America's Declining Prosperity

                                                                                                written 18 Aug 2018

                                                                                                published 25 August 2018

            On August 8th, UDJ syndicated columnist Robert Samuelson reported on the downward mobility in America.  While 90% of people born in the 1940s financially exceeded their parents, only 61% of those born in the '70s, and 50% of those born in the '80s accomplished this.  He blames poorer schools, income inequity, weak housing construction, inadequate innovation, and over-regulation.  However, I believe these are all symptoms of four systemic changes; population growth, peak empire, peak oil, and climate change.

            Population in America has more than doubled from 144M when I was born in 1947, to 326M today, and global population has more than tripled.  This increase, the most rapid in human history, has depleted easily accessed resources, increasing scarcity and prices.  

            Second, economic empires of exclusive gain, in conflict with the reality of holism, have an arc of rise, peak, and decline.  Following WWII, America was the only intact manufacturing economy, with the most developed oil infrastructure, and we ruled the planet. From 1945 to 1972, Americans had access to the best the world offered, and the middle class, with strong unions, expanded and flourished.

            The rest of the world eventually rebuilt their manufacturing capacity with more efficient technology, and challenged American economic supremacy.  At great cost, we fought two major wars, one to a stalemate and the other to defeat.  In 1972, our empire peaked.  We had to abandon the dollar convertibility to gold to avoid bankruptcy, and we lost control of the price of oil because domestic oil production peaked.  

             America shifted from lending money, to being the largest borrower on the planet. Increasing interest on the debt and relentless tax reduction for the wealthy, meant less money for education, producing poorer citizens.  Corporate efforts crushed unions, resulted in stagnant wages and accelerated wealth inequity.  Declining value of the dollar created a series of fiscal crashes for the first time in decades, further concentrating wealth at the top, and impoverishing the middle class.  Seeking higher rates of return, money was invested overseas, and reduced domestic manufacturing caused loss of high wage employment.

            Third, economies run on money, but civilization runs on energy, which today is primarily oil.  The most important measure of any energy source is the energy surplus available beyond what is required to produce that energy, the Energy Return On Energy Invested (EROEI).  It is this surplus that powers our civilization, currently so energy intensive it requires an EROEI greater than 20:1. 

            When the oil age began, a new well in a major field would geyser oil into the sky, and produced for decades, creating an EROEI up to 100:1.  But most of the large global fields have been developed, peaked, and are now declining, so new fields are more difficult "unconventional" oil (very deep water, tar sands, and hydraulic fracking), which require more energy to produce, reducing global EROEI to 19:1.  Shale oil, which has been vigorously developed in the US, has an EROEI of about 4:1 because the wells are expensive to drill and deplete in less than a decade.  The current American fracking boom began about a decade ago, and the industry has lost more than $250B so far.

            Fourth, climate change is eroding prosperity.  As the planet heats, we are seeing more extreme weather events, particularly drought and flooding, which will continue to worsen.  As I write this, there are over 100 large fires burning in the US, 15 in California, which spends more than $440M annually fighting a year-round fire season.  In the US, the 2017 insurance costs for rebuilding after firestorms and floods exceeded $300B, and this year is hotter.  This doesn't include the adverse impact on food production, which is beginning to cause scarcity and higher prices.  Rising sea levels are also raising costs.  Miami is spending more than $400M to protect against a 3' rise in their downtown area.  Real estate prices are beginning to drop on shorefront properties vulnerable to sea level rise.

            These systemic changes will crash our civilization if we fail to redefine prosperity as more than material accumulation.  The pursuit of happiness is in our Constitution, but the hoarders of money have confused wealth with happiness, and we are a poorer nation as a result.

PG&E's Liability For Fire Damages

                                                                                                written 12 Aug 2018

                                                                                                published 18 August 2018

            A few months ago, the CalFire verdict came back that PG&E equipment was responsible for most of the October fires in Northern California.  The same laws that give the company right to take private property they want, requires the company to pay for losses caused by their operations.  Current law requires these costs be borne by shareholders, not ratepayers.  Before the fires were even cool, PG&E started lobbying to have that obligation changed, claiming that the possible $10B loss could force the company into bankruptcy, because the $30B company carried only $800M in insurance.  Another PG&E proposed solution is state supported bonds, which will increase rates as well as cost the taxpayers.  Bad planning on PG&E's part becomes a rate payer problem, if the legislature can be convinced.  If the public is to bear the costs of these losses, it is worth examining what we get for this payment.  

