the converging economic and environmental crises - a pep talk for those paying attention - nate...

The converging economic and environmental crises.

MCAD7/10/2014

Nathan John Hagens, Director: Bottleneck Foundation, IIER, ISEOF

*

Salomon Brothers training Class 1992

FIRST PRINCIPLES

OVERVIEW• Introduction• First Principles

– Energy– Money/economics– Human behavior

• Synthesis: the present and the future

• What to do? – What am I doing– What can you be doing?– What can Minnesota be doing?

Source: “Green Growth an Oxymoron?” IIER 2011

Ahem. The Cobb Douglas function fully explains growth and is solely based on capital (K) and population (P) and productivity factor (b).

Hundreds of energy

150 Horse 1/10 Horse

1 Horse45 Horse

30 15 30 300kWh 700kWh

$3/hr $5/hr $15/hrModel /data IIER

Wait son. There are plenty of energy and resources and they get cheaper over time. More money and more technology will access all the energy we need.

Yes but the US is going to be the new Saudi Arabia. Bakken Shale, etc – we literally have hundreds of years of fossil fuels in the ground.

Retrieved from Ourfiniteworld.com 7/10/2014 Datasource EIA 2014

Energy price history (Europe)

5% of GDP

19 10% of GDP

9


– Energy

–Money/finance– Human behavior



Excuse me sir. Economics textbooks clearly state that banks only act as intermediaries…

Declining debt productivity

35

IIER.CH

How many GDP$ for each $ of new debt?

19541956

19581960

19621964

19661968

19701972

19741976

19781980

19821984

19861988

19901992

19941996

19982000

20022004

20062008

2010 -

0.20

0.40

0.60

0.80

1.00

1.20 U.S. sustainability of new debt (3-year moving average)

actual debt sustainability minimum

GDP

grow

th p

er $

of n

ew n

on-fi

nanc

ial d

ebt (

nom

inal

)

minimum requirement for long term sustainable credit growth

Private and public sector debt growth (without financial sector) Sources: U.S. Federal Reserve, BEA, IIER calculations

Debt sustainability acts as a measure of the long-term viability of debt and compares economic growth vs. non-financial credit volume growth

China

Brazil, IndiaEurope

A micro and macro lens for debt


– Energy– Money/economics

–Human behavior



BEHAVIOR IS BEST UNDERSTOOD THROUGH THE LENS OF EVOLUTION

FROM MACLEAN: THE TRIUNE BRAIN

HOMO SAPIENSEVOLVED AMIDST

SCARCITY

Graphic Credit: Dr. Peter Whybrow – UCLA – Author of “American Mania”

Optimally, our brain regions work in concert. But the older the brain part, the more potential it has to trump our behaviour

A) STEEP DISCOUNT RATES

I wonder if those acacia branches will be sweeter and bigger next week. Guess I’ll never know…

Wooohooo!!! I can’t wait to see what my grandkids look like!!!!!!

A) STATUS/SEXUAL SELECTION

IS BIGGER BETTER?

• Would you prefer a 4,000 sq ft house in a neighborhood of 6,000 sq ft houses?

• Or would you prefer a 3,000 sq ft house in a neighborhood of 2,000 sq ft houses?

• (Prof Robert Frank)

C) SUPERNORMAL STIMULI & HABITUATION / ADDICTION

http://www.stuartmcmillen.com/comics_en/supernormal-stimuli/#page-6

UNEXPECTED REWARD IS KEY DRIVER

Dr Wolfram Schultz testing on chimpanzees – Cambridge University 2003

The “Wanting ” feels better than the “Having”

(The dopamine system is stronger than the opioid system)

Exercise

Watch TV

Save climate

Vacation

SaladBurger

Video Game

Homework

Pizza…BeerTwitterFacebookFootball gameNapFacebookEmailNapBeer

D) COGNITIVE BIASES

The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts. --- Bertrand Russell

Homo oecinomicus is self-interested and super-rational. Otherwise micro-economics wouldn’t make sense.

Beliefs…

God/ wormsNatural limits/ No limits Ford/Chevy

Climate Change/ Denial

Humans!!!! /other speciesThe Future/

This weekend

Economic growth/ degrowth

Finite NaturalResources

E) MAXIMUM POWER

“What took place in the early 1500s was truly exceptional, something that had never happened before and never will again. Two cultural experiments, running in isolation for 15,000 years or more, at last came face to face. Amazingly, after all that time, each could recognize the other’s institutions. When Cortés landed in Mexico he found roads, canals, cities, palaces, schools, law courts, markets, irrigation works, kings, priests, temples, peasants, artisans, armies, astronomers, merchants, sports, theatre, art, music, and books. High civilization, differing in detail but alike in essentials, had evolved independently on both sides of the earth.”

Ronald Wright, A Short History of Progress (2004, 50-51)

F) EMERGENT PROPERTIES

"Selfishness beats altruism within groups. Altruistic groups beat selfish groups. Everything else is commentary.“

D.S. Wilson and E.O. Wilson

1. We value the present disproportionately more than the future via steep discount rates.2. We easily become distracted by and habituated to readily available novelty. 3. Via natural selection, we are programmed to compete for RELATIVE status (and resources) by whatever metric our current environment dictates.4. Cognitive biases. –Our brains are like swiss army knives5. We are not sentient or sapient in aggregate but follow the momentum of the ‘hive’.

