Resignation and optimism on the brink of the apocalypse

Guest post by Federico Tabellini

Despite the misleading title, I will not talk to you today about the coronavirus, but of that other, far more insidious crisis that we cannot hope to solve with a vaccine. The global ecological crisis: a crisis in which we are the virus. I would like to share with you some brief reflections on human agency, human nature and their relationship with the possibility of a sustainable society. I know, philosophical stuff – but with very practical implications. 

The idea for this article came from a series of conversations I recently had with a reader of my book ‘A Future History of the 21st Century: How We Overcame the Crisis of Civilization’. The text debates the nature of the current socio-economic system, and analyses which of its structural elements constitute obstacles to our transition to a sustainable society. It then discusses how we could potentially overcome those obstacles, focusing on specific economic, institutional and political reforms. All of this while avoiding the well-known trap into which many Degrowth theorists still fall today, which can be summarized by the dead end idea that bottom-up change is the only way out of the crisis, and that to change the world we first need to change ourselves. In short, this is a dead end idea because it cannot be translated into concrete policies. Conversely, to be carried out successfully, a bottom-up change requires a top-down change that facilitates and supports it. In other words: institutional, political and economic reforms.

After this necessary introduction, let’s get to the core topic of the article. The reader I spoke of earlier agrees with the book’s analysis of our current situation and acknowledges that the solutions proposed could produce the desired transition to a sustainable steady-state economy. However, he argues that human nature will never allow us to implement those changes. In other words, not only can human beings not change themselves – they can’t even change the very institutions they created. And this is not an unlikely change either, he claims, but an absolutely impossible one. This is the same as saying that we are trapped in a car that is heading speedily towards a ravine, with a functioning brake in easy reach of our hands, but sadly we are programmed not to pull it.

To put it another way, the problem is not to be found in a defect of the hardware (our hands) or in the resilience of the system (the car), but rather in the software code (our head). The software, he argues, is programmed for accumulation, for a growth without limits and without purpose, for constant acceleration. These things are not cultural constructs, but rather inalienable characteristics of human nature.

He then proceeds to claim, based on fringe clyodynamic theories – which he of course accepts as undisputable scientific proofs – that history demonstrates this; that civilizations have always grown until they could, and when they stopped doing so, they without exception collapsed. The only solution, he concludes, is exactly that: collapse. A non-solution. Worse still: to embrace the very idea that a solution is not possible. That we cannot pull the brake. That we cannot change direction. That we need to give up and accept that we are going to fall into the ravine, and die along with the system. Not everybody, of course. Those of us that will survive will have the chance to start again, little by little, from down there, the slow climbing of the cliff. Only this time with fewer resources. And this ad infinitum, with our heads forever preventing us from learning from the mistakes of the past: until the final suicide.

Of course – I’m sure you’ve guessed it by now – I do not agree that this is the unavoidable destiny of our species. I do acknowledge, however, that we are indeed genetically programmed for accumulation and growth, and that we are not programmed to individually impose limits to ourselves. We get immediate pleasure from accumulation, while the most we get from limits is a kind of long-term serenity. To obtain the latter we need effort and perseverance, while to accumulate more and more, we just need to follow our instincts.

In other words, starting from a clean sheet and without culture, we tend to long for growth. To have more, to produce more, to do more. What I do not agree with is that our culture has to strengthen this inclination, and cannot instead compensate for it, for everyone’s sake.

Let me be clear: contemporary global culture intensifies these human tendencies more than any other culture that preceded it. The fact that we live inside this culture makes us see it as the most natural outcome of human nature, just as the ancient romans thought of their own culture as the peak of human civilization. Neither they nor we were right, of course. In the same way as we constrained our human tendencies to indulge in gratuitous violence, and no longer slaughter slaves in an arena, so people in the future can stop growing their production and consumption beyond the carrying capacity of the ecosystems. What allows us to do this is human agency: the ability to change our culture and our institutions based on what we think is right. In this case, what is right for most people (including the author of this article) is to increase the lifespan of the human race on this planet, and make sure that life is worth living for future generations.