            PG&E is one of the largest investor owned utilities in the country, one of three in the state.  They have a monopoly in the area they serve, regulated by the Public Utility Commission (PUC), which has historically sided with the company, setting a guaranteed rate of return on investment.  As a private corporation, their mission is maximum return for shareholders, which includes reducing costs on maintenance and overhead, like insurance.

            The only alternative is publically owned power systems, which serve 25% of California.  Los Angeles, Sacramento, San Francisco, and an additional 44 smaller towns, including Ukiah, have municipal power systems.  In Ukiah, we pay less than 2/3 the rate PG&E charges for the same amount of power, one of the benefits of socialized electricity.  Public ownership shifts the economic goals from maximizing fiscal profit for the shareholders, to improving service quality for the ratepayer/owners, by infrastructure investment for resilience and reliability, and living wages for local employees.

            Capitalism generates profits for a few, but socializes losses to everyone whenever it gets into trouble.  From a holistic perspective, this illusion of exclusive gain is a foolish denial of the fundamental reality that all parts are connected and need nourishment for the system to thrive.  We have been so programed to "fear" socialism, that we ignore all the ways that socialized systems make sense, particularly in monopoly systems, where the theory of competitive advantage fails.  

            Capitalist monopolies have to be regulated to protect against the inherent greed of the system, but regulatory capture, where the companies buy or influence the regulators, is a well know failure.  Socialized monopolies, being run by humans, are still subject to misuse, but there are additional checks and balances.  The board members are locally elected, and subject to comment and vote. By living where the system operates, they experience the quality of the service in a way that absentee shareholders do not.

            PG&E survived bankruptcy in 2001, but it is not to anyone's advantage to have it happen again due to fire costs.  Under pressure from environmentalists, PG&E is a major player in the shift to more renewable energy and storage, as the state addresses climate change, and further investment in this direction would be at risk in a bankruptcy.  However, we should consider alternatives to just sticking rate payers with the bill. If they, or the state taxpayers, are expected to cover costs when things go wrong, they should also expect an equity share in the company to benefit when things are working.

            If the taxpayers are billed, then some form of public-private consortium would have to be worked out, with state appointed members serving on the board, and regular payments to the state general fund as profit sharing.  If the rate payers are billed, then they should have voting representatives serve on the board to protect their interests in reliable, affordable service, with profit sharing in the form of reduced costs.

            There is also the alternative of outright confiscation of the power system, as the state has an interest in keeping power flowing as an economic necessity. If PG&E is so badly managed that they can't responsibly provide this necessary service, then the people have no choice.  Capitalism is not a divine decree, it is just one way of organizing an economy.

Considering A Local Currency

                                                                                                written 4 Aug 2018

                                                                                               published 11 August 2018

            Money's function is facilitating commercial exchange within the community.  The abundance or scarcity of dollars, due to national or global events, can radically disrupt that function in our local economy.  Globalized finance has released an ocean of money, racing around the globe seeking the best fractional return on investment.  Money washes into a local or national economy, disrupting the previous economic stability, only to rush out again chasing new opportunities, leaving economic wreckage behind, as in the 1997 Asian financial crisis.

            No matter how money comes into our community, the longer it stays local, the more robust our economy.  It is well documented that shopping locally stimulates the local economy by slowing the "wealth leakage" rate.  A 2003 study by The Institute for Local Self-Reliance found that 55% of money spent at a local independent store immediately leaves, and the remaining 45% stays as secondary spending to support the local economy.  At a big box store, 86% leaves immediately, something to watch now that CostCo is open.  100% of online shopping leaves.  

