Legitimacy, indentity, loyalty

More from John Robb, a powerful and original thinker who's on a roll these days at Global Guerrillas:

JOURNAL: More on Banksters
The real systemic risk we face isn't from a financial seizure. That risk is mild in comparison to the risk of a widespread collapse in legitimacy. Due to excesses (too many to name), legitimacy is rapidly draining from the global financial system and the networked groups that give it their primary loyalty.]…[In recognition of this, nation-states should hold this system at arms length to limit damage to their own legitimacy. Given the constraints on resources faced by nation-states, a plan that would bulk up legitimacy would focus on reorganizing financial institutions (not bailing them out) and repairing the balance sheets of individual citizens (the only group in the chart to the left that is still loyal to nation-states). That isn't happening and the damage incurred from this mistake will be significant.

I keep talking about legitimacy and many of you might wonder just what I mean. In Australia we have a deep faith in our institutions, so that we treat them almost as the air we breath: most of us believe in the impartiality of justice and we also believe that most people in authority are basically people of goodwill even if we sometimes disagree with them and that corruption among public officials is restricted to a few bad apples rather than being systemic. We don't perceive our society as riven by class warfare, or captive to one interest group.

Note that I say perceive. Perceptions are what drive politics. From the beginning of last century there was a very strong perception amongst certain groups of people who labeled themselves as "Communist" or "Socialist" that society and its wealth had been captured by people they labeled "Capitalists". This vision then drove the form of politics in western industrialised countries for most of the century. It finally died, not because one "side" or another "won", but because a generation grew up with a different perception of the world. This is a generation of largely salaried workers, for whom over the last fifteen years, unemployment has been low and consumer goods and leisure activities have fallen in price. They have also become major investors, via superannuation and at one remove, in the stock and property markets and thus in the Western Industrial System as a whole. So politics has changed from a paradigm of "Class War" into a managerial paradigm where political parties have competed with each other on the basis of their economic management credentials.

Now the long boom which began in the 1940's and which had it's smoothest run in the past decade and a half is over. Politicians surfed this wave and took credit for its successes. Their successors will not have that luxury. Those who try to cling to managerialism for their legitimacy and are too closely identified with the financial system will be destroyed and to the extent that the political system as a whole has become identified with economic management and entwined with the financial system it will lose the faith and thus the loyalty of the citizenry. This is what John Robb is talking about in the quote at the beginning of this post. And this is glaringly obvious in the USA where President Obama's economic team charged with fixing the problems are all former senior figures from the financial enterprises which caused the current crash. Their primary loyalties are to their mates, not the average citizen or the democratic system. It is this which may very well destroy the United States.

In Australia the situation is not so extreme, but it is similar. The loyalties of both political parties are to the influential interests who back them, not the nation as a whole. If your job is with a big car company and government policy allows you to keep your job, naturally you are a supporter of that government. But if you lose your job and then see that government spending is directed towards special interest groups to your detriment, loyalties can change very quickly. The mad scramble to re-start the debt-driven consumerism which has got us to where we are is doomed to fail. The resources squandered doing this will be a tax burden for future workers which will be bitterly resented by them. This resentment will be stoked by any perception of a section of society benefiting from the present debacle: those who have seized the opportunity to game the system for their own benefit. John Robb again with Parasitic Predation…

Some Boydian logic -- a new construct for decision making -- to brighten your day. Not likely. However, the aim of this brief is not to convince you. Instead, it is to get you thinking in new ways, to challenge assumptions, and spur creativity -- all of which is essential to our collective long term success.

__________

Back in 1974, the long running connection between improvements in worker productivity and wage growth was severed. Median per capita wages for individuals have stagnated since then, replaced with measures of growth in house hold income (two workers instead of one) and growth derived from growing the labor pool (mostly illegal immigration). During this time, the money derived from productivity improvements over the last decades (which would have doubled the incomes of American workers under the post-WW2 to 1974 social contract), was shunted to capital markets under the ideological assumption (seen in Greenspan's thinking) that these markets would make better investments in future prosperity than individuals. That assumption has been proven false. The money was gambled away or spent on lavish increases in the lifestyles of oligarchs and their underlings.

However, it would be bad enough if it ended there, with the realization that two generations of American wealth was squandered by capital markets in a frenzy of excess. It won't. There is increasing evidence that this group of "oligarchs" has ideologically captured all forms of US governance in a situation similar to what we have seen in emerging markets. The situation in the US today, particularly to those that saw it first hand while at the IMF, is very similar to what they saw in past crises in Argentina and Russia (in their view, our situation is worse than Japan). Here's a couple of posts that warrant further reading:

The Quiet Coup by Simon Johnson (the Atlantic)

Re-emerging as an Emerging Market by Desmond Lachman (Washington Post)

Comparing the US to Russia and Argentina by Glenn Greenwald (Salon)

This development has major implications for those of us that think about the future of warfare. The devolution of the US economic system into crony capitalism, replete with the parasitic predation of oligarchs, paints a picture of warfare punctuated by:

rampant crime, rapidly declining military/government budgets, inopportune withdrawals from foreign adventures/development efforts (money for this dries up), corporate armies, deep urban decay, spot starvation/health crises, broad privatization of public goods (theft or fire-sale prices), widespread poverty, etc.

To think that a parasitic oligopoly (akin to Russia's) can't happen here, despite factual evidence to the contrary (trillions of $ given away to bank/hedge funds/etc. without the slightest reform, hope for economic return, or accountability), is a failure of decision making due to doctrinal/ideological rigidity. However, if it's true, a move to the primary loyalties of manufactured tribes (gang, clan, sect, etc.) by a large segment of the population will be almost inevitable. Many of these new groups will both defend and advance their interests through violence.

