Reviews

Review: The End of Growth by Richard Heinberg

The future of cites will rest on their ability to change economic thinking patterns that have only benefited the top few percent of corporate executives.

By Maggie Hughes
Published August 22, 2011

Richard Heinberg is very understated when he offers titles to introduce him. He is much more than the author of ten books, the most recent being The End of Growth.

Heinberg is also one of the leading Fellows, for the Post Carbon Institute, an organization dedicated to providing individuals, communities, businesses, and governments with the resources needed to understand and respond to the interrelated economic, energy, environmental, and equity, crises that define the 21st century.

The goal of the institute is to help communities to re-localize into thriving ecological bonds.

Heinberg tries to demonstrate the How To's in his new book, as well as including all the statistics any government organization may need to consider their future survivable urban planning.

The future of cites will rest on their ability to change economic thinking patterns that have only benefited the top few percent of corporate executives.

This pattern of putting Wall Street first has seen corporations becoming bigger than governments and cities themselves. Unlike civic societies, corporate societies do not concern themselves with the well-being of every citizen.

Since the late 1970s, it has been big business that has dictated to government and decided how policies should be set when it comes to trade deals and mining natural resources.

Heinberg uncovers each of the theories that policy makers have used over the past fifty years, and clearly explains that it is the mantra of constant growth that has depleted the very life base that humans need to continue survival on Earth.

Depleting natural resources no matter where they are found on the planet has led to more poverty, starvation, and the loss a livable environment. Constant growth has seen the abuse of clean water and clean air, along with whatever minerals or fossil fuels are the source of wealth for corporations.

Big business has run its course. We can see the results in our local cities, with particulate matter choking the air, while waste treatment plants are hard put to truly clean the water.

These changes in air quality are a big part of climate change. Rising greenhouse gases levels in our atmosphere lead to hotter temperatures quickly melting fresh water sources. Much of fossil fuel discovery and processing has added more and more pollution to drinkable water sources.

We are a planet out of control. Job losses, wage freezes, and increased food prices are the new norm. The only possible future must be one in which communities can feed and house their people.

The best start in that direction is laid out in Heinberg's book. Smaller livable communities, with less attention given to transportation, and more attention given back to farmers and food growers, just may be the only way for people to get over the tremendous hump of change that is coming faster than we think.

We are a World that has allowed "growth" to be the only economic indicator, inciting people to seek more and more wealth-based upon monetary increases, rather than a world that realizes that true wealth is in abilities of its people to enjoy natural comforts and have more time socializing: a lifestyle based upon the limits of our surroundings is a full life.

Stripping those resources and allowing the benefits to go only to a few world moguls has caused a great imbalance of resources and the basic needs of life.

We have lost the middle class in North America, while our governments seem to know of only one way to fund projects: pulling more taxes from the working class.

It is no surprise that masses are taking to the streets in cities and countries around the world. For them there is no future in the status quo.

Maggie Hughes hosted The Other Side, a weekly independent podcast. The Other Side looked at the issues that mainstream media tends to downplay or ignore, using interviews and lectures to show the effects that economic, corporate and political policies have on society. Maggie died in November 2012 after a long struggle with multiple sclerosis. The Hamilton Independent Media Awards were established in her honour.

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By z jones (registered) | Posted August 22, 2011 at 15:30:38

Thanks for this. Heinberg is an inspiring figure - while other pundits are grandstanding, he just puts his head down and gets to work. I've enjoyed the other books of his that I read, I'll have to pick this one up too.

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By Mahesh_P_Butani (registered) - website | Posted August 22, 2011 at 19:54:21

Maggie: How does one reconcile this report from the National Energy Board of Canada:

Canada's Energy Future - Reference Case and Scenarios to 2030 - Energy Market Assessment

with Post Carbon Institute / Richard Heinberg's views:

  • The End of Growth: Adapting to our New Economic Reality (June 2011)

  • Blackout: Coal, Climate, and the Last Energy Crisis (2009)

  • Peak Everything: Waking Up to the Century of Declines (2007)

  • The Oil Depletion Protocol: A Plan to Avert Oil

  • Wars, Terrorism and Economic Collapse (2006)

  • Powerdown: Options and Actions for a Post-Carbon World (2004)

  • The Party's Over: Oil, War and the Fate of Industrial Societies (2003)

Are these both very different perspective on the same energy/resource depletion problem -- or are they just the same but with a different tone? And how do you see Hamilton's economic future and its built-form in this mix?