            Some countries have made efforts to insulate their economy from such wealth leakage.  In 1936, responding to the Depression, Swiss businesses started the WIR Bank, as a credit alternative to the Swiss Franc.  This currency was not valid outside the country, so the wealth value in the system stayed in the national economy.  The intention was to increase sales and profits of the participating businesses through interest free credit, encouraging members to buy and sell within the group as much as possible.  Starting with 16 members, they had grown to 62,000 participating businesses by 2005. 

            Individual communities have established alternative currencies as well.  The oldest active system in the US is "Ithaca Hours", in Ithaca, New York, established in 1991, currently involving over 500 businesses.  Within the last 20 years, as the Transition movement has grown, more communities have begun to create alternative currencies to reduce wealth leakage, stimulate local shopping, and provide resilience to financial turbulence.  While many have failed, Wikipedia shows 20 local currencies still active in the US.  

            An alternative currency, Ukiah Hours, was proposed here around 2001, but seems to have died as a result of burnout of the core group.  When I lived in Port Townsend, Washington, the local currency effort was a time barter system, where members traded time at equal value.  Transactions were recorded digitally, and there was no physical currency.  The membership never got above 150, as most of the services offered for trade were peripheral to the core economic needs of the community.  While the Port Townsend Transition movement is still very active, the alternative currency effort seems to have died.  

            To be useful, an alternative currency should facilitate acquiring the basic needs of life in a community: water, food, power, and sanitation.  Imagine the City of Ukiah and the Ukiah Co-Op teaming up to establish a local currency which would be honored by these two initial participants.  The City provides water, sewer, trash disposal, and electricity, and the Co-Op provides food.  The unit of exchange could be pegged to a specific quantity of goods, say kilowatts and carrots, as a hedge against inflation.  Call it a Kilowatt-Carrot, or KC for short.  People could buy into the KC system, or, with recipient's approval, the City and the Co-Op could spend KC's into the economy as a credit for specific goods.  

            Even this little closed system would be viable, as it serves real needs. Local businesses would be encouraged to participate in this enforced local shopping, since the KC have zero wealth leakage.  Businesses could pay City taxes with KC's, and employees might take partial payment with KC's.  As with the Swiss WIR Bank, as more businesses participated in the KC system, they would have incentive to buy local themselves.  As more businesses participate, people living outside Ukiah would have reason to join as well, even if they don't get the primary City services.

            Obviously, there are a lot of details to cover before such a system could function, but the opportunity is there, and the fundamental need for economic resilience is going to get more important as the global debt bubble heads toward its logical conclusion.

The Global Debt Bomb

                                                                                                written 28 July 2018

                                                                                                published 4 August 2018

            I recently heard the sound track of Paul Grignon's 2006 video "Money As Debt" as a two-part podcast on TUC Radio (tucradio.org), which was very informative.

            Once societal commerce expanded beyond barter, symbolic money was created, with value maintained by consent of the community.  The first physical artifacts were eventually supplanted by paper, and today most money has no physical form, being digital records on hard drives.  To keep prices stable, the money supply must expand at the same pace as economic productivity.  Too little money slows commerce or causes collapse, like the Depression of 1929.  Too much money creates inflation, a different instability.  

            Our money is created out of nothing in two ways.  A small part is printed into existence by the government, but the vast majority is loaned into existence as debt to private banks.  The money the government creates is deposited in a private bank, which is allowed by law to create debt ten times the value of the deposit, usually secured by a real asset.  The borrower deposits this money in another bank, which must retain 10% on deposit as reserve, but can loan 90% as further debt.  This is known as fractional reserves, based on the assumption that few of the depositors will make claims on their deposits at any one time.  At each stage, the newly created money is deposited and loaned in a diminishing series, until the original deposit by the government has been expanded as debt obligation worth 100 times as much.  Our money is debt obligation.

            The bank loan creates the value of the loan principal, but interest charged as profit for the bank must be paid in addition to the principal.  The borrower is faced with the challenge of finding this extra money, which on long term loans, like mortgages, can be greater than the principal.  Since money is debt, the options are to take on more debt, or default on the loan, in which case the bank takes ownership of the asset securing the loan.

