Monday, January 04, 2010

2010 - Predictions and Catabolic Collapse

A new year, a new decade, and time again for a fresh set of predictions (and a review of my predictions for 2009), as well as a few thoughts on goals and plans for the new year:

First a review of last year's predictions--a year I labeled as "Selfishness Disguised."  It is with mixed feelings that I report that my 2009 predictions were far more accurate than those for 2008 (though my one "go out on a limb" prediction of a military coup in Pakistan didn't materialize).

In general, my prediction that the economy would muddle along but not officially "recover" in 2009 seems to have been just about right (and, given my general pessimism on the fate of our current political and economic system, it was somewhat bold from my perspective, in late 2008, to not predict collapse and catastrophe).

Similarly, I think I was fairly accurate when I said that the American government would focus all of its energies on solving our short term problems at the expense of putting any real effort into fixing our long-term concerns.  Admittedly, this is probably a safe prediction to make for any group, anywhere, at any time.  None the less, it came to pass.  We've set ourselves up for a bit of a crunch, but more on this later...

Regarding oil prices, I predicted the year ending between $60-$70 a barrel, and in actuality it ended just shy of $80.  There have been many reasons for the surge in prices over the past few days--I've even heard some people claim that the price rise (from around $70 a week before the end of the year) has been due to thin trading--i.e. not enough speculators in the market.  That's a bit too rich even for my tastes:  make up your mind, people who don't think that oil prices are set by supply and demand, is it too many speculators or too few !?  The real story in the current price of oil--not the high resolution $79 vs. $75/barrel, but the fact that oil isn't at $30/barrel--is that the economy hasn't collapsed, and demand has begun to grow again, especially in places like China and India.

On the geopolitics front, I'm disappointed to say that my predictions were correct that Obama would eschew any long-term investment in diplomacy and building institutions for international governance and human rights in favor of various short-term, politically expedient moves: "Surge, Part Deux" in Afghanistan, omens of growing involvement in Yemen, the failure to make any significant effort at the recent Copenhagen conference to show the world that we're not trying to maintain a de facto North-South divide.  Oh well, no big surprise there, move along...

On to 2010:  the year we commit to catabolic collapse.

It's not that I would have suggested that we would manage to avoid it, but 2010 is the year we commit to Catabolic Collapse--the concept that our civilization will experience a long, slow, and bumpy decline over the next several decades.  We spent 2009 desperately scrambling to fabricate a recovery out of everything we could find in the armament:  loan, stimulus, outright bribes to buy houses or new cars, and even occasionally the attempt to enforce some of the laws that could have limited the excesses that were revealed in 2008.

This short-term focus has created several problems for us.  First, we didn't really do a damn thing about energy.  Lower prices were the result of declining demand (especially in the US, where it was "easy"--e.g. high proportion of high elasticity demand).  Calls for real change in energy efficiency standards or renewable energy generation seemed to fade with 3-digit prices just in time to escape being targeted by the "what cooking utensil can we throw now at the problem" approach.  As a result, we're now poised for a short-lived recovery (at least in energy consumption) in the US in 2010, as well as an accelerated rate of energy consumption growth it much of the developing world.  Supplies held relatively steady while the price of oil crashed from nearly $150/barrel to nearly $30 barrel, effectively making any renewable energy investment that depends on oil a more than $30-$40/barrel unlikely on the economics alone.  Likewise, from a political standpoint, far too many think that oil prices spiked because of speculators.  As a result, the political will to address price volatility (such as with a significant gas tax redirecting energy to renewables investment) and proactively avert market-driven demand destruction as supplies decline has evaporated.  At best, we have five years of a relative production plateau (that is only if all megaproject predictions pan out), and then we're in for production decline--I don't see anything in 2010 that will show our intent to build the foundation of renewable generation we'll need to avoid the Renewables Gap and be in any way prepared for the downslope of fossil fuel production...