Whether we like it or not we're caught up in this same system. If we had politicians smart enough to see the danger I would feel a lot happier. But I fear when the dust settles the Federal Government here will also be damaged goods and "Australia" as we now perceive it will be gone forever. We may well drift back to a primary loyalty to our home states. But it also possible that once again we will fall back into a situation of class conflict.

Todd Litman workshop revisited

I attended a workshop on sustainable transport at the Northcote town hall on Tuesday run by Todd Litman and sponsored by the Institute for Sensible Transport which produced some useful ideas. Todd is a very energetic individual and he's put a tremendous amount of work into analysing public transport versus private and burrowed deep into such arcana as the costs of parking in various urban environments. What his statistics unequivocally showed was that cities with poor public transport options greatly disadvantage their lower income inhabitants but add to the living costs of nearly everyone. He showed too how far money spent on various transport options went in bringing multiple benefits including jobs.

What was particularly useful is that he showed how planners can cost the variables from various planning and transport choices to show net benefits in monetary terms for a much broader range of environmental and social outcomes than is traditionally the case and how if properly done this can allow planners to present cogent financial reasons to polticians and decision makers for doing the sensible thing.

There were forty or so attendees at the workshop, mainly from local government planning departments so one hopes that they will all go back to their offices and start modifying their spreadsheet analyses to take Todd's advice into account.

Top marks to Velo Cycles Elliot Fishman for organising the event! He had a particularly cool Bakfiets cargo bike there too.

Planning for a future economy

Here's the proposal I've sent to our local Shire people for their consideration. Feel free to use any of this if you can fit it to your local situation.

The Corner Inlet Business Incubator

Introduction

Background
The viability of our local communities is threatened by external pressures, which will mount over the next few years. These include

• Uncertainty in international trade, which will strike at export-oriented businesses, traditionally the backbone of our local and national economy

• Developing problems with oil supply and availability which will force drastic changes in business practices and settlement patterns
• A much more finance-constrained environment with reduced tax revenues which will shrink government’s power and the ability of large-scale enterprises to raise capital

These threats will make large-scale enterprises of the kind which have dominated our political and economic life for the past sixty years much less viable and will force a re-localisation of our economic production. Fortunately improvements in technology have greatly enhanced the viability of smaller scale manufacture and services in the past few decades.

Communities which fail to tackle these future challenges by taking steps to seize the opportunities which these changes present and which fail to provide opportunities for their population, particularly their young people, will shrink and in many cases disappear entirely.

The task then becomes to identify the paths by which we can make our communities as resilient and liveable as possible in the face of these huge changes. Failure to do so will result in most of those in a position to do so leaving the area, with the remainder of the population forming an ageing, shrinking poverty-stricken rump with major social and health disadvantages.

The place of small business
In light of the changes in our economic situation which I’ve already mentioned, the economic vitality of our area will depend to a very large extent on our small businesses. Therefore it is vital that those able to do so should be encouraged and supported in their efforts to learn the necessary skills to succeed in small business and be supported during the vulnerable first few years of their businesses’ life.

The failure rate of small business is high and necessarily so — successful, prosperous small business is dependent on a rich compost of ideas and strategies which have been trailed and the lessons assimilated, and of individuals who have experienced the vagaries, joys and heartbreak of small business in the real world.

The dangers of trying to maintain “Business as Usual”
A great danger for government at all levels as we go forward into these uncertain times is to attempt to “pick winners” and to fail, thus squandering valuable, scarce resources and even more crucially, damaging their own legitimacy. This can be seen in the high-risk strategy currently being pursued all round the world where national governments are not letting major finance institutions fail but instead are bailing them out with public money. In the process they are committing their citizens to a future of high tax and the real risk of poverty while rewarding a very small class of people whose primary loyalty is to themselves and who were largely responsible for the crisis in the first place. If this strategy succeeds it will be at great social and political cost. If it fails the legitimacy of national governments everywhere will be so severely damaged that political collapse and widespread social breakdown will be inevitable, with decades of poverty and suffering following on.

The risks of wooing big business
The past model of courting, subsidising and smoothing the regulatory path for big business to try and encourage local employment has been of limited success. With no loyalty to the local area (no matter what the public statements made at the beginning might be) and generally only lower-level jobs with narrow or low-level skills involved, the benefits to the local society are often temporary and can create longer-term social problems.

If the industry closes or downsizes the resulting unemployment of lower-level workers often creates significant social problems and a legacy of expenses for all levels of government which are often ongoing for decades (privatisation of the SEC, closure of the Toora milk factory, the heavily subsidised wooing of Kodak to build a plant in Melbourne which closed after only a few years due to technological obsolescence). Even if higher level skills are involved, should the business fail, the possessors of these skills are often forced to leave the area in order to find an employer who can use them.

This process can be seen as a form of “Cargo-Cult” where local governments with minimal understanding of the dynamics of the economy and the business they are wooing commit themselves to something they can neither control nor predict. While it is easier to negotiate with one large organisation, it is much more sensible to invest in a multiplicity of different businesses where the owners and workers carry the bulk of the risk and have more connections to the community they live in, making it more likely they will stay and try again if they fail. The more widely the risk is spread, the more predictable it is and the better planning can be to account for it.

Pathways to small business
Traditionally school leavers have gone into apprenticeships or employment where they have picked up some of the necessary skills needed to succeed in small business. For the past decade and a half the NEIS (New Enterprise Incentive Scheme) program has been a very valuable resource to upskill those unemployed who are considering entering small business. As valuable as NEIS has been, it is a pre-business education course and once a participant has finished it they are on their own.
Plenty of small business information is available along with advisors and other useful resources provided by State and local government. But these resources take some effort to seek out, advisors are often under-resourced and unable to provide continuity of contact with small businesses and much of it is city based.