            Both options eventually threaten the stability of the whole system.  Since the borrowing option expands debt independent of actual economic growth, total indebtedness can eventually exceed the real worth of the entire society.  The default option means the banks exponentially accumulate control over a greater share of the net worth of the society.  While this serves the bankers, it impoverishes the society as a whole.  Interest-bearing debt-based money is a global phenomenon, so both these problems are now global as well.  In 2015, total global assets were valued at $250 trillion, and total global debt was $233 trillion, more than three times the annual global economic output, and increasing about $13 trillion a year.  The richest 8 people own as much as the poorest 50% of the planet.  In the US, the top 1% own 40% of the country's wealth.  Needless to say, this capitalist debt money system is unsustainable and a threat to our society.

            Even if we can unwind this precarious situation, are there any real alternatives?  Fortunately, the answer is yes, but vested interests will fight any change, until the current system crashes and needs a taxpayer bailout.  Again.

            An alternative to debt-created money is spending money into existence.  Since all money is created out of nothing, the government could create what is required to eliminate the national debt. It could fund massive infrastructure investments, employing people, and improving the quality of life for the entire society.  It could give money to everyone as a Universal Basic Income, without needs requirements.  People at the bottom of the economic pile spend their cash into the economy immediately, as opposed to the rich, who tend take it out of circulation as savings. If the money supply gets too large, taxation could trim the supply back.  All this money would be created without debt, or predatory interest.  Instead of giving created money to the private Federal Reserve, which loans it back to the government at interest, a government owned National Bank could be created, like the Bank of Canada.  Such radical solutions would creatively disrupt the current financial structure, which is headed toward chaotic collapse and depression.

Newton and Karma

                                                                                                written 21 July 2018

                                                                                               published 28 July 2018

            Sir Isaac Newton is famous for his 1686 description of three laws of motion.  These are: 1, the motion of an object remains the same unless a force is applied; 2, force is equal to mass times acceleration; 3, every action has an equal and opposite reaction.  When a hammer hits a nail, the nail is driven into the wood and the motion of the hammer is stopped.  The action is the movement of the nail, and the reaction is the end of the motion of the hammer.  When a sharply struck cue ball squarely hits another ball on the pool table, the other ball shoots away and the cue ball stops dead.  This is action and reaction.  

            Momentum is mass times velocity.  From a dualistic perspective, there are two separate pool balls, but considering the whole system, the momentum of one ball is transferred to the other through contact: momentum is conserved through the balance of action and reaction.  Newtonian mechanics has been defined as independent masses joined together in energetic holism through contact with each other.

            Quantum mechanics arose a century ago and presents a very different picture of the world.  Mass is no longer simple billiard balls in occasional contact, but is described as a peak in a probability function, quantifiable only when observed, and arising out of an immense ocean of energy.  Einstein described the energy equivalence of mass in his famous equation, energy equals mass times the speed of light squared.  Ongoing quantum research has shown that mass is non-local, meaning it is fundamentally connected, not just through contact in space/time, but in dimensions beyond space/time.  

            As confusing as all this sounds, challenging our direct experience of the world, quantum theory has been repeatedly put to the test, and measurable results confirm these relationships.  Technologies based on quantum theory, such as computers, lasers, and nuclear weapons, not only work, but have transformed our world by their power of connectivity.  Additionally, consciousness has been shown to be non-local as well, fundamentally connected beyond space/time.  There is an emerging theory in physics that there are no material "things", but only thoughts and experience in relationship.

            Considering non-local consciousness helps us understand the Buddhist concept of karma, which is similar to Newton's third law.  If you cause pain, you will eventually experience pain, or conversely, giving joy brings joy, the foundation of the Golden Rule.  We don't normally experience this connection because we live in a dualistic world view of separateness.  When we push on another, we experience only the act of pushing, not the experience of being pushed. The non-local, or non-dual connection of consciousness requires an experience of reaction as a balance, since the events are unity in reality.  Our ignorance of connection doesn't negate the fact of balance, but does shift our experience of that balance in time.