Where does this leave us for 2010:  I think we'll actually turn the corner from "muddling" to "recovery" in 2010.  I won't be a very egalitarian form of recovery--especially if you are a formerly well paid industrial worker that still captures the attention of the American news media, but there will be a bit of life breathed into the markets for houses and cars, and the results will be another confrontation between energy supply and demand.  Some locales will address this directly, and there will be some real improvements in energy efficiency and the creation of local self-sufficiency, but the reality of energy descent will begin to cut the legs out from underneath any generalized increase in prosperity shortly--perhaps not in 2010, but not long thereafter.  I'd expect another economic slowdown to begin at the end of 2010 as oil prices break and hold just over $100/barrel by the end of the year after an earlier dip (voila, there's my oil price prediction . . . though I'm less bullish for 2011).

The bigger picture, though, is that centralized government seems structurally incapable of mustering the political and economic program necessary to seriously re-evaluate and address how it attempts to order our civilization.  What will happen instead--perhaps as early as the end of 2010, is that we'll again mobilize in support of some near-term and media friendly rallying cry to solve the ___ problem (probably energy, but hell, it could be crime, healthcare, trade wars, blackouts, even piracy for all we know).  The focus on the effervescent economic recovery of 2010 will repeat the general cycle--rally the populace around the promise that-near term recovery is possible, and that we don't need to listen to the loonies advocating for fundamental changes. It is this process that confirms a future of Catabolic Collapse.  Probably driven by energy, but with political and social swings exacerbating the situation as populists of all stripes try to offer their own rallying cries, we'll see the continued degradation of both modernity (to the extent it still exists in the Nation-State construct) and the unabated slide down the energy descent amusement ride.

I can't say I find this prediction particularly distressing, precisely because I think the potential of Rhizome and the Diagonal Economy depend on a collapse that isn't too fast to do anything about (asteroid), too slow to recognize, but just right...  Many will lament the losses of time-honored institutions, but frankly I don't think any centralized and hierarchal powers structure can address the Problem of Growth.  We'll have to do that for ourselves.

I don't have any bold "this specific event will happen here" predictions for 2010, but I do want to give one location-specific example of where I think this trend toward the degradation of the Nation-State construct will be especially severe:  India.  No, I don't think India will collapse (though there will be plenty of stories of woe), nor that the state government that occupies most of the geographic territory of "India" will collapse (note that careful wording).  Rather, I think that the trend for a disconnection between any abstract notion of "Nation" and a unitary state in India will become particularly pronounced  over the course of 2010.  This is already largely apparent in India, but look for it to become more so.  While Indian business and economy will fare decently well in 2010 from an international trade perspective, the real story will be a rising failure of this success to be effectively distributed by the government outside of a narrow class of urban middle class.  It will instead be a rising connectivity and self-awareness of their situation among India's rural poor, resulting in an increasing push for localized self-sufficiency and resiliency of food production (especially the "tipping" of food forests and perennial polycultures), that will most begin to tear at the relevancy of India's central state government.  In India there is a great potential for the beginnings of the Diagonal Economy to emerge in 2010.

Those are my predictions.  Nothing really incredible, but that' the point:  the most important thing that will happen in 2010 (and that almost no one will recognize) is that we will confirm the inability of our most important institutions (Nation-States, centralized economic systems, cultural constructs like "nation") to do anything about the underlying Problem of Growth, or even to take a reasonably long-sighted approach to energy policy and geopolitics.  And, as a result, 2010 will be the year that we commit to the catabolic collapse.

On a slightly lighter note, I'll post briefly about my personal goals and plans for 2010.  I'll gloss over the more personal ones (continue and expand my old-form Chen Taichi practice, read to my daughters every night, shift to an 80% work schedule to allow more time for writing, etc.) in favor of something that might be of interest to readers.  Specifically, my overarching goal is to cultivate mindfulness in 2010--not merely the narrow concept of internal mindfulness, but an expanded notion that includes awareness of all my life choices and how they create or support certain power structures, how they build or diminish hierarchy, and ultimately lead to self-sufficiency and fulfillment of human ontogeny.  In short, my concept of Rhizome is predicated on the structural self-awareness of its participants, and this kind of "life awareness" seems like a valuable skill to work on in my own life.  I also hope to build a litigation checklist and complete a second book, that is now only in very rough outline, providing a stand-alone critique of hierarchy, discussing the Problem of Growth, and offering an alternative via Rhizome and the Diagonal Economy.  More on that as the project progresses...

Happy New Year.

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TH in SoC said...

I detect a note of frustration... (which is quite understandable). I agree with you that TPTB will not concern themselves with the common good, and that it will be up to ordinary people to make their own arrangements. I think that the U.S. will not be very far behind your predictions for India. I also have a hunch that the oil megaprojects will not perform as predicted, and that we will find ourselves on a descending slope rather than a plateau.

Jeff Vail said...

I agree... I doubt that oil megaprojects will perform to expectations. It seems that there are two options--at or below expectations, but not above expectations. Therefore, it seems to make more sense that a prediction should probably skew below expectations.

Also, even if megaprojects perform to expectations, these are almost all cases of lower net-energy oil. If production as measured in barrels per day holds steady, the net energy available to society will still be in decline, and that's the more relevant measure for society's ability to keep up its current economic/political mode.

ryan said...

"And, as a result, 2010 will be the year that we commit to the catabolic collapse."

right. got it. so is it cool to start dressing like an extra from Mad Max yet or will football pads with spikes welded to not be all the rage until 2011?


Rice Farmer said...

I guess this comment is a bit late (finally getting caught up on my reading), but I would like to ask about a couple of things.

On India, I assume you are including the Naxalites in your calculations, but would like to know how big a role you see for them in developments there.

On oil, there seems to be a lot of optimism these days that Iraqi production will be ramped up quickly and bring down the price of oil. My view is that too many things can (and probably will) go wrong in Iraq and prevent any big production increase. What's your view?

Jeff Vail said...

Rice Farmer,

I think the Naxalites are part of the puzzle, but I see them more as a manifestation of the situation in India which will make it a forerunner in this regard. There is massive poverty and a huge rural workforce in India, but there are (at least) four things that I see as being critical that distinguish India from, for example, China or sub-Saharan Africa:

1. Rule of Law: there is a fairly functional legal system in India. This will, especially up front, help (paradoxically) make the state structure less relevant because it will be easier for distributed landowners to defend property rights than, say, in China.

2. Historically distributed land ownership: No (significant) history of collectivization in India. Still widespread existence of small farmers and rural markets.

3. Education/widespread English/Organization: It will be easier to pick up on global developments in open-source/localization in India because they tend to have better international contacts (through historical trade patterns/modern migration) and can more easily access the wealth of available information because English is widely spoken.

4. Extreme transportation challenges: Localization and import substitution will be more successful at the same energy price in India compared to other palces because there are such massive transportation issues in India. This also makes it more difficult for the state to impose homogenous standards or markets on the rural areas because it's so difficult to reach them physically. My understanding is that it takes *at least* a week to drive across India (often much more). I've driven from Virginia to Colorado (comparable to the widest part of India) in a day (long day).

On Iraq, I'm not very optimistic that it will significantly ramp up production. I could see it reaching 4 mbpd, but any estimate above that seems excessively speculative to me. One thing I will say about Iraq: precisely because of the geopolitical turmoil over the past 3 decades, there is better potential for discovery of geologically "easy" oil there than almost anywhere else. Even if some magical pool of geologically easy oil does exist under the Western desert, though, that won't make it geopolitically easy to get out! If the Iraqi federal government and the Kurdish state can work out a long-term plan for revenue sharing of the northern fields, then I'll change my tune about Iraq. That's the bellwether to me--if they can't overcome their conflicts there, they won't be able to produce the geopolitical environment necessary to increase production over 4 mbpd. They're nowhere close to reaching an agreement there at present...

Rice Farmer said...

Thanks for your insights. Another major factor that will constrain economic growth (and probably help lead to collapse) in India, not to mention Africa, the Middle East, the rest of South Asia, Central Asia, and Southeast Asia is the chronic and crippling shortage of electric power. There are frequent press reports on power shortages and outages particularly in India and Pakistan. This is going to seriously aggravate the situation.

Urban Scout said...

I love reading your predictions. They get me so excited. Haha. Can't wait for your next book. Sounds awesome.

Erik Organic said...

At what point do you see the shipping industry adapting to sustained higher energy prices?

The folly of shipping products on a plane, then sending Fedex and UPS trucks into a neighborhood 2x a day, followed by the USPS driver, seems a likely source of efficiency.