My proposal is to build several business incubators in our local small towns. For a minimal investment these will provide the “missing link” between formal education and functioning successful businesses.

The proposal

Aim:

• To provide opportunities for newcomers to business in the district by:
• Providing start-up premises at low cost in a good location
• Providing training and mentoring to increase business success rate, and to widen the possible scope of businesses
• Provide capital assetts the use of which could be shared between a number of businesses thus making them viable

Target group:

• The mid kids: those less likely to go on to tertiary study, and for whom employment opportunities are currently limited
• People who have been displaced from traditional employment and who have the energy and commitment to attempt to be self employed
• People from outside the school leaver group who can present a viable business idea to the management committee and who demonstrate a need for the kind of help the incubator could provide

Management:

• A part time manager with offices on the premises
• A management committee consisting of local business people, retired people with suitable skills, the Shire’s business facilitator and education representatives
• A board with representatives from the Shire (the local councillor or councillors), Secondary College Student Representative Council, School Council, local Traders Association and other seconded members or groups.

Income:

• Shire Council subsidy
• Deet
• State/Federal government grants
• Rental

Costs: Start-up:

• Planning
• Premises and capital equipment
• Renovations

Ongoing:

• Rates/building maintenance and security
• Manager’s wages
• Provision of training
• Possible subsidies for approved businesses

Necessary conditions for success

• Good location
• Good quality premises
• In-depth supervision, mentoring and training available
• Ongoing commitment from management bodies
• A positive attitude from the other traders and the community in the area
• Good financial management
• Careful crafting of guidelines to ensure the aims of the project are met and that viability is ongoing

Locations
The two immediate locations which spring to mind in the Corner Inlet area are the retail hub of Foster and the former milk factory at Toora. The former would be the ideal retail and service business incubator and the latter the manufacturing and food processing incubator. Other possibilities may be related to primary industry but I haven’t considered them here.

Retail and service incubator
Here is a sketch of what I have in mind. It is based on a shop which was available in Foster several years ago, but the idea could be adapted to several different locations.

Individual shops should be very small to allow the maximum number of micro-businesses to incubate and to force them to look for larger premises as soon as they begin to succeed.

Industrial incubator
The ideal premises for this would be the former dairy factor at Toora. There are a number of large separate buildings including the administration block, mechanics workshop, maintenance workshop, laboratory, former boiler house and main building with the former processing area plus large insulated warehouse spaces. The general condition of the buildings is quite good although there may be an issue with the asbestos cladding on the older sections.

The manufacturing incubator could be built around a core facility which included some items of capital machinery such as a CNC lathe and large laser cutter whose cost of purchase would be prohibitive for a small or micro business on its own, but which would act as an enabler for a large number of such businesses.

Food processing would also be a natural business in this location.

Operation
The idea is to provide facilities such that there are minimal initial capital requirements and low initial fixed operating costs for start-up businesses, but have their tenancy either time-limited or space limited, or a combination of the two. Successful businesses needing more space would naturally move on, although in the case of the Toora facility this may not be such an issue.

A cluster of such businesses would provide mutual support for each other and also allow monitoring, education, mentoring and the provision of other support services to be delivered in a much more time-and-resource efficient and way.

Small businesses have a high failure rate. Having business incubators would raise the success rate for conventional businesses while allowing an opportunity to try higher risk but high potential benefit businesses as well.

Conclusion
In the face of great economic uncertainties the best strategy is to try a lot of low cost low loss solutions. A resilient, healthy local community is one not dependent on large organisations whose control lies in other places; whose citizens are resourceful, self-reliant and multi-skilled and which provides as many opportunities as possible for these citizens to support themselves and their families.

The cost of setting up these business incubators is not prohibitive and they involve facilities and equipment for which there is a ready market should the venture not succeed. But the benefits of their success would however be very great.

May a hundred (local) flowers bloom!

Core values

Some of you may wonder why I bang on about what's going on in the USA all the time. Isn't Australia special? Aren't we more innocent, more moral, better? Well we are different. We're more gullible, more trusting — entirely naive in fact. And we are easily impressed. Our Kev goes to see Cool Dude #1 and agrees with everything he says. Or maybe Barack just nods as Kev spins out the syntax and Kev feels a warm glow inside. He's playing with the big kids! Does it get any better than that?

But President Obama is also the #1 Weird Dude. Is he a black version of Ronald Reagan? Doesn't he just play the President beautifully, convincingly? Because what his minions are doing is utterly at odds with his rhetoric (So how does our Kev deal with that disjuncture? Does he even notice?). Anyway, here's a big quote from The Automatic Earth…

Ilargi: Apart from Bernanke's admissions that the financial products division at AIG is holding the mother company hostage, and that the US should have taken the company into receivership a long time ago, -both of which are no small matters at all, they’re in fact stunning since he's known this all along-, I don't see much reason to watch Bernanke and Geithner's appearances in the House, nor Obama's press-op tonight. The reason is that I could write their speeches for them, not because I have intimate knowledge of the material at hand, but because they will avoid to address that material at any and all cost anyway. There are plenty smart writers who are starting to see what's going on, but they're only starting.

No Mish -and thousands with you-, Geithner and Bernanke don't get it all wrong all the time, in fact they get it remarkably right. What makes you think they get it wrong is that you fail to understand their objectives. Which have nothing to do with doing good for average Americans, at least not as a priority. The man in the street is an afterthought. The objective is to save the banks. Whether that is because they honestly feel that the banks need to be rescued at whatever cost to the public purse, or Armageddon will ensue, or whether they fear for their own little power lust comfort zones if they don't, it's hard to say, and in the end it doesn't matter either.