In this sense, we should note that our current situation involves never before seen elements that work in our favour. Here are some of the most significant:

1.      Today, for the first time in history, we know that our socio-economic model is environmentally unsustainable, and that a change is necessary (although there is currently no complete agreement on what type of change we need, or how to produce it).

2. Today, for the first time in history, the entire world is interconnected, and can potentially discuss shared solutions (although coming to an agreement is not as easy as we hoped).
3. Modern technologies make producing the goods and services essential to human survival more efficient. We produce and consume too much, but each unit we produce and consume has a lower impact on the environment compared to the past.
4. It is now a consolidated fact that beyond certain levels of consumption, further consumption does not equal more well-being for human beings.[1] We already passed those limits, which means that a reduction of our per-capita consumption would not produce a reduction in aggregate well-being.

There is also historical evidence that points towards the possibility of complex social models that are not based on the relentless accumulation of material goods.

There have been entire communities in Asia and Africa that for centuries lived in societies in which the individual accumulation of material goods was socially sanctioned. These are examples of instances in which culture compensated nature, producing ecologically sustainable social models as a result.

Thus, the real fundamental question is not whether it is possible to build a sustainable society, but rather whether it is possible to do so without sacrificing the fundamental values of the West and people’s well-being. If by ‘fundamental values of the West’ we mean things such as human rights and political and civil liberties, the answer is a resounding ‘yes’ (you can find a demonstration of this in my book). If we instead mean unchecked capitalism and a lawless market, then the answer is ‘realistically, no’.

However, we do not need to ask history to know this, because history does not include the full range of possible futures. If there is a constant in human history, it is novelty. The creation of new things that constantly confute the idea that history is destined to repeat itself. History is not the full toolbox we have at our disposal to build our future. Many things that exist today did not exist before. These things are as varied as computing technologies and the internet, but also liberalism, the state of law, and human rights. We also, for the first time, live in a full world, without new frontiers to exploit. Human history has always been a history of exploitation because, among other things, there was an abundance of resources to exploit; now we are consuming (far) more than what nature produces. The situation has changed, and there is no reason to believe that we cannot change also. Before we did not need to change. Now we do. The very fact that we can see this as a problem is a relatively new thing, and a hint that we have the power to solve it.

My reader, however, appears to be blind to the very possibility of change, any change. This is because he draws his arguments not from history, but from an interpretation of history. A highly deterministic interpretation that excludes human agency. Doing so, he looks at the forest as an actor independent from the trees it is made up of. In this way, culture becomes an entity separated from people, which controls them as a puppet master. It has its own will, or moves as if it had one. There is no way we can control it. And even when it looks like we are in control, in reality we are just executing its directives. It is not the trees that make up the forest; it is the forest that makes up the trees.

Conversely, my position is one shared by most social scientists: the forest makes up the trees and at the same time, the trees make up the forest. The influence is mutual. Under certain historical conditions, it is mostly the forest that shapes the life of the trees. It decides where they lay roots, where they extend their branches, where they spread their seeds. In times of uncertainty and crisis, however, the trees can shape the life of the forest. They can shape which direction it expands. Whether it grows or retreats. If it provides sufficient nourishment for the living beings that inhabit it.

In a similar fashion, human beings are not slaves to their culture, although going against it, to change it, requires a considerable effort. An effort that the majority will not want to undertake unless they perceive it as absolutely necessary. Unless – and this is the main message I want to pass here – they believe that a change is possible.

Such a change is not likely to occur spontaneously, without direction. Most great changes in history have occurred when capable and innovative leaders (not only politicians, but also intellectuals) come together with a mass of people united by a common goal. A mass that starts small, but little by little grows until it reaches the critical threshold necessary to spark a change. This happened with women’s rights, with workers’ rights, with the liberal-democratic model, with communist revolutions, with Nazism. Change is not always positive. But it is almost always possible.