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By Undustrial (registered) - website | Posted August 22, 2011 at 22:43:57 in reply to Comment 68345

None of the scenarios touched on in the report really touch much on peak oil, or bring it up as a serious concern. They all make similar assumptions about economic growth, continued tar sands development and a reletively stable global energy market. Even if Canada's peak is decades off, the Middle East's obviously isn't and might already be behind us. The kind of business-as-usual projections contained just aren't realistic. Once I saw the projections for future oil prices on page 19 ("continuing trends" see a constant $50/barrel from 2007 onwards) my jaw dropped, then I realized. This was published in 2007 (and like most government reports, was already dated), obviously before the price of oil hit $150/barrel and the bottom fell out of the world's economy.

Heinberg et al., predicted the oil price spikes, the economic crash, the political upheavals and vanishing resources we are now witnessing a decade ago, with frightening accuracy. By 2003-5 they just wouldn't stop talking about things like housing market securities and credit default swaps...

Gold hit $1900/oz today. This isn't going to happen. It is happening.

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By Mahesh_P_Butani (registered) - website | Posted August 23, 2011 at 01:11:49

Undustrial: "This was published in 2007 (and like most government reports, was already dated) .....Heinberg et al., predicted the oil price spikes, the economic crash, the political upheavals and vanishing resources we are now witnessing a decade ago, with frightening accuracy..."

I am no expert on peak oil, hence I am asking you this: How would you factor this below in helping us better understand as to what exactly is going on here?:

"WTRG Economics gathers data from industry, government & proprietary sources and uses years of experience, sophisticated economic, statistical and financial analysis tools to compile its current and historical Oil Price History and Analysis."

Or how such deep convictions came to pass: "We are convinced that the age of skyscrapers is at an end. It must now be considered an experimental building typology that has failed. We predict that no new megatowers will be built, and existing ones are destined to be dismantled." (note: I am deeply conflicted here, for Nikos Salingaros whom I hold in the highest esteem seems to have inadvertently got his name involved in this rare fumble - possibly on account of the implicit shock of the event referenced here).

Could there be a remote chance that a massive cognitive dissonance, is driving peak theories to not take into full account - all the facts on declining natural resources, new technologies, the transition phase of an economic shift, population growth and migration?

As I said I am no expert on this peak oil stuff -- but would you be willing to consider the above for a brief moment, if only to see where this may lead us?

Comment edited by Mahesh_P_Butani on 2011-08-23 01:21:05

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By Undustrial (registered) - website | Posted August 23, 2011 at 11:25:46 in reply to Comment 68352

Oh Kunstler. If only he could settle down a bit... This definitely deserves a bit of a note about the extremely difficult nature of predicting anything more than a year ahead.

It wasn't long before most of those who were talking about peak oil and weren't just alarmist wingnuts started realizing this would be a lot more complicated than a steady march onward to $500/barrel then a prompt apocalypse. Ryan's comment below is a good example - high oil prices rely on a strong economy, which relies on low oil prices. So rather than a constant and predictable fall, we're far more likely to see prices lurching wildly. Beneath all of this will be the trends we're talking about.

"Peak oil" describes a fairly abstract concept - the point at which oil production begins to fall as scarcity and increasing energy requirements overtake our ability to continue raising production. There's nothing "neat" about it - areas peak at different times, and a global peak might never be totally definable down to the day. That day isn't what's important though, it's the falling EROI (Energy Return on Investment) which we need to consider.

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By Ryan (registered) - website | Posted August 23, 2011 at 07:17:14 in reply to Comment 68352

You have to be careful not to conflate two separate issues: 1) predicting the geological peak in oil production, and 2) predicting the myriad effects on the global and local economies. The former is pretty clear and even linear, whereas the latter is a problem of organized complexity.

One of the earlier economic predictions from peak oil was the prediction that oil will hit $400/barrel. After witnessing the first iteration of the "bumpy plateau" in which rising demand bangs off hard limits to production, I'm not so sure the oil price will actually have a chance to get that high.

Instead, the price of oil seems to drag the economy to a stall by around $150/bbl. When economic growth collapses, a lot of demand for oil is destroyed, and the oil price collapses once spare production capacity re-emerges.

Of course, each time we go through that cycle, more real wealth is destroyed, more public and private debt is created, and - perhaps most worrisome of all - politics gets more fear-based and volatile.