There may be all sorts of ideas of how another $1 trillion of taxpayer funds will free banks of their gambling losses to the point where they will start lending again, but whoever talks about that is just as stuck in their comfort zones as are Tim and Ben and Larry. It will not happen, it can't, America suffers a huge debt overload already, as a nation and individually, and that debt has to be repaid. Taking on more debt will bring no solution, least of all when it's used to bail out the very institutions that are most responsible for the majority of the debt.

And it's the system itself, it's not the institutions that are the core of the problem either, which by the way supplies a brilliantly solid reason to let them all fail tomorrow morning. That is, if as a government you have the best interests of the people in mind. Unfortunately, you're stuck with "leaders" that have either only the interests of the happy few in mind, or who have convinced themselves that to save what's left of the people's welfare, you need to save the happy few first. A very convenient worldview in which only one focus is needed: banks. It's the ultimate, and extremely perverted, version of trickle down economics.

Only, in this case, it’s as if you're watching a cartoon in which there's a pyramid filled with people, with the rich on top and the poor at the bottom, in which there's a mechanism to take away from the impoverished bottom whatever it has left, and reinject it at the top, while telling the poor that taking what's theirs is the only way to save them. Maybe someone with drawing skills can draw that picture for me.

The entire government is made up of people who either don't get it, or who don't care for the interests of the people. I’m sort of sure that Washington has both kinds of people working together, but we can't really tell the difference, because they all have the same priority. Those that don't get it steal from the people to give to the rich, because they see that as the only way to save the people. Those that don't care, steal from the people because they think that's some kind of inherent Darwinian right.

But there are no Robin Hoods out there. And that makes me think the game is pretty much set. The banks can't be saved, but they're the only party the government is attempting to save. There's only one possible outcome from here on in: an imploding society. This $1 trillion that Obama will talk about tonight can only be spent once, and it's being spent on the worst possible target. But that is not a mistake, it's a deliberate move made by the blind, the misguided and the cruel that are, all three of them, coincidentally, the only three categories of candidates who can get themselves elected to office. You need a substantial personality disorder to wind up in Washington, if only simply because you land in a pool of equally distorted minds. And that pool will lead us all into a world full of bitter misery. We're not on a road to nowhere. We will soon wish we were though.

---

Do you understand what's happening here? This is a very serious and brutal game. These people are not nice. In fact they are ruthless sociopaths. Kev is a lamb amongst wolves. I wonder how many column inches his visit has got in the US media.

This is class war in its naked form. These people are in for the kill. How long before the victims realise what's happening, wake from their torpor and fight back? How long before blood flows in the streets? How long before the armies of the Empire have to return to the Homeland to crush the revolt within?

Is Kevin Rudd a fool or very cunning? I fear he is the former. He has been intoxicated by his proximity to Power. A naive provincial from the barbarian outlands, at the banquet in the court of the Emperor he has drunk too much and now reels about spouting random platitudes, blind to the deadly game going on about him among the courtiers and sinister lobbyists, which is masked by the bland rhetoric and numb conventionalities of the Washington press. He will rush back to Australia still blinded by the glittering pageant of which he was oh-so-briefly a part (didn't we see all this already with dear little Johny Howard?). He will imitate the Bail-Out, the pillaging of the poor via taxes to prop up the privileges of the rich, not because he's a murderous blood-sucker like the ruling class in America, but because that's what the big kids do!

Sustainable transport worshop

I attended a workshop on sustainable transport at the Northcote town hall yesterday run by Todd Litman and sponsored by the Institute for Sensible Transport which produced some useful ideas. Haven't got time to write anything on it today but in the next day or so I'll do a much more comprehensive post.

Disease in a time of weakness

Over at The Automatic Earth they've posted some interesting videos, one of which I've embedded below…

The video series of which this is the first part is a fairly technical but very well presented explanation of how the shorting the shares of Bear Stearns triggered the Wall Street meltdown. But to focus on the trigger for the meltdown is to miss the point of what's happening. All systems tend to carry a burden of disease causing pathogens. Every society has its criminals, every living creature carries viruses and bacteria which can potentially cause problems and often do. A healthy organism — or organisation — can usually deal with this burden. But when the body or organisation is weak it becomes vulnerable.

Our economic system was already weak and vulnerable. Millions of brilliant minds had already prolonged its life well beyond what could be considered reasonable. It was bound to succumb to some trauma eventually and the longer the system's life was prolonged, the more trivial and minor the triggering event was likely to be. Sure, prosecute the crooks. Don't pretend though that the overall catastrophe could somehow be averted in perpetuity. In many ways the longer the collapse is held off, the more terrible it will be when it happens. This is the paradox of the situation we are in. What conventional wisdom may hold up as solutions to the problems we are facing may well simply increase our vulnerability. Improve crop yields through genetic engineering? Doesn't that simply make for an even more unsupportable human population overburdening the Planet's ability to cope? Can you now see what a catastrophe the discovery of a cheap replacement of oil might be?

There are two responses to the current troubles and future prospects which I personally find distasteful. One is the "look for the culprits" distraction. Let's be frank here: we are all the beneficiaries of the current system and two-thirds of us wouldn't have existed without it. Blaming other people for everything that's wrong is dangerous, destructive and fundamentally dishonest. The second one Richard Heinberg trots out sometimes and that is "Oh What hath us baby-boomers wrought?" I find this even more nauseating and unhelpful.

In small business it translates into the whiners who blame the competition for their failure and incompetence, or the even more short-lived types who beat themselves up and collapse in depression. I've always been an admirer of a certain type of toughness, unsentimentallity and good humour in adversity.