This does not mean it is probable. Often it is not. Today I think it is not probable. But it is possible. And this is really, really important. Another thing is important: change becomes more probable if we believe it possible. If the ideas of my aforementioned reader spread, change would become less probable: a self-fulfilled prophecy that could condemn our race (and others, too) to a dreadful future.

It is true: human beings are, to a certain extent, programmed by genes and culture. But they can also reprogram culture. Often they can only do this indirectly, like when the standard working day was reduced to 8 hours (an institutional reform). This produced more free time for individuals, which in turn translated into a proliferation of new activities, giving birth, among other things, to the entertainment industry and sport (previously, sport had been something that only athletes and nobles engaged in).

In conclusion, between my reader and myself there is both agreement and disagreement. We agree that the world is hurrying towards a ravine. We disagree on the possibility of pulling the brake. I firmly believe that resignation is the worst enemy of change. It paralyzes us. And I believe that optimism is needed more, not less, on the brink of an apocalypse. If we want to produce a positive change in the world, we need to look at the ravine with a smile on our lips, but also – and especially – with rolled up sleeves and our brains at work. It may be highly unlikely that we will be able to pull the brake. Nonetheless, we have the moral obligation to try. Success might not be probable, but it is surely possible. And this possibility, being rooted in the present and not in the past, is something that no deterministic interpretation of history will ever be able to disprove.

[1] See, for example, D. G. Blanchflower, A. J. Oswald, Well-being over time in Britain and the USA, in “Journal of Public Economics”, 88 (2004), pp. 1359-1386; R. Layard, S. Nickell, G. Mayraz, The marginal utility of income, in “Journal of Public Economics”, 92:8/9 (2008), pp. 1846-1857; D. Kahneman, A. Deaton, High income improves evaluation of life but not emotional well-being, in “Proceedings of the National Academy of Sciences of the United States of America”, 107:38 (2010), pp. 16489-93; E. Proto, A. Rustichini, A Reassessment of the Relationship between GDP and Life Satisfaction, in “PLoS ONE”, 8 (2013)_.

Collapse: Where can we find a safe refuge?

Does it make sense to have a well-stocked bunker in the mountains to escape collapse?

 

Sometimes, you feel that the world looks like a horror story, something like Lovecraft's "The Shadow Over Innsmouth.." Image from F.R: Jameson.

Being the collapsnik I am, a few years ago I had the idea that I could buy myself some kind of safe haven in the mountains, a place where I and my family could find refuge if (and when) the dreaded collapse were to strike our civilization (as they say, when the Nutella hits the fan). It is a typical idea of collapse-oriented people: run away from cities, imagined being the most vulnerable places in a Mad Max-style scenario.

Maybe I was thinking also of Boccaccio's Decameron, when he describes how in the mid-14th century a group of wealthy Florentines finds refuge from the plague in a villa, outside Florence. And they had a leisured time telling stories to each other. I don't own a villa in the countryside, but I took a tour of villages in the Appennini mountains, a few hundred km from Florence, to seek for a hamlet of some kind to buy. I was accompanied by a friend of mine who is a denizen of the area and whom I had infected with the collapse meme.

We found several houses and apartments for sale in the area. One struck me as suitable, and the price was also interesting. It was a two-floor apartment with the windows opening on the central square of the village where it was located. It had a wood stove, the kind of heating system you can always manage in an emergency. And it was at a sufficient height you could be reasonably safe from heat waves, even without air conditioning.

Then, I was looking at the village from one of the windows when a strange sensation hit me. People were walking in the square and a few of them raised their glance to look at me. And, for a moment, I was scared.

Did you ever read Lovecraft's short story "The Shadow over Innsmouth"? It tells the story of someone who finds himself stuck in a coastal town named Innsmouth that he discovers being inhabited by fish-like humanoids, the "deep Ones," practicing the cult of a marine deity called Dagon.

Don't misunderstand me: the people I was seeing in the square were not alien cultists of some monstrous divinity. What had scared me was a different kind of thought. It was that I knew that every adult male in that area owns a rifle or a shotgun loaded with slug ammunition. And every adult male in good health engages in wild boar hunting every weekend. They can kill a boar at 50 meters or more, then they are perfectly able to gut it and turn it into ham and sausages.