            For example, we are currently experiencing a karmic balance in the United States.  For decades, America meddled in the elections of other countries for our national advantage, and are now experiencing outrage at having our elections meddled with by Russia.  We support tyrannical dictators all over the world for the benefit of corporations and banks, and ignore the suffering of the people of those countries.  Under the current administration, the same corporate interests are more openly oppressing American citizens, even jailing many who dare to protest.  Americans have economically benefited from intrusions into other countries, even if we didn't know about it.  However, the pain was real to other people, and until we feel it ourselves and demand fairness and equality for everyone, the karmic balance won't be restored.

            There is a sect of Christianity which believes in a punitive God, punishing guilty sinners, but the translation of sin from the original Aramaic is "to miss the mark".   Many people feel that karma is punitive, but that is an error.  No judgment is involved, any more than stubbing your toe on a rock implies the rock had it in for you.  Karma is simply experiencing the reactions to our own actions, a consequence of the non-dual connection within all life.  As Thich Nhat Hanh says, "we are here to awaken from the illusion of separation".

The Republican Long Game

                                                                                                written 14 July 2018

                                                                                                published 21 July 2018

            The Federalist Society was founded in 1982 to promote conservative judges and legal interpretations.         In the 90's, the Federalists felt they were "losing" the culture wars, as most Americans supported environmental protection, contraception, abortion, and rights for voters, women, workers, and gays.  Believing they knew what was best for the country, the Federalists decided to pack the courts, particularly the Supreme Court, to impose their narrow vision as the law of the land.  Leonard Leo, a conservative Catholic Republican activist, joined the Federalists in 1989.  Leo has shaped the Federalist Society to align with the religious beliefs derived from his membership in the Knights of Malta, and is the Federalist liaison to the Trump White House.  The only judges Trump has considered are Federalists.

            The tight election in 2000 and the intrusive Supreme Court decision to halt the vote count in Florida was the opening play in this long game.  The 5-4 decision to make George W. Bush president included three members of the Federalist Society, Rehnquist, Scalia, and Thomas.  When Rehnquist died and O'Conner retired, Bush appointed Roberts and Alito, both Federalists, bringing the total to four.  

            The aftermath of the voting problems in Florida saw widespread government investment in electronic voting machines, supplied by companies owned by conservative Republicans, using secret, proprietary software.  With no public transparency, the accuracy of the vote count began to be questioned.  Coincidentally, Republicans flourished, and instituted widespread voting district gerrymandering and erroneous voter role purges purported to prevent voter fraud, successfully suppressing Democratic voter turnout.  

            The 2010 Citizens United 5-4 decision by the Supreme Court, with the four Federalists in the majority, cited corporate right to free speech, exposing politics to unlimited cash donations, including untraceable dark money.  Alito died in February 2016, during Obama's administration.  Under Federalist urging, the Republicans in control of Congress refused to move on Obama's court nomination, citing that it was unfair, being "too close to a pivotal election".  By November 2016, Republican voter purges and gerrymandering, combined with a cash flood from corporations, the wealthy 1%, and the Russian mob, put Trump in office, and he appointed Gorsuch, another Federalist. 

            Even though Justice Kennedy will retire even closer to a "pivotal election" than Alito's death, hypocritical Republicans want to rush Trump's nominee through in record time.  If Kavanaugh is confirmed, he will be the fifth Federalist on the bench, sealing their agenda for the near future.  It is worth examining the agenda of the Catholic Knights of Malta and the Federalists, since they have worked so diligently to stack the court in their favor.

            The Knights of Malta are an extremist Catholic sect which considers the Pope too liberal.  Their catechism claims to be a moral law higher than human laws, defining acceptable natural and unacceptable unnatural functions. Sensual enjoyment of any kind is unnatural.  Sex is for procreation, not pleasure, and a woman's only purpose is to give birth.  Since homosexuals don't procreate, they are unnatural.  Life begins at conception, so abortion, and somehow even contraception, is murder.  These are supposedly God's laws, so individuals have no rights to decide for themselves.  Other faiths are anathema.

            The Federalist agenda is almost as extreme, proposing that all New Deal programs including Social Security are unconstitutional.  Corporations have free speech and religious rights, and there is no constitutional right to privacy.  The traceable funding for this agenda comes from the Koch brothers, the Mercer family, the Chamber of Commerce, Chevron, Microsoft, Google, and Pfizer, among others, all with a goal of eliminating financial and environmental regulations.