So what will our present collapse mean? Simply put, most organisational complexity above a local or family level will wither and die. The surplus wont be there to maintain it. In a town like ours it means a lot of us will need to find different things to do, or different ways of doing what we do now. No big deal in some ways. In places where organisational complexity is all there is, things will be much harder. In places where there may well be a strong community but the economy is dependent on high levels of complexity it will be very difficult too. Think export dependent agriculture. So the choice for all of us is either move or adapt in place.

"The Peakist" on ABC Radio National

The family just listened to themselves on Radio National's "360". We were all variously cringing in anticipation but even the most extreme introverts amongst us felt OK by the end. Nick Franklin did an outstanding job of recording and editing all my stammering and manic utterances into something coherent and it would be worth listening to just for the segments with Maria Jackson alone (long may she live!).

If you're a radio person it's repeated next Wednesday and of course the podcast is available anytime to listen to or download. Once again thank you Nick for dragging this tremulous creature out into the bright light of day!

Money and the Crisis of Civilization

Hi everyone — zap over to Rob Windt and read this great essay he's reposted…

What is to be done?

Yesterday I was part of a group invited to attend the "Barriers to Employment in Corner Inlet Forum" which was run by my friends Linda Giddy and Dana Hughes. They've been asked by our local Shire Council to come up with a report with recommendations for tackling the systemic unemployment and poverty in our part of the Shire. It was an interesting exercise and after some pretty intensive brainstorming it seems we may be able to come up with something which can work for all of the different parties represented at the Forum.

We had a few educators, some Shire staff from Community Development and from the business side, some of the people who are on the South Gippsland Transport Connections Group with me, our newest Shire Councilor, Mohya Davies, one of our veteran local politicians, Cr. Jeanette Harding plus a couple of community interest group representatives and business people like me.

I've had this notion of having a business incubator in Foster for quite a few years and maybe its time has come. The problems as I see them for individuals trying to get going as self employed are (a) the capital needed for startup to cover rent is a great hurdle, (b) you're on your own and have (usually) no-one to talk to and mentor you, (c) it's hard to find premises in a location which gives your startup a chance.

Anyway it seemed during the discussion that a lot of our ideas were converging on something like my incubator and perhaps it was possible to make something similar not just in Foster but Toora (where there is the massive, empty dairy factory) and at Port Welshpool which needs help the most and where a couple of dynamic locals, Marzia Maurelli and Kerry Pinzone have some great ideas for using the now derelict long jetty.

For young people I think the step from school to real life has become too much of a gap. Many years of classroom schooling don't suit a lot of people anyway. I see these incubators as a way of providing a real life learning environment where knowledgeable people will easily find a concentrated body of willing students and where lots of informal interaction will make for even more efficient learning.

Foster is the retail hub so it makes sense to have a retail and service oriented incubator there. Toora could be the industrial and manufacturing incubator (I grew up living in a company house in the factory grounds and my Dad supervised construction of the place originally before becoming maintenance engineer and eventually manager and company director). I'm not sure what Marzia and Kerry have in mind for Port Welshpool but Marzia seemed to have a fairly clear idea of what's possible.

It's early days but I'm hopeful something really useful could come out of this and what makes me even more optimistic is that there is such a large number of people of goodwill out there who have a good grasp of reality, see the pitfalls of past approaches such as trying to attract big businesses to the area (what I call the Cargo Cult strategy) and also see that we must save ourselves because no-one else will.

Stop everything: be still and listen

There's lots of exciting action at the moment: governments are running around like headless chooks, economists are saying stupid things, ordinary folk are bewildered and don't know what the hell is going on but somehow in dear little remote Australia it's possible to believe we're all in some kind of movie with a happy ending.

The terrifying summer is suddenly gone, it rained like hell on the weekend and the crowds at the Mossvale Park Music Festival dug it all, celebrated the 3" downpour and had a good time anyway. Sales at our nursery are up again, not to a great level, not where they would have been if it were Business As Usual, but not the disaster of a few weeks ago. Wilsons Promontory is reopening for tourists on a limited basis in the next few days after more than half of it burnt in a massive weeks long blaze. Plans are in place to revive our battered local economy. At one of the committees of which I'm a member, the South Gippsland Transport Connections Partnership Group we were told that public transport to our area is to receive a huge boost with services doubling.

But to quote one of the great monsters of the twentieth century, Vladimir Ilyich Lenin, these ups and downs are of momentary interest. The real story of taking place in various inhospitable and mostly unpopulated locations around the world, some distance below the surface. At The Oil Drum where the editorial staff are usually a fractious lot, a staff survey shows that most agree World Oil Production Peaked in 2008.This is news that cannot be spun and brushed aside as something of secondary importance. The fate of our Industrial Civilisation can be read on the up and down slopes of this graph…click on it for a larger image

A dinosaur on life support

Here's a neat illustration of how the Australian government is completely at odds with reality — I'm talking about the physical reality of the end of the age of cheap oil, not the "reality" of politics, which consists of pandering to the powerful interests which prop governments up.

We have spent the last thirty-five or so years sustaining the ultimately unsustainable, living in an illusion of exponential growth and progress. The smoke and mirrors worked quite well while we all were convinced reality was something you saw on a screen. As the costs of maintaining the system have risen inexorably so our hours of work have grown and grown and we have each become more and more isolated by the demands of our personal obligations to maintain ourselves and others in this increasingly unviable world.

And in this personal isolation which external demands force upon us, this increasingly private shell in which we all live, we have been fooled into quiescence by the availability of a multitude of cheap personal trinkets and thrills which keep us amused and distract us from our increasingly inhuman environment. iPods, X-boxes, internet porn, flights to Bali and most of all, the ever-new, ever-novel cars which for a small down payment and a promise of a lifetime of servitude give us, momentarily, god-like illusions of power and invulnerability. For many of us our self-image is so intimately bound up with everything associated with the car that we recoil instinctively from anything which might threaten the end of the automobile age.

