“Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent.” Energy experts generally agree that a 2 per cent annual decline in extraction of crude oil translate to reasonably painful adaptation and the cessation of economic growth, a five per cent declines spell very painful adjustments and an economic depression of unprecedented magnitude, and a ten per cent decline means societal breakdown at a monumental scale.
As waves of red ink from the Overdraft Ocean lap at the shores of The Check(book) Republic, the cry goes out: The economy must grow.
I have new vision of the United States. I call it “Bucket-head Nation.” My inspiration came from a humorous scene in Werner Herzog’s latest film, Encounters at the End of the World. The scene portrays students in an Antarctic survival class wearing buckets on their heads to simulate the zero-visibility, white-noise conditions of the Antarctic tundra. The leader of the bucket-heads had the objective of leading the other bucket-heads to a location specified by the instructor. They failed this task twice because the leader of the bucket-heads misguided them. The scene ends with a shot of the disgruntled bucket-heads in a confused, clustered entanglement. Sound familiar?
It seems neither the Fed nor the Treasury Department cannot stop sunshine with an umbrella, much less interrupt the relentless tsunami of dire economic news.
That was 1971. Before the first oil crisis. Before the Iran hostage crisis. Before globalization ruled our lives. Simpler times, for sure. Just about everybody in Weippe was an FDR Democrat, dedicated to strong workers’ rights and a decent social safety net.
One of the honors students was in Zimbabwe last summer as the Zimbabwean economy crashed. His description of the human horrors, which included starvation and mass murder, was quite a lesson for those who believe we’ll behave when the grocery stores are empty. And also quite a lesson for those who believe the mainstream media are providing relevant world news.
Cheap oil allowed the construction of suburbia. Cheap oil allowed us to use our houses as ATMs. Cheap oil allowed the banks to borrow money inexpensively and lend it slightly more expensively (but it was still cheap). Cheap oil allowed economic growth.
Those days are behind us.