            While Islamic extremists use violence to subdue a nation to their tyrannical vision, Christian extremists have used dark money and pliable politicians to the same ends.  The beginning of the reign of Emperor Trump is a good time to be a rich Republican, straight, white, "Christian" extremist man.  The rest of us are grist for the unfettered economy ravaging the planet for the profit of a few, employing fewer people in more dangerous jobs, with no provision for education, health care, or a social safety net.  From a holistic perspective, this joyless vision of exclusive gain is insanely suicidal, yet passes for Republican wisdom.

The Hero's Journey of Transformation

                                                                                                written 7 July 2018

                                                                                                published 14 July 2018

            Joseph Campbell is known for his lifelong research into myths from around the world.  Shortly before Campbell died, Bill Moyer interviewed him, available in a DVD series "The Power of Myth", which we recently viewed.  

            Myths are metaphors, like poems, meaning more than literal interpretation of the details, alluding to deeper relationships and wisdom.  After studying thousands of myths, Campbell found a common theme of an individual heroine, or hero, challenged to transcend self-interest, to risk their life for the good of a larger system, of which they are already a part.  Some individuals go seeking adventure, some inadvertently fall into the adventure, and in some cases, the adventure sweeps them up.  No matter how they became engaged, the quest demands they expand their sense of "self" in order to heroically recognize and embrace a larger context.

            Watching the video, it struck me that our current moment in US history is the hero's challenge.  Trump can be seen as a symbol of the isolated individual, acting without regard for anyone else, the state of the hero before the transforming adventure of myth.  In Trump's mind, America is a solitary player on a dog-eat-dog planet.  He acts with no regard for the consequences of his actions, because he believes everyone is against him and looking to take advantage.  The border wall is a good example of the illusion of this view, as if walls can really keep out the problems that come with an interconnected world.

            One of my favorite metaphors from biology is the metamorphosis of a caterpillar to a butterfly.  After a time of focused eating and growing, the caterpillar begins to change, producing the hard shell of a cocoon around its body.  The soft body inside the cocoon dissolves into a featureless goop.  Within that goop, numerous small groups of cells, called "imaginal buds", begin to come together, forming the butterfly.  However, the caterpillar's immune system is still functioning.  Being narrowly defined, it attacks these growing imaginal buds as foreign invaders.  Because there is a holism between the caterpillar and the butterfly, this attack actually stimulates the growth of the imaginal buds, hastening the completion of the emerging butterfly.  The butterfly breaks out of the cocoon, contributes to other life forms by acting as a pollinator, mates, lays eggs, and the cycle begins again.

            Like a caterpillar, the American economy has spent decades in focused consumption, living without awareness or regard for the rest of the world, other than as raw material.  With less than 5% of the world population, we consume 24% of the resources, and produce 50% of the solid waste.  This economic form, having run its course, is now collapsing.  Whether we like it or not, we are engaged in a mythic adventure, challenged to transform into a new form, which acknowledges and contributes to the larger connected planet.  Nothing less will really do at this point.    

            The American experiment with democracy is a testament to the powerful potential of inclusion.  When American was founded, a nation based on democracy and equal rights for all was considered a naive utopian fantasy.  While imperfect in practice, the fact of democratic America's duration has inspired oppressed people all over the planet.  America is now being tested to see if our vision is still strong, or whether selfish greed will destroy our inclusive democratic experiment.

            This national myth challenge illuminates our personal myth challenge as well.  The old cultural stories based on fear and separation are strained by the explosion of connective technology, which disrupt the familiar social order by opening powerful links to the whole world.  Global immigration patterns, the rise of individual rights in the form of voting, gender equality, sexual preference, and race, appear as threats to an isolated individual, rather than expressions of the diversity of the unity that includes us all.  Trump's attacks on compassionate democracy are calling us to become heroes and heroines engaged in an archetypical adventure of transcending our selfish perspective, and embracing our connection with the unity of the world.  This is our work.  This is our human potential.  This is our birthright.