So our government is now rushing in and saddling us and future generations with an enormous tax burden in order to keep this dream alive — something in the region of A$100,000 per Australian auto related job over the next eleven years. It will fail and the money will vanish into the black hole of catastrophic deflation which is now gobbling up the financial innards of our industrial civilisation as stock markets around the world tumble. The car companies in Australia are mere branches of the giants now thrashing in their death agonies in the bleak cities of the American industrial heartland: the money involved a mere trifle compared to the amount the US government is shoveling into the void. But it's not a trifle to us.

As the growth of the system and the population it has supported followed an exponential curve, so the collapse seems to be growing exponentially, swallowing our future at a dizzying rate. None of our leaders seem to have any vision of a more viable future or any idea of a way forward other than to crazily spend more and more maintaining the dinosaur on life support. And when the dinosaur dies and falls, most of us are standing way too close for our own good.

The Unabomber, Kevin Kelly, Ran Prieur and me

Kevin Kelly posted an essay recently, The Unabomber Was Right, and Ran Prieur posted a critical review of it which I mentioned in an earlier post. I thought it was interesting and important enough to review and comment on.

An issue I'm constantly aware of when writing on the subjects covered by this blog is what may be loosely termed doomer porn, and everything which the term implies. There are lots of people unhappy with Industrial Civilisation for all kinds of reasons and they look forward eagerly to its demise. Whatever their reasons for being unhappy with it, they tend to imagine some sort of golden age once IC is no more: some of these utopian fantasies are religious in nature, some involve ideas of a new culure based around ecological principles and some are simply primitive Mad Max fantasies where the thinker sees themselves as a powerful warrior in a violent world. Looking forward to these utopias they often lap up bad news stories about the current world. If you feel marginalised and alienated from whats going on around you for whatever reason: social exclusion, failure, sexual or other humiliation or for some less personal or more altruistic reason — the list is endless — there is a temptation to wallow in these stories.

Or you may go further, as the Unabomber did, and take some direct action. Kevin Kelly's essay examines the validity of the Unabomber's view of the world and then critiques the conclusions he drew from these views and the actions he then took. Ran Prieur jumps on KK's argument and makes some valuable points. But both of them missed an important error in thinking which was apparent in the first few paragraphs of KK's essay. The crucial quotes are from Ted Kaczynski, the Unabomber himself:

"The system does not and cannot exist to satisfy human needs. Instead, it is human behavior that has to be modified to fit the needs of the system. This has nothing to do with the political or social ideology that may pretend to guide the technological system. It is the fault of technology, because the system is guided not by ideology but by technical necessity"

and

"When a new item of technology is introduced as an option that an individual can accept or not as he chooses, it does not necessarily REMAIN optional. In many cases the new technology changes society in such a way that people eventually find themselves FORCED to use it."

Kevin and Ran treat this statement as valid and then go on to argue for conclusions based on it. Kevin Kelly says yes: industrial civilisation does force us to fit into tight patterns to satisfy its demands and does lots of bad things along the way but the freedoms and choices it gives us are more or less worth it. Ran Prieur says maybe: but the freedoms which result are only for a fortunate few and the majority are oppressed by their low status and lack of control over their lives: hence many people don't love the system and would be happy to see its demise.

But I would argue that the loss of freedom the Unabomber rants against is not the property of Industrial Civilisation and its technologies alone, but is an inescapable part of the human condition from the beginning of time. This is true at a societal level and a personal one too. Look at the second quote from the Unabomber and ask yourself what else it could be applied to. I can think of anything from clothing (as opposed to nakedness in our oh-so-pluralistic and tolerant society!) to the Catholic Church in the European Middle Ages.

When are we truly free? The only time is before we have decided on a course of action: that state of indecision when a cloud of possibilities hangs in the air but nothing has yet happened which may be difficult to back out of. Keeping that in mind, look at his first quote. A cynic would say it sounds like a description of marriage. "The system does not and cannot exist to satisfy human needs. Instead, it is human behaviour that has to be modified to fit the needs of the system." Sheesh!

I'm really not joking here. My attitude to the intellect and its products is that of a child poking a bull ant's nest with a long stick. I can't resist it, but I'm aware of the raw power, danger and unpredictability of the endeavour. Both Kevin and Ran are very American. They believe in certain ideas which have a weaker hold on me and on Australians in general. Their thinking is deeply fundamentalist Christian, even if they are not Believers. Of course so much of our English language and culture are a product of two millennia of Christian thought. We use Christian ideas all the time in our thinking even if we've never been to church. This applies to Australia as much as the USA, but we had the advantage of inheriting the Christianity of the Vicar of Bray rather than that of the founders of the Plymouth Colony.

So Kevin and Ran are both idealistic — it's the American inheritance — and the ideas of salvation and redemption are never far below the surface.

I doubt that whatever replaces Industrial Civilisation will make Kevin, Ran or the Unabomber very happy. I have my own views which I'll explicate in my upcoming novel. Lets just say that I'm not a Panglossian either and the hero of my novel is a Candide. I believe in dealing with the world as it is rather than what I wish it to be. And it will turn out as it will, not as I will it. If I'm lucky I might make an insy-winsy bit of difference in the present, but the future depends on vast largely unknowable forces.

It's interesting that both KK and Ran assume that somehow we could have consciously planned and built a different, better world. Ran talks about having civilisations grow and collapse until we get it right. I'm a child of the sixties and seventies and went through all that stuff back then. We never know enough to predict the outcome of any of our dreams, but historic experience shows pretty unequivocally that the more utopian the dream and the more thoroughly it is pursued by its advocates the more atrocious the results. Pol Pot, Mao, Stalin, Hitler, Lenin & Trotsky. And let's not get started on the wars of religion.

