Mar 14, 2011

The Moral Calculus of Mega-Economics

By Rice Farmer / collapsenet.com
The Moral Calculus of Mega-Economics

March 14, 2011 (1400 hrs) - Watching scenes of the devastation is emotionally taxing. Bodies continue to be found everywhere. The body count in Miyagi Prefecture alone is now over 10,000. Whole towns completely wiped off the map. Even if people escaped with their lives, those lives are now shattered. And now it looks as though the 20-year slow-motion collapse of Japan’s economy could be significantly accelerated.

Despite the promises and plans of the government and all the businesses that might profit from reconstruction, we know that it will never all be rebuilt and put back the way it was. And the reason for that is simple: energy is too expensive now. How much reconstruction can be accomplished depends primarily on the price of oil, and the outlook in that respect is not good. Money just doesn’t buy as much energy as it used to. The Kobe earthquake of 1995 required many resources, much energy, and a long time for rebuilding. Homeless people were shoved into prefabricated shacks and effectively abandoned there for years. But here’s something to keep in mind: The inflation-adjusted average price of oil in 1995 was $23.96. Money was still able to mobilize a lot of energy. And that went a long way toward powering reconstruction. But now oil costs four times as much (as I write this, WTI crude is slightly over $100; Brent is of course higher still), and governments are more heavily indebted. So we can expect much less bang for the buck. After all, that’s all money is good for: mobilizing energy, either directly or indirectly. Further, commodities are also on a tear these days.

Haiti is still a shambles. Developed countries were supposed to help that dirt-poor country reconstruct and get back on its feet, but the developed countries can’t be of that much help because they too are all economic basket cases and can’t even help themselves.

Then there’s New Zealand to clean up and rebuild. How much of that will be accomplished before the effort flags in the face of expensive energy and mounting debt?

How did it come to this? Why are there so many people? How did national economies scale up to such elephantine proportions, and then merge into the global economy? And what must be done to prop it up? Therein comes the moral calculus of mega-economics and its handmaiden, mega-technologies. And then there is the end result of mega-technologies: mega-accidents.

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