DEMAND OVERVIEW

Fitness Maximizers

AdaptationExecutors

200,000 hominid Generations…. !

The currency is…..


– Energy– Money/finance– Human behavior



+OIL

We turn

energy and resources

Into dollars…and dollars into feelings

+ waste

The Human EcosystemPast, present and FUTURE

Credit: Adapted from Richard Feely (NOAA), Pieter Tans, NOAA/ESRL (www.esrl.noaa.gov/gmd/ccgg/trends) and Ralph Keeling, Scripps Institution of Oceanography (scrippsco2.ucsd.edu)

Source: Stuart Staniford: EarlyWarn

“A central finding of WGIII is that growth of income has beenthe largest single driver of emissions.” Victor, Science July 2014.

US Going it alone?

Kintisch – Science July 2014

Jeez.. Really?

1886-2007

1886-2007

GROWTH

Income development 2002-2012, U.S. census data (www.census.gov), graphic IIER

For most people growth is already over…

112

IIER.CH

Belo

w in

flatio

n in

tere

st ra

tes

Dire

ct li

quid

ity to

insti

tutio

ns a

t ris

k (c

ount

ries/

bank

s)

Gua

rant

ees

for c

redi

t mar

kets

(h

ousi

ng, s

tude

nts)

Expl

icit

and

impl

icit

too-

big-

to-fa

il gu

aran

tees

On-

goin

g go

vern

men

t defi

cit

spen

ding

Cent

ral b

ank

bala

nce

shee

t ex

pans

ions

Now, systems need permanent support

Financial system

Physical base

Our Economic “Pie”

Our Economic “Pie”

More money, less benefits?More energy, less benefits?

Fossil

Hydrocarbons

Renewables

Real Cost of Capital

Graphic Rune Likvern, Nate Hagens

Australia could slash its carbon emissions to zero by 2050 and still experience average economic growth of 2.4% a year, according to a UN-backed study.http://www.theguardian.com/environment/2014/jul/10/zero-carbon

Natural gas claimed as a bridge to clean energy future

Neonicotinoids blamed for colony collapse disorder.

Etc.

SocialEquity

Finance, etcBiodiversity

Climate

OA

Geopolitics

Natural Resources

Energy

Intergenerational Equity

Interspecies/ecosystems equity

Energy/Capita vs. % Very Happy – (worldvaluesurvey.org)

1) Money is marker for energy

2) For most people growth is already over.

3) No shortage of energy but longage of expectations.

4) Biology determines what we need, culture determines how we get it.

5) A lower consumption, more local and regional future.6) What sort of a future do we want? What are we willing to

give up?7) On some key risks ‘seeing a smoking gun’ will be too late

Conclusions


– Energy– Money/finance– Human behavior



Energy/Renewables

Economy/Jobs/Income Biodiversity

Climate Change

OceanAcidificationSocial

Equity

FutureGenerations

Finite NaturalResources

What Am I doing?

“ECOJEDI ”

What Can YOU be doing?

ENVIRONMENT

ENVIRONMENT

RESILIENCE/ END of GROWTH

ENVIRONMENT


PSYCHOLOGICAL

ENVIRONMENT


PSYCHOLOGICAL

Efficiency…Renewables..Divestment…

ENVIRONMENTPSYCHOLOGICAL


What to Do?Embrace Life


Assert control

"Biological Basis of the Stress Response" by James P. Henry, Integrative Physiological and Behavioral Science, January-March, 1992, volume 27, Number 1, pages 66-83


Assert control

Think/act in terms of real capital


Assert control


Take back language


Assert control

Learn something new, learn something old


Take back language


Give Something Up

Assert control



Take back language

What to Do?

Know thy reptile

Embrace Life

Give Something Up

Assert control



Take back language

Pizza…BeerTwitterFacebookFootball gameNapFacebookEmailNapBeer

What to Do?

Know your reptile

Embrace Life

Give Something Up

Assert control


Buy solar, but not only as supply


Take back language

“Dammit we wasted a day of sunlight”

What to Do?

Know your reptile

Embrace Life

Give Something Up

Assert control




Personally Divest

Take back language

What to Do?

Know your reptile

Embrace Life

Give Something Up

Assert control



Choose your tribe


Personally Divest

Take back language

Sociopaths driving train – all we can do is find a car w the right people we want to travel with

What to Do?

Know your reptile

Be Prosocial

Embrace Life

Give Something Up

Assert control



Choose your tribe


Personally Divest

Take back language

What to Do?

Know your reptile

Be Prosocial

Embrace Life

Give Something Up

Assert control


Like yourself


Choose your tribe


Personally Divest

Take back language

Environment/economic clues

Political acceptance

Source/Sink stocks

Dear Myself,

I don’t know when or where or how I will have to act, but I will not accept dead oceans and ecosystems, etc……………………………………………………………………………………………………………..When the moment comes, count me in.

Sincerely

What can Minnesota be doing?

Let’s get started…

There could be a great future in this place. Different but great.

the converging economic and environmental crises - a pep talk for those paying attention - nate...

Environment

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