Now, if things were to turn truly bad, would some of those people consider me as the equivalent of a wild boar? For sure, I couldn't even dream to be able to match the kind of firepower they have. I thanked the owner of the place and my friend, and I drove back home. I never went back to that place.

A few years later, with a real collapse striking us in the form of the COVID-19 epidemics,  I can see that I did well in not buying that apartment in the mountains. At the time of Boccaccio, wealthy Florentine citizens could reasonably think of moving to their villa in the countryside. These villas were nearly self-sufficient agricultural units, where one could find food and shelter provided by local peasants and servants (at that time not armed with long-range rifles). But that, of course, is not the case anymore.

The current crisis is showing us what a real collapse looks like. And it shows that some science fiction scenarios were totally wrong. The typical trope of a post-holocaust story is that people run away from flaming cities after having stormed the shops and the supermarkets, leaving empty shelves for those who arrive late. That didn't happen here. At most, people seemed to think that what they needed most in an emergency was toilet paper and they emptied the supermarket shelves of it. But that was quickly over. Maybe we'll arrive at that kind of scenario, but what is happening now is not that the supermarkets are running out of goods, everything is available if you have the money to buy it. The problem is that people are running out of money.

In this situation, the last thing the government wants is food riots. And they especially care about cities -- if they lose control of the cities, everything is lost for them. So they are acting on two levels: they are providing food certificates for the poor, and, at the same time, clamping down on cities with the police and the army to enforce the lockdown. People are facing criminal charges if they dare to take a walk on the street.

Not an easy situation, but at least we have food and the cities are quiet. Think of what would have happened if I had bought that apartment in the mountains. I wouldn't even have been able to go there during the coronavirus epidemics. But, if somehow I had managed to dodge the police, then I would be stuck there. And no supermarkets nearby: there is a small shop selling food in the village, but would it be resupplied during the crisis? The locals have ways to survive also with local food, but a town dweller like me doesn't. And I never tried to shoot a wild boar, I think it is not easy -- to say nothing about gutting it and turning it into sausages. Worse, I am sure that no police would patrol that small village, surely not the woods. So, maybe the local denizens would not shoot me and boil me in a cauldron, but if I were to run out of toilet paper, where could I find some? And, worse, what if I were to run out of food?

So, where can we find refuge from collapse? I can think of scenarios where you could be better off in a bunker somewhere in an isolated area, where you stocked a lot of supplies. But in most cases, that would be a terribly bad idea. A well-stocked bunker is an ideal target for whoever is better armed than you, and they can always smoke you out. Of course, you can think of a refuge for an entire group of people, with some of them able to shoot intruders, others to cultivate the fields, others to care for you if you get sick. Maybe, but it is a complicated story: you need to build up a whole group of people with similar ideas and complementary skills, but most collapsniks are good intellectuals but poor peasants or hunters. You could join the Amish, but would they want you? It has been done often on the basis of religious ideas and in some cases, it may have worked, at least for a while. And never forget the case of Reverend Jim Jones in Guyana.

In the end, I think the best place to be in a time of crisis is exactly where I am: in a medium-sized city. It is a place that the government will try to keep under control as long as possible, and not a likely target for someone armed with nukes or other nasty things. Why do I say that? Look at the map, here.

This is a map of the Roman Empire at its peak. Note the position of the major cities: the Empire collapsed and disappeared, but most of the cities of that time are still there, more or less with the same name, the new buildings built in place of the old ones, or near them. Those cities were built in specific places for specific reasons, availability of water, resources, or transportation. And so it made sense for the cities to be exactly where they were, and where they still are. Cities turned out to be extremely resilient.

But how about Roman villas in the countryside? Well, many are being excavated today but, after the fall of the Empire, they were abandoned and never rebuilt. It must have been terribly difficult to defend a small settlement against all the horrible things that were happening at the time of the fall of the Empire.