Comment edited by administrator Ryan on 2011-08-23 07:18:02

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By Ryan (registered) - website | Posted August 23, 2011 at 11:34:40

Some very sobering reading in today's Guardian by columnist George Monbiot:

Last week the Wall Street consultant Nouriel Roubini, one of the few who predicted the financial crash, spelt out the fix we're in. Governments cannot afford to bail out the banks again. Quantitative easing can no longer help, nor can currency depreciation. Italy and Spain will be forced, in effect, to default, and Germany won't pay out any more. The successful capitalist reached this striking conclusion: "Karl Marx, it seems, was partly right in arguing that globalisation, financial intermediation run amok, and redistribution of income and wealth from labour to capital could lead capitalism to self-destruct."

Nor can the current economic system address the environmental crisis. Its advocates promised that economic growth and environmental damage could be decoupled: better technology and efficiency would allow us to use fewer resources even while increasing economic output. Nothing remotely like it has happened. In some cases there has been a decline in resource intensity, which means a lower use of materials per dollar of economic output but higher overall consumption. In some cases – such as iron ore, bauxite and cement – even this hasn't happened: resource use per dollar has risen.

So far governments have responded to the renewed crisis of capitalism by frantically seeking to invoke the old magic again, to start the engine of creative destruction once more. The means to do so no longer exist. Even if they did, they would only delay and enlarge the underlying problems.

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By A Smith (anonymous) | Posted August 24, 2011 at 15:29:18 in reply to Comment 68365

>> "Governments cannot afford to bail out the banks again."

Yes, they actually can. This article...

http://pragcap.com/resources/understanding-modern-monetary-system

... gives a great and counter-intuitive analysis of how our modern financial system really works.

Here are a few points from the article...

1. We tax in order to create demand for the currency. In addition, it controls aggregate demand or effectively, the money supply

2. The bond market is a monetary tool. NOT a fiscal financing tool.

3. Foreigners do not fund our spending.

4. Money must be created before government bond auctions can occur and before taxes can be enforced. Otherwise, there is no currency in the system to tax and no money to raise via bond auctions. This is just basic logic in terms of the way the current system works. It can be no other way.

5. Households, states, Europe and the gold standard are not remotely similar to the modern monetary system in which the Federal government of the USA (or Canada, UK, etc) functions.

http://pragcap.com/resources/understanding-modern-monetary-system

Here is another surprising conclusion that we have not been told by the media/governments...

Public debt = Private sector savings.

The two are inversely correlated.

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By Market Anarchist (anonymous) | Posted August 28, 2011 at 14:03:28 in reply to Comment 68414

A good critique of MMT (Modern Monetary Theory), outlined in the link that A.Smith gave, can be found here:
http://seekingalpha.com/article/242669-the-trouble-with-modern-monetary-theory

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By WRCU2 (registered) - website | Posted August 29, 2011 at 07:02:42 in reply to Comment 68523

You're both full of crap because the whole system should be scrapped. We need to slay The Creature from Jekyll Island we can no longer afford to Hyde this fact.

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By Freedom seeker (anonymous) | Posted August 28, 2011 at 11:57:06 in reply to Comment 68414

Smith said: ">> "Governments cannot afford to bail out the banks again."
Yes, they actually can. This article... [snip]"

The suggestion is that Government can perform some sort of magic trick whereby they can bail out the banks, car companies, etc., etc. not just "one more time" but forever without limit or negative consequeces. Can this be true?

Some may find the link provided by Smith to be an easy read, most though will I expect be reaching for the Tylenol. Let me try this... When Government wants money, for whatever reason, be it to fund ongoing programs, "bail out" some institution, etc. there are 3 ways it can obtain it:

[1] Taxation
[2] Borrowing
[3] "Print" it (Create it out of thin air)

Option 3 is only available in situations where the money in question is "fiat" money, that is bank notes / account balances stored in computers, rather than "Commodity" money, that is Gold, Silver, or some other scarce physical item. All states these days use a fiat system.

Taxation is straight forward enough: Take money from Peter,and all his fellow taxpayers, under threat of force, and give it to Paul. No magic to be found here, eventually Peter will be driven into destitution, or motivated to revolution.

Borrowing gives the money of savers to Paul, promising in return to repay the savers with the original amount plus interest. This solves Paul's
problem, and leaves the government with the same options that any other borrower has; Repay the savers or default on the loan.
Repeated default is clearly not sustainable, savers will quickly become unwilling to lend to government. Repayment simply pushes the problem into the future, but now a larger problem than would have been the case if taxation had been used because the amount of the interest to be paid to savers has been added. The money necessary to accomplish repayment in the future can only be obtained by options 1, 2 or 3. So again, no magic to be found.
The case in which government borrows from itself should be mentioned. An example of this is "Quantitative Easing" seen recently. Analysis will show that this is in fact simply "printing" papered over with a layer of voodoo bookkeeping.

