--in life, community, and business--can be gauged against this definition. The simplest way to do so is ask yourself whether your choice supports the local community. As peak oil returns limits to our horizons, you cannot escape the fact that you are an intimate and interconnected member of the web of life where you live.
Disconnect from consumer culture. As with eliminating your dependence on oil, this doesn't mean never again make a consumer purchase. But stop buying what you don't need, or that which has no enduring significance. Try to shop for locally produced products, those (somehow!) produced without toxic byproducts and large inputs of fossil fuel energy. Realize though that for so long as the present picture global economy remains, local cannot compete on a price basis with the far side of the planet.
Carrying debt for the purpose of consumer spending is a waste. Conversely though, debt for the purpose of controlling an asset that even "holds" value in inflation may be a prudent move. (At least while the current economy continues to function.) If you pledge the asset though as security for the debt (i.e. a home mortgage) and do not have sufficient cash reserves to keep up with the loan, realize you may lose your bet (and your home).
In conflict with an exhortation to stop consumer spending is the fact that money in the bank is, thanks to (primarily) government generated inflation, a guaranteed LOSS in purchase power. As a sad example, as of OCT 2006 you are probably better off holding rolls of pre-1981 pennies, than deposing money in a bank or credit union.
If the peak oil crowd is right (no evidence to the contrary) then to the extent any good or service is a "daily" need, it will either need to be taken care of at home, or somewhere within essentially walking distance. Things taken for granted today are likely to become a "luxury". But until and unless enough people wake-up, and in fact until things get bad enough, many things are not going to change.
A personal example: I am a lawyer, nearing retirement from Army civil service. If the "worst case" scenario comes to pass and we are in "survival" mode, I do not expect that my neighbors will have much need for services of a lawyer. Nor do I have confidence that my pension (or Social Security) will be paid, or that if it is, the money will have any significant meaning or value. Even though I see a coming problem, I CAN'T see resigning.
I am also an Arizona Master Gardener. At the moment, there is no significant money to be earned as such, but it may become a valuable retirement skill, if for no other reason than to feed my family.
In the meantime, I research, experiment, prompt discussions, and write.
If your community is to become truly sustainable, it must adhere to the definition of sustainability. Too many people think sustainability means the continuation of the status quo of the Industrial Growth Society.
In most places the current business environment is hostile to small business and home-based business. We dare not however wait for the Greater Depression before trying to do something about our situation. One of the ways to take back power from the people who have taken over our political and monetary systems is to break their strangle hold on the local economy. Local production not retail is key. The value-added to the community is in production, not reselling something from somewhere else.
An area where people show a willingness to pay a premium price (greater than that for "slave labor") is custom and quality handicraft. This 'small shop' approach fits a coming paradigm of high energy costs for shipping. A level playing field is not going to happen while cheap energy allows slave labor products from 12,000 miles away to enter without the tariffs to compensate for the present safety nets here. We want our safety nets and benefits, without personally paying for them. This cannot continue. If the fuel costs for shipping had to be paid for in purchase of "present day" energy, instead of the underground storehouse of ancient sunlight, even distant slave labor would have difficulty competing.
Given our current situation it will be difficult to get the public to see the need for local, higher cost products. Everyone is encouraged, and to encourage others to start small and think big. There is essentially NO reason for local unemployment. Surely there is something you can do, make, fix, etc., with greater skill than another, and they have a specialty in turn.
As an example, if someone wants to get into the shoe making, or other such business, for now, it must just be their hobby, as we're NOT going to compete with the imports from China.