So, overall, I think I did well in moving from a home in the suburbs to one downtown. Bad times may come, but I would say that it offers the best chances of survival, even in reasonably horrible times. Then, of course, the best plan of mice and men tend to gang agley, as we all know.  In any case, collapses are bad and that's doesn't change for collapsniks.

Why do Dragons Love Gold so Much?

We, humans, love gold so much that we have even imagined that giant, flying reptiles would share our love for the yellow metal. This curious vision of dragon's motives has a certain logic, although it takes some work to understand it. But it is sure that gold has been important in human history from the time, at least five thousand years ago, when our Sumerian ancestors started to collect gold and use it to prop the power and the prestige of their big men, the Lugals. 

Cassandra's Legacy has published several posts dedicated to gold. Below, a reflection by Pepi Cima, here some links to older posts. 

The Return of Gold as Currency? (2013)

The Lady doesn't Wear Gold (2013) 

The Strategy of Dragons: Hoarding your Gold (2013)

Peak Gold: How the Romans Lost Their Empire (2013)

Real gold? Are you sure? An examination of modern gold counterfeiting (2014)

Mineral Depletion: The Trouble with Gold (2014) 

Gold and the beast: a brief history the Roman conquest of Dacia (2014)

The Seneca Cliff of the Gold Mining Industry (2017)

What has Gold Ever Done for us?

by Pepi Cima

Could it be that gold mining is in modern times completely useless, very costly and terribly detrimental to the environment and nobody has seriously thought about it? Could gold acquire a status not too dissimilar to that of the rhinoceros horn?

Warren Buffet, the most revered investor of all times, says: “Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

Present day Gold economy is very costly for the environment and for our fossil fuel reserves. Gold bank reserves, equivalent to tens of years of civilian use of the metal, could be sold on the open market to reduce gold mining together with all its environmental and social negatives without affecting any of its industrial uses.

GOLD MINING FACTS

Global gold production totaled roughly 3300 tonnes in 2017. 10 listed gold mines are responsible for nearly 30% of global output, the remaining mines are private unlisted mines and very many Artisanal and Small Mines, ASM. ASMs, triggered by booming gold prices, have become a lucrative source of income in countries such as Thailand, Peru, and Senegal over recent years.

They involve a lot of people, one widely used estimate is that more than 100 million people globally depend either directly or indirectly on ASM for their livelihood. In Africa alone, more than 6 million people are directly employed in ASM.

Gold mining is a very big industry in absolute terms: in 2017 the market capitalization of the first 20 public gold mining companies was reported at 140 B US$, for comparison oil companies in 2018 totaled 1250 B US$.

China, the largest gold producer in the world, in 2016 accounted for around 14% of total annual production but no one region dominates. Asia as a whole produces 23% of all newly-mined gold. Central and South America produce around 17% of the total. Around 19% of production comes from Africa and 14% from the former USSR.

Increased gold prices, together with low energy costs, are encouraging the exploitation of lower and lower grade mineral in bigger and bigger mines.

GOLD AND THE ENVIRONMENT

The consequences of all this mining are land damage produced by deforestation and environmental destruction at the mine and its surroundings. Its impact is particularly damaging because it mostly occurs in pristine environments, see for example the huge mines of Las Claritas in the Caribe Indian region of Venezuela and El Sauzal in the astoundingly beautiful Tarahumara region of the state of Chihuahua in northern Mexico.

A quick look at the aerial pictures of Google Earth, ( 6°11'35.00"N, 61°26'9.60"W and 26°59'52.73"N, 107°54'3.51"W are the relative geographical coordinates) would suffice to get an idea of the physical devastation. Artisanal and small-scale mines are responsible for similar, smaller scale, havoc but in larger numbers.

Gold mining is particularly destructive also from the pollution point of view: mercury and cyanide are the two main chemicals employed in gold extraction.

For every gram of gold produced using the amalgamation process between one and two grams of mercury are released in metallic form or as vapor. UNIDO (UN Industrial Development Organization) estimates that small-scale gold mining is responsible for about a third of world mercury emissions.