This leaves us with "Printing". The Government creates money out of thin air and gives it to Paul. It simply prints more bank notes, or in fact types some more digits into a computer.
The purchasing power of money, is a function of scarcity and the total amount of goods and services available for purchase. So, increase the money supply faster than the goods and services available for purchase are increasing (due to economic growth) and the result will be that the purchasing power of a dollar will decrease. This is "inflation". So how does printing help Paul? Because there is a time lag between when the new money enters the economy and it's presence is detected by the actors in the economy Paul, as "first user" of the new money gets the chance to exchange with it at it's uninflated (higher) value but as time passes the value of all money in the money supply will assume it's new lower purchasing power. The effect of inflation is that the actors in the economy have less purchasing power than they did before the inflation occurred, just as they had less purchasing power after they were taxed than before they were taxed. Inflation then can be seen as taxation by another name, and subject to the same limitations as taxation as a long term strategy for government.

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By A Smith (anonymous) | Posted August 28, 2011 at 17:12:18 in reply to Comment 68520

From 1997-2008, home prices in Toronto INFLATED by an average of 8%/year. In these years, the government(s) of Canada ran surpluses. Not only that, but government spending as a percentage of GDP fell from 43.8% to 38.1%. Gas prices rose from $0.68/ltr, to over a $1.00/ltr.

In contrast, from 1990-1996, deficits averaged 5.82%/GDP, yet Toronto home prices DEFLATED by an average of 5.4%/year. During this time frame, government spending averaged 49.1%/GDP. Gas prices fell form $0.73/ltr to $0.68/ltr.

If you worry about deficits and inflation, look no further than Japan. They have been running massive deficits and yet prices there keep falling.

Furthermore, U.S. inflation only died down AFTER Reagan began pushing the federal debt back up, following thirty years of steady decline in the debt/gdp ratio.

Another thing, the government doesn't simply print money like you think it does, it spends. When it spends, it credits bank accounts, thereby creating additional savings in the private sector. If those people choose to spend and they do it faster than the economy can increase production, then yes, it's possible you may have inflation.

However, if you consider that Canada's current industrial capacity utilization rate is only 79% and unemployment is 7.2%, there is still a lot of idle capacity waiting to be put to use producing things people want to buy.

I don't know about you, but I would rather risk an overheated economy than a idle economy. At least with the former, the solution is easy, raise interest rates and drain reserves to slow lending.

In contrast, as seen in the U.S. and Japan, unless the government increases the amount of savings in the private sector (by running deficits), they will slow their spending and pay down debt.

More public deficit = Less private debt

Look at the second chart...

http://www.creditwritedowns.com/wp-content/uploads/2010/01/sectoralbalances.gif

Japan's corporate sector is STILL deleveraging, even after 30 years.

Here is a good video on that scenario...

http://www.youtube.com/watch?v=HaNxAzLKegU

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By Undustrial (registered) - website | Posted August 29, 2011 at 09:49:17 in reply to Comment 68524

I'm curious, once we get this perfect monetary policy going and get our wonderful overheated economy, where is the oil going to come from to fuel it? Or the coal, copper or coltan?

A 3% growth rate (hardly "overheated") means a doubling time of 24 years. How, exactly are we going to find the resources to double our current use by 2035? And quadruple by 2059?

Comment edited by Undustrial on 2011-08-29 09:49:29

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By Ryan (registered) - website | Posted August 29, 2011 at 09:56:44 in reply to Comment 68547

How, exactly are we going to find the resources to double our current use by 2035? And quadruple by 2059?

Magic!

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By Undustrial (registered) - website | Posted August 23, 2011 at 14:01:49 in reply to Comment 68365

Once I hear the energy intensity argument being brought up, big red lights start flashing in my head. It's one of the points which really worries me about the National Energy Board publication above.

Over time, technology will (tend to) improve, yielding increased energy efficiency. Over that same time, the quality of resources those technologies will tend to decrease, providing the opposite effect. Higher ore concentrations will be mined first, larger oil-fields closer to the surface will be drilled before smaller fields, as well as those most conveniently located near trade centres. As the iron and Bauxite (aluminium) examples above show, these later factors have the capacity to totally swamp technological increases.

Add to this the second important factor - the way that increasingly efficient technologies tend to be used more than their predecessors (the Jeavons Paradox), and the benefits all but vanish.