The bad things that Industrial Civilisation has done and is doing to the world are not something that could have been prevented, once the genie of cheap energy was out of the bottle. Who could have resisted such power for long? Who ever has? This is why all talk of reducing greenhouse gases is in my opinion never going to be any more than talk. There are way to many humans on this planet for it to carry and greenhouse emissions will start to disappear when our numbers start to reduce, not before. But I don't see a great rush of voluntary suicides any time soon. Our vast numbers depend on technologies which are environmentally destructive. Selling the message that to save the planet, large numbers of us will have to drop off the perch and not be replaced is something no politician in a democracy will ever be able to do.

I think it's important to look at what really drives people to try and build a "better" world. How often is it a hangover from some vague millenarian traditions echoing in the hallways of culture, inevitably full of imagery of the saved and the damned? Who picks up these ideas and runs with them? How often is it a sick puppy like the Unabomber who first and foremost is a life-hating misanthrope who cloaked his bloodlust in some sophisticated intellectual drapery?

At this point I'll lay my cards on the table and try to be honest about my own motivations. Primarily I want to survive myself and I want the people I love to survive. My love casts a wide net, but I'm not indiscriminate. Hostile selfish people I don't care much for. Beyond that I want to reduce suffering because I don't enjoy seeing either people or non-human creatures suffer.

If we can't control our numbers, and I don't think we can, nature will. Cheap fossils fuels are finished and so is exponential growth of economies and populations. The reversal — the slide down the back side of the bell-shaped curve — is not going to be nice. But we can do what we can to not make it any worse by leaving crackpot ideals and Utopian fantasies well alone.

Busted boomers

I couldn't resist that headline! Mish has a very good post on the economic outlook for the Boomers (synopsis: not good). This is something small business people like myself need to carefully consider. We are already seeing some rapid changes in buying patterns in the nursery business at the moment: my own feeling is that the top end of the market is or soon will be toast (Mish's data show the very top end of boomers may still be solvent but we don't see too much of that demographic in Foster).

The USA is six to twelve months ahead of us in my estimation. What we will see is vast numbers of people who formerly considered themselves as middle-class tumbling down the social ladder. They will have frugality forced upon them, so businesses depending on the discretionary dollar from them will be in big trouble (that's us at the nursery to some extent).

We're madly trying to diversify to get the income stream back up (we're starting a mowing and garden maintenance department and have decided to persevere with the florist business because although it's been a loser till now, we think it has legs). The big fires, particularly our local one on Wilsons Promontory, have killed the tourist trade at the moment, but that was on top of a fall-off in sales which was apparent well before Kevin Rudd's handout inflated our Christmas sales to record levels.

We are going into a time of rapid economic change and we're going to have to adapt in a very capital constrained environment. The race will not favour the swift or the clever, but rather those who have little to lose, do not panic easily, have a good network of friends and non-monetary reward systems which keep them happy (it's called family and community, folks!) and are not the kinds of hot-blooded idealists who rush to impale themselves on the horns of political dilemmas which unfortunately will be characteristic of the next phase of our social scene. A clear-eyed view of what's happening, a positive attitude and a willingness to do the work are also necessary.

The boomers are going to be interesting to watch. Will they be bitter? Will they get their jollies from toxic politics? Will they accept the changes and adapt? Will they try and grab the goodies that are left and ignite inter-generational conflict? I suppose we'll see it all.

Steve Keen's reality check for Australia

Steve has posted an interview mp3 on his site: it's a bit weird trying to download/play but if you're Australian please make the effort to figure out how to do it and listen to this.

Some important arguments

Kevin Kelly has an interesting essay on the Unabomber. and Ran Prieur has an equally interesting take on KK's argument. I've been intending to post on the Unibomber article and will in the next couple of days because there are some important ideas that need to be threshed out here. In the meantime if you can, read them both.

The man is everywhere!

Dmitri has popped up on ABC Radio National where he's interviewed by Phillip Adams for Late Night Live. Check it out here.

I'm going to be on Radio National as well, on "360" (the re-badged Radio Eye), Saturday the 21st of March at 2:00pm. It's a half hour documentary program put together by Nick Franklin who spent most of a week following me around with a microphone patiently waiting for me to say something sensible!

Dmitri on the impending collapse of the USA

Here's a TV interview with Dmitri Orlov. The sound is awful: out of sync and only in one channel but the content is rivetting…

Steve Keen's Debtwatch

A good solid post from Steve Keen on why this recession will be different from those of the sixties, seventies and eighties.

Tuesday funnies

Jon Stewart serves it up to the stock market boosters aiding the crooks and incompetents who lost all your superannuation money…

The Daily Show With Jon StewartM - Th 11p / 10c

CNBC Gives Financial Advice

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Joke of the Day

If it's not too late, get everything out of the market NOW! And read JMG on investing if you haven't already.

Hanging On, Or, How to Get Through a Depression and Enjoy Life

I've just come across an article about the experience of the Great Depression as seen through the eyes of a young middle-class man from Flint, Michigan in the USA. The article is a review of a book which is now out of print (available second hand) but nevertheless it makes some very interesting and useful points. It gives a picture of what people were thinking as the depression developed and how they adapted and changed as time went on.

We tend to look at events in the past as having a certain inevitability and therefore predictability, but of course they are often not like that at all. The people going through them often regard them as a temporary aberration and generally try to keep their normal life going until they can do it no longer. Then they either adapt or they fail.