Every year, 2,000 tonnes of mercury arising from human activities such as coal-fired power plants and gold mining are emitted into the atmosphere, according to FOEN, the Swiss environment office. The heavy metal is found at the site of contamination but because of its extreme volatility also at locations far from where was originally released.

Cyanide, mainly used in large industrial mines, is highly toxic. Low-grade ores are stacked into heaps and sprayed with a cyanide solution at a concentration of about one kilogram NaCN per ton of ore, a few grams of gold. The precious metal is complexed by the cyanide to form soluble derivatives, e.g. Au(CN)2. The "pregnant liquor" is separated from the solids which are then discarded to a tailing pond or spent heap, the recoverable gold having been removed. The metal is recovered from the "pregnant solution" by reduction with zinc dust or by adsorption onto activated carbon. This process can result in environmental and health problems. A number of environmental disasters have followed the overflow of tailing ponds at gold mines. Cyanide contamination of waterways resulted in numerous cases of human and aquatic species mortality.

Switzerland hosts the environmental policy center of competence for chemical products and toxic waste in Geneva, Global Environment Facility (GEF), a 183 member countries environmental cooperation voluntary organization. Coincidentally most of the gold produced in the world physically transits Swiss refineries. In 2017 2,404 metric tons of raw gold were imported into the country, worth 70 BSF, and 67 BSF were exported. Only the chemical/pharmaceutical sector is more important with 98 BSF.

GOLD MINING AND THE SOCIAL ENVIRONMENT

Degradation of the social environment is an associated issue too. Although the vast majority of artisanal scale mines are undertaking a vital livelihood activity, there is strong evidence that elements of organized crime are involved. A host of players have vested interests in maintaining the status quo of informality and illegality for example because of money laundering or smuggling schemes or of support to civil war. Incidents occur related to unsanitary work environment, child labor, human rights abuses. Some have little to do with the mining company but take place on or in the direct vicinity of the mining concessions.

Furthermore large industrial mines don't necessarily provide jobs for local unskilled populations, as is the case for the mines in the Tarahumara territories of northern Mexico where literally none of the locals are employed and all the mine workers are flown in and out from neighboring regions to an otherwise isolated mine.

GOLD MINING AND ENERGY

Gold mining is a very energy-intensive industry. In 2013 the EIA reported that the top 5 Gold mining companies were using 104 liters of diesel fuel per gold ounce extracted, at more than 10% of the extraction cost at diesel price untaxed rates. At European street pump rates, it would have accounted for nearly half of production costs.

Incidentally, Bitcoin perpetuates the energy wastefulness of gold, another money-form which has materialized as an environmental nightmare.

There is an ample literature on gold recycling and gold is often cited as an example of virtuosity of circular economy. Unfortunately an example of something of which we already have too much. A broader view of how the "system" works is badly needed.

GOLD ECONOMY

Most of the gold ever dug out of the earth in the whole history of humanity is still stored somewhere since it is precious and doesn't corrupt. In a chemical sense.

The best estimates currently available suggest that around 190,000 tonnes of gold have been mined throughout history, of which around two-thirds have been mined since 1950. Because of its indestructibility, almost all of it is still around in one form or another. On earth, we store a supply of gold large enough to keep us going for more than 100 years. But going where? Roughly 20% of production is used in electrical contacts and jewelry but most of it as a reserve of value of one kind or another.

Many think of gold as something without which financial markets would not work.

On the other side liquidity problems with a gold-based monetary system caused the Nixon administration to abandon the gold standard and from that point forward no currency has a natural resource tethered to it. All money is now created from thin air, 95% or so via commercial bank loans. 

If there is something all economists seem to agree on is that the gold standard is a bad idea for a modern economy.

Most people don't have a clear opinion about the opportunity of saving gold as a reserve of value but many stash gold in deposit boxes anyway. Freud interpreted this behavior in his usual way.