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By Mahesh_P_Butani (registered) - website | Posted August 24, 2011 at 13:45:26

Ryan: "You have to be careful not to conflate two separate issues: (1) predicting the geological peak in oil production, and (2) predicting the myriad effects on the global and local economies. The former is pretty clear and even linear, whereas the latter is a problem of organized complexity."

Undustrial: "Peak oil" describes a fairly abstract concept" ...a global peak might never be totally definable down to the day. That day isn't what's important though, it's the falling EROI (Energy Return on Investment) which we need to consider."

Geological predictions made in that cross over space between ideologies and scientific facts (1) - form the basis for predictions of the myriad effects on the global and local economies (2).

It is not about conflation here - it is about connecting the dots to see thru the haze, and realizing that science is in service of politics, and politics has always been fear-based.

Yes, "Peak oil" is a fairly abstract concept indeed!!

While we are busy focused on one kind of EROI (Energy Return on Investment) (A, B C ); here is a very different view on the types of EROI's (1, 2, 3 ) that are at play in a parallel world.

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By Ryan (registered) - website | Posted August 24, 2011 at 20:33:32 in reply to Comment 68412

Yes, "Peak oil" is a fairly abstract concept indeed!!

You keep saying that, but it's actually quite straightforward. The rate of production at a given oilfield tends to increase until it peaks, at around the point in which half the recoverable oil is gone. After that, the rate of production slows until the oilfield is effectively depleted - i.e. the EROEI falls to 1:1 or the cost becomes prohibitive.

If you add up all the oilfields in a region, they collectively experience a similar increase in rate of production rising to a peak and then falling off to approach zero.

If that region is the entire planet, the collective peak in rate of production for the oilfields is the global production peak.

By the numbers, we are already some years past the global production peak for conventional oil. We have only just managed to maintain a plateau in daily rate of production through a combination of: a) supplementing conventional oil sources with much more risky, expensive, energy intensive and polluting non-conventional sources; and b) price spikes that destroy demand growth when the marginal cost to produce an additional barrel takes off.

The lengths to which the US government is going to ensure that oil-rich countries retain friendly (to the US) governments is itself an indicator of how serious the government is about locking down continued access to oil in a global market that no longer has the spare capacity to absorb lost production.

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By Undustrial (registered) - website | Posted August 24, 2011 at 15:45:38 in reply to Comment 68412

The military expenses of acquiring oil are a very good example of increasing EROI. Since the most attractive sites get drilled first, there's going to be a shift over time to less friendly and stable regimes, with all the conquest or compromise that entails. The US Military is the country's largest user of fossil fuels, and though the war in Libya's been relatively cheap (so far), the war in Iraq has been unbelievably expensive.

Add to this the destabilizing effects of having large oil reserves, or having another intervention happen in a nearby country or region, and you've got a recipe for large-scale chaos.

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By Engles (anonymous) | Posted August 25, 2011 at 16:28:50

insult spam deleted

Comment edited by administrator Ryan on 2011-08-25 16:57:19

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By WinstonSmith (anonymous) | Posted August 28, 2011 at 06:51:59

stop focusing on Peak Oil or even Climate Change.

the bottom-line big-picture is this:

we're not going to grow, consume, indebt and complicate our way out of the problems of growth, consumption, debt and complexity.

"The world population, currently at seven billion, is well beyond Earth's ability to sustain. By 2050, with a projected population of 10 billion people and without a change in consumption patterns, the cumulative use of natural resources will amount to the productivity of up to 27 planet Earths, the study found.

"Sustaining the current seven billion people on the planet requires a major shift in resource use. At present, the average U.S. citizen's ecological footprint is about 10 hectares, while a Haitian's is less than one. The planet could sustain us if everyone's footprint averaged two ha..."
- Data Shows All of Earth's Systems in Rapid Decline
( http://ipsnews.net/news.asp?idnews=56685 )

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By mrjanitor (registered) | Posted August 29, 2011 at 09:50:31

Halliburton Oilfield Services in Canada has a such high demand for its oil fracking services that they are holding job fairs all over Ontario and the Maritimes. If you have a pulse and a clean driving record they will hire you on the spot and have you in Alberta for training in under 2 weeks. They were here in Hamilton about two weeks ago, I went because US Steel in not looking too good right now.

So what could this simple observation on Alberta employment add to a thread filled with links of reports and expert analysis? Fracking services in Alberta are busy to the point of not being able to service clients properly with current staffing levels. Why are they so busy? All of the easy oil is almost gone.

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