The name "Great Depression" is something which was assigned after the fact. People caught up in it, at the beginning at least, thought Business As Usual would resume shortly and often saw their economic failure as a personal failure, not as something produced by forces beyond their or anyone else's control.

By the time the Great Depression was over people's attitude to life and society had undergone some fundamental shifts. The article is particularly interesting talking about how attitudes to government and to big business were very different. But there are many other fascinating insights. Here is a list of section headings:

Background
Denial
Impact on most vulnerable
Communities and families
Plans and Dreams
Ingenuity
Unions and the workplace

Read it here.

Alternative currency discussion

Jason Bradford has a very interesting story at the The Oil Drum about a local currency backed by food grains. It's a similar system to a lot of barter currencies but has the advantage of having an actual physical backing in the way our currencies used to be backed by gold. The extensive discussion afterwards covers some important topics including the problem of forgery and lots of interesting historical data on similar systems. Highly recommended because I believe this is the sort of thing we will need to have some time in the near future if, as I fear it will, our dollar suffers a complete collapse along with the banks.

Security, legitimacy, the State

I've mentioned the issue of piracy before. Piracy is imposing a cost and a brake on international trade. Australia is a country whose economy is crucially tied to others by international trade. Piracy is flourishing because states are becoming weak. Why are states so weak?

States exist because at an earlier time they were forged from disparate social elements existing in a defined geographic area by an elite of some kind using force. This elite may have been originally a group of predators who discovered it was better to settle among the population and milk them via taxes rather than raid, rape and pillage on an occasional basis. Over time the elite becomes compromised by dilution or by some other means which weakens their grip. The bulk of the population forces political compromise on the elite such as habeus corpus or some sort of representative body which helps broker power relationships. Eventually democracy may arise.

As political power spreads and trickles down into the population, politics becomes dominated by special interests, careerists and administrators. Loyalty to the state becomes less visceral and more nuanced: loyalty to ones subgroup or to procedure or to an institution or ideal becomes more common and loyalty to the elite as a primary loyalty less so. Legalism flourishes and the state becomes less flexible as more energy becomes absorbed in administration and maintenance. Novel situations and threats can be difficult to respond to because loyalties are now diffuse, many interests need to be appeased before action may be taken and those directly threatened may be forced to work through agencies which are not threatened and which feel little sense of urgency in solving the problem.

And so we now have a situation where powerful warships hang about off the coast of Somalia but seem incapable of taking decisive action against lightly armed pirates in small open boats flitting among them, seizing passing merchant vessels. While complex administrative procedures govern relations within states and make them run generally in a predictable and functional way, relationships between states are far cruder and more tenuous: more dependent on personal relationships between individual leaders and ad hoc arrangements. The United States has successfully led a campaign to undermine the legitimacy of the United Nations, a body which could have brought order to the international situation in a way national governments have brought order internally. This is why the pirates can operate in a number of areas with impunity: internationally law and order are weak. For states like Australia which depend on international law and order for the functioning of their economy this represents a grave and growing threat.

International disorder is beginning to fray nation states at their edges. Many already have their legitimacy weakened by the forces operating internally which I've mentioned above. Over the next few years as the world economy goes through the stresses of financial meltdown, oil supply problems and the economic recessions brought on by all this we can expect many states to begin to break up and others to to act more aggressively in order to try and shore up their legitimacy. Energy shortages will reduce the power and legitimacy of all states. Less oil means less economic activity and the taxes which derive from it. Oil has powered industrial civilisation. In Australia the Federal government and hence State governments depend on large revenues from sales tax which is mainly attached to consumer goods and services. As the consumer society dies so will this revenue. Those dependent on the Federal and State governments for income or support — public servants, teachers, doctors, armed service personnel and social security recipients — will see their income decline very noticeably and as it does so will their dependence, attachment and loyalty to the State.

All this will mean increasing disorder and insecurity internationally and as prosperity declines, within states. How strong is Australia as a nation and what kind of threats can we expect? I've mentioned the economic threat which a breakdown in international trade represents: this could weaken Australia's ability to maintain a strong federal system. Individual states may well feel less attached to the others. Queensland will be bordering unstable regions to the north and will find it impossible to maintain border security. Western Australia will be so isolated that it may feel no need to remain attached to the rest of the country.

Within individual states politics will change. As the corporate entities which now dominate political life wither and die along with the industrial system which supported them, other players will emerge. Who will those players be? Will Australia devolve into a loose collection of city states dominating their surrounding countryside? How stable and prosperous will they be?

It's easy to foresee the course of the next few years or decades but further out becomes the realm of pure speculation. I'm currently writing a novel which runs with some of these ideas and I'll be posting it on this site later in the year. In the meantime have a look at this essay on piracy by William S. Lind. To quote from his conclusion…

Piracy is only the barometer; the storm will be something else. That storm is coming, and soon, as Brave New World’s promise of unending material wealth in return for acceptance of an administered life proves a lie. By the time the storm is over, the elites that fear to hang pirates will be hanging from lampposts themselves.

Another collapse scenario

An interesting article (pdf warning) on the collapse of the Argentinian economy between 1999 and 2002. There are many differences between our societies and I earnestly hope we never experience anything like this here. But there are many similarities between Argentina and Australia too, particularly in economic structure. Well worth reading and comparing with the collapse of the Soviet Union as described by Dmitri Orlov. Security and law and order were major problems in both collapses.

Investing

I've been mentioning in passing the danger of staying in the stock market and a couple of posts ago mentioned John Michael Greer's latest post, "The Investment Delusion". This is a very important essay on the subject and if you have any interest in investments I urge you strongly to read it and to pass it on to anyone else who might benefit from reading it. It lays out in the clearest possible way what investments really are, where they're going and the implications for anyone involved in them.