Distinguished economists seem to have a clearer idea about the subject for example, in this excerpt from General Theory of Employment, Interest, and Money, par. VI, Keynes says with a sense of humor worthy a Monty Python sketch:

Just as wars have been the only form of large-scale loan expenditure which statesmen have thought justifiable, so gold-mining is the only pretext for digging holes in the ground which has recommended itself to bankers as sound finance; and each of these activities has played its part in progress….

GOLD AND BANKING

Governments seem to know everything there is to know, in their vaults, they accumulate gold in gigantic amounts and at tremendous cost.

Central bank reserves consist of foreign currencies and precious metals, mostly gold. From the following table, one can see central bank gold distribution among countries, as a percentage of their reserves and in grams per citizen. Interestingly the two largest economies, the US and China are at the opposite sides of the spectrum. The large US reserves percentage, 75%, has to do with the belief that the US dollar doesn't need much in terms of foreign currencies reserves, its weight in the world markets makes it believable by itself. China's small percentage reflects the young age of that country as a world financial/industrial power. Modern money theory doesn't support the use of physical gold as currency reserve.

Collectively, at the end of 2015, central banks held around 31,400 tonnes of gold, approximately one-fifth of all the gold ever mined. Moreover, these holdings are highly concentrated in the advanced economies of Western Europe and North America, a legacy of the days of the gold standard. This means that central banks have immense pricing power in the gold market, crucial to the fate of gold mines all over the world. In recognition of this, major European central banks signed the Central Bank Gold Agreement (CBGA) in 1999, limiting the amount of gold that signatories can collectively sell in any one year. There have since been three further 5 years agreements, in 2004, 2009 and 2014 and the signatories have stated that they currently do not have any plans to sell significant amounts of gold. Central banks have committed to being stewards of stable markets and that they will not engage in uncoordinated large-scale gold sales. Are they aware of their environmental responsibilities too?

WHAT TO DO WITH GOLD

Can we do something useful with this giant reserves of gold? Yes, we can, we can exploit the huge labor investment done by humanity since ancient history to the advantage of the physical and social environment we live now in, without affecting the present uses of the metal.

Recognizing the little utility in hoarding present-day gold reserves most governments could agree to destine their gold to civilian use in competition with gold mining. They could do so for tens of years in a row with no practical repercussions. A side benefit would also be the one of reducing the appeal of gold for illegal money recycling and tax evasion. Our fossil fuel reserves would benefit too.

CONCLUSIONS

The commercial sale of gold reserves would represent a great victory of the environmental cause over superstition and fear of the wrong enemy, a good starting point to reexamine priorities in our economy and its relationship with a degrading environment.

The gold industry is one egregious example of how badly the demand/offer feedback loops of our exchanges work. Our right hand doesn't know what the left hand does.

The supply side of energy and labor is much more heavily scrutinized that the demand one. We investigate and invest in new energy sources far more than thinking of what to do with the energy they produce.

Do we know if we are developing so much activity and destruction for a good reason? Is this subject discussed? Are legislators taking proactive initiatives, like they do about vehicles gas milage? With cars, we move around for work and pleasure, and we should question this too, but what are we achieving with gold?

Could it be that gold mining is in modern times completely useless, very costly and terribly detrimental to the environment and nobody has seriously thought about it? Could gold acquire a status not too dissimilar to the one of the rhinoceros horn?

The gold tragedy keeps reminding me of Atahualpa's execution at the hands of the conquistadores after requiring a ransom in gold. Different actors but the end of that sad story is still not in sight.

Inca jewel, very original and beautiful art was melted to pay for Atahualpa's ransom

The Seneca Rebound: why Growth is Faster after Collapse. Explaining the European World Dominance

Lisbon: the monument to the European sailors of the age of explorations, starting with the 15th century. What made Europeans so successful in the task of conquering the world? My interpretation is that it was the result of periodic "Seneca Collapses" of the European population which made it possible to accumulate resources that would then be available to propel the European expansion. It is an effect that may be called the "Seneca Rebound" that makes growth faster after a collapse.

