One of the biggest changes of current times, beyond technology or communications, has been the amazing progress of our standard of living. A fundamental shift has occurred in the way we acquire the necessities of life, and even how we define what those necessities are. My ten-year-old son says his worst nightmare is no WiFi. The rest of it is just a given; if you want food well duh, the grocery store is full of it. Any other device he can conceive of is a google search away. There is no value in tossing out a ‘when I was your age’ speech because those days are over. It is what it is, but the fact remains that we seem to be losing the connection between what we take for granted and what things actually cost.
There are many reasons for the disconnect, but a big one is a due to life in a credit culture. Borrowing money is not just easy; it is encouraged. It’s everything. Not long ago, debt was a very big deal reserved for mortgages, businesses and bigger ticket items like autos. There were a few rigid, if arbitrary, guidelines that governed our spending habits – a new car should be a maximum of 20 weeks wages, for example. We were encouraged to hold savings of 3-6 months of living expenses in case things went sideways. Even governments took debt more seriously; politicians in principle at least felt somewhat obligated to target public debt towards things like infrastructure.
That’s all gone out the window. Personal debt is normal; for millennials it is almost impossible to go without it. House prices, rents, and the cost of living for everything but TV sets and general mass-market crap have increased steadily while wages have gone nowhere. Easy credit makes it all possible, and makes things really weird. It’s now easier to buy a new car than a used one, for example. The same holds true for many consumer products; credit cards are ubiquitous, for specific stores or just life in general. The worst part of these little rectangular vampires is that the cards often fuel consumption, not infrastructure. Borrowing to invest in something that will generate a return is one thing; there is little future in borrowing to order a pizza.
Government debt has also reached unprecedented levels, and there is absolutely no vision for what the debt is incurred for. Theoretically, government debt is perfectly acceptable when it’s incurred to build bridges and highways, not so much when it pays pensions for an aging population, bails out corrupted banks, and any number of countless wasteful, nonproductive things. At every level, we borrow to consume with hardly a second thought.
We also, on the flip side, simply will not tolerate things that bugs us. We are used to sublime comfort that a few hundred years ago was reserved for royalty. We expect the industrial complex to bring us everything, now, and with no environmental footprint whatsoever. We will halt progress of a project because 12 ducks live near it. A US website has been documenting all the infrastructure projects that have been put on hold by protesters. This is where we can see the scope of the senseless mania that’s gripped society It’s not an anti-fossil fuels thing; protesters can stop anything including, by the site’s count, 140 renewable energy projects. When projects legitimately are halted for environmental concerns, that’s fair enough and not a bad thing; there does need to be limit on our environmental footprint. I have nothing against those 12 ducks and wish them well. But it’s all about choices. If you think those ducks are that valuable, count the number of carcasses heading out the doors of the average KFC every day. And yes it is a fair comparison if the lives of the animals are the question. If it’s the environment that’s the issue, then choose: which humans get whatever they want, and which don’t? And remember what is in the “optional” category – flying is, heat is not.
What does this have to do with energy? Well, protesters, and large parts of the general public (NIMBYism is an international past-time) seem willing to stall anything based solely on the assumption that whatever they want will be there when they want it, paid for by someone else, with borrowed money, as long as it doesn’t inconvenience them or disturb their view. It is the tragedy of the commons gone wild, consumers consuming whatever they want while striving to destroy the very infrastructure that feeds, houses, clothes, and transports them.
Green energy is awesome; it would be unbelievably great if we could get all the energy we wanted for free from the sun or wind. But we can’t. It just doesn’t make sense yet. Its day is coming but there is a big cost associated with overenthusiasm, that it must succeed just because we want it. The only serious progress has been made because of massive subsidies whose costs are borne by taxpayers.
This is a double whammy on productive enterprises that we need to be cognizant of. The burden of paying down these incredibly large debts, primarily government debt like the US $20 trillion pile, falls squarely on industry and its ability to grow and innovate. Industry’s productivity however only derives from cheap energy. There is no escaping that fact. And that is cheap reliable energy; solar power that floods the grid when no one wants it and can’t be found when they do is a theoretical help but not a real one. Again, yet.
There is a debt avalanche coming, and our gluttonous way of life is at stake. We can’t afford everything. We can’t afford to feed 7 billion people, keep them warm, move to green energy, and maintain our ravenous western lifestyle. Grocery stores lined with every conceivable item, cheap flights around the world, and electronics that can do everything are scarcely believable luxuries that we take for granted. The system that brings them to us was created by debt and cheap energy.
No one cares now, because we’re worried about temperatures going up a degree, or as the once brilliant Stephen Hawking postulates, up by 200 degrees thanks to Donald Trump. (Yes, he’s a famous physicist, but it’s also true that China’s GHG emissions dwarf anything negative Trump might do, and China’s emissions are growing, which is what makes his comment seem so uncharacteristically ill-conceived. If he sees that as a possibility for the planet, go after the largest emitters, not the symbols.)
But if cheap energy goes away and the debt bomb goes off, those 7 billion people will burn anything that’s not nailed down, and the sky will be so filled with black sooty clouds that we won’t even be able to see our thermometers.
Globalization, interconnected markets, rampant debt, and insatiable consumers are givens, these days. The planet might or might not warm up too much, but it is an absolutely irrelevant topic if the planet’s population continues to consume as it does.
Read more insightful analysis from Terry Etam here