shrinking pie

SHRINKING PIE


I think one of the important points to keep in mind about your future, even if we don’t see a serious crash or collapse in our life times, is that your piece of the pie is going to continue to shrink. This has already been going on for some time and you can’t escape it regardless of politics or economics for two very simple reasons. Population and resources. More and more greedy hungry mouths come into this world every day and every day more and more resources are used up. We know this, yet continue to live as though our personal lives can somehow escape this simple equation. We think we can get better jobs, live in better houses, find a better spouse, get a better education, drive a newer car, etc. We ignore the macro trend and assume our micro world can buck this trend, or be the exception or hold out a little longer than anybody else. Which is of course retarded because no matter how hard you work at two jobs, no matter how smart you are saving money and not wasting, no matter how many degrees you earn at college, you can’t control the basic trend lines. Since 1979 the world as a whole has been consuming less and less energy per person. Per capita available BTU’s has been declining. For a poor schmuck in Bangladesh, say, the drop has been severe. For a couple in the US, with both adults working rather than one, the available energy has declined only slightly. But a decline it has been.

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We are eating less healthy foods. There is more toxins, more genetically modified poisonous crap. The quality has decreased markedly. Our cars are lighter yet barely get better mileage. Or houses are made with far less quality materials. Our infrastructure is patched rather than repaired or replaced. This all translates to less energy used for each person. Rather than burning petroleum, we are burning ethanol and tar sands. Rather than using high energy coal we are using crap coal. The Chinese economic growth has largely been from coal. We are almost replacing all our lost imported petroleum with frac oil and ethanol, but the cost is a doubling of grain prices, and frac gas and oil are not long term solutions. The fields play out much quicker than conventional fuels ( if you doubt this, look at the rush to pump by the companies. One, their leases are set for renewal in a year or so. They are pumping the crap out of a well to avoid the increased cost of leases. Two, if the well was able to pump for twenty years, this wouldn’t be possible. And three, this is a mad rush at profits so I wouldn’t bet anything long term with this- in a very short time, the area will be polluted, the stockholders stuck with worthless paper, and the execs living large in the Bahamas ).

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At the end of the nineties, we started to run out of the last of the cheap and plentiful oil. We’ve never recovered from that. The end of cheap energy ushered in one financial bubble after another popping and the start towards substituting crap fuels. And it started the trend towards global grain drawdown and shortages. Without cheap oil, the end of cheap food began. Every year, because things don’t get better but continue to get worse, our standard of living decreases. This is the trend. It isn’t a recession that we can grow our way out of because there is no more cheap oil to push growth. Growth is resource use. Resources are running out. For now, there is plenty of fuel and we don’t notice any shortage. But we are using fuel that delivers less energy. I even wonder if the environmental changes is camouflage for that loss of BTU’s. I wouldn’t doubt it. The government and the profit centers don’t want a stampede, and consumers don’t want any reality check and gladly play the game. You can happily point to our fuel supply that continues to grow, but if you examine the total BTU being delivered in that fuel, and the growing cost in both money and energy to extract that fuel, it points to a shrinking fuel picture ( more and more coal being mined, but each ton takes more energy to extract and each ton delivers less heat since it is lower grade. Liquid fuels are the same ). Which is okay, to a certain point. It is a gradual decline in living standards which is far better than a crash or freezing in the dark. But the trend, which is long term, points to YOUR future also seeing a decline.

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You can be luckier, and smarter, and better than most other people, and that is great since you won’t suffer as much as quickly. Just don’t try to fight the trend. Eventually you will also see a decrease in the resources available to you. Don’t bet against the trend. Keep the old car going, don’t buy a new one. Insulate the house to decrease your energy needs. Get out of debt. Not into more. All the standard advise applies, from getting chickens to raise to growing a garden. Because you must act while there is a surplus to insure against future shortages. Even here in “the land of plenty” our standard of living has been in a decades long trend downwards. The cars look shinier, the houses bigger, the TV’s nicer, but it is all form over function. The cars are easily dented plastic, the houses are thin plastic shells and the TV’s are shorter lived. By voluntarily embracing a slightly lower standard of living now, by acknowledging that growth is gone and decline is permanent, in the long term your standard of living will be far better than your contemporaries. Word to the wise.

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