The Middle Ages are sometimes referred to as the "Dark Ages" -- this is mostly untrue, but it is not wrong to apply this term to the early Middle Ages, called also the "Late Antiquity"(1). According to some estimates, in 650 AD the European population had shrunk to a historical minimum of some 18 million people, about half of what it had been during the high times of the Roman Empire. If you think that today the European population is estimated to be as more than 700 million people, it is almost impossible for us to imagine the Europe of the early Middle Ages: it was a minor appendage of the Eurasian continent, a poverty-stricken place, nearly empty of people, where nothing happened except for the squabbles of local warlords fighting each other.

Yet, a few centuries later, the descendants of the inhabitants of this backward peninsula of Eurasia embarked in the attempt of conquering the world and were successful at that. By the 19th century, practically all the world was under the direct or indirect control of European countries or of their American offspring, the United States. How could it happen?

The conventional explanation for the European ruling of the world has to do with factors related to the "white man's burden", a term invented by Rudyard Kipling in 1899. According to this interpretation, the European domination was a sort of manifest destiny generated by the superior qualities -- genetic or cultural -- of the European people in terms of being smarter, more laborious, better organized, driven by their Christian faith, and the like. In comparison, the populations of the rest of world were lazy, disorganized, uncultured, and in the grip of superstitions.

Maybe, but the idea that the Europeans conquered the world because they are smarter than the others is not supported by any data. Europeans may find it flattering, but it is an ad hoc interpretation that doesn't help us understand much of what led to the European world dominance. I have been scratching my head on this question for quite a while, until I stumbled into the graph below, showing two drastic "Seneca Collapses" of the European population. The term "Seneca Collapse" indicates a situation where the decline of a complex system is faster than its growth.

Graph from William E Langer, "The Black Death" Scientific American, February 1964, p. 117 -- note how growth is faster after the collapse than it was before. This is what I call the Seneca Rebound.

Note first of all that the data are uncertain and not all authors see the population drop in the European population to have been as drastic as Langer does. But there is a general agreement that a drastic collapse of the European population took place starting in mid 14th century AD. The collapse is often attributed to the spread of the "black death," a continent-wide epidemics of plague. In reality, there were several factors that led the European population to crash down so badly, including famines and a widespread economic crisis. In a complex system it always is difficult to establish a clear-cut chain of causes and effects: when the system crashes, many factors collapse together. The population crash plague that hit Europe in mid 17th century was less drastic, but also associated with a new outburst of the plague. These two Seneca Collapses followed the one I already mentioned, when the Roman Empire collapsed during the 6th-10th centuries AD.

There is a common element of these three collapse: the remarkably rapid recovery that followed. Let's describe that in more detail.


The first collapse (from the 5th to the 8th century). After the fall of the Western Roman Empire, Europe started recovering and soon it was able to mount military attacks against neighboring regions. The first crusade started in 1095 and for some three centuries successive waves of European armies attacked the region we call today the Middle East, succeeding in creating a number of European kingdoms in the area. The result was, ultimately, a failure and the European crusades and the European Middle Eastern kingdoms withered with the mid-14th century.

The Second collapse (mid-14th century). The population crash was brutal, but as soon as Europe started recovering, a new phase of expansion started: it was the age of exploration that we may consider to have started with the discovery of the island of Madeira in 1430 and then proceeding with a remarkable burst of explorations that lasted for about a century from mid 15th century to mid 6th. This burst included Columbus' travel of 1492 and the start of the gradual expansion of Europeans in Africa and in the Americas.

The Third Collapse (mid-17th century). In this case, the collapse was not so drastic as the first two and it didn't really stop Europeans from expanding. But, with the restart of population growth, Europe saw a new phase of economic growth which ushered the age of coal and, with it, the "age of divergence" when Europe truly conquered the rest of the world and started thinking of themselves as carrying the "white man's burden."


So, there is clearly a pattern here: the expansion of the European social system didn't go on smoothly, but in bursts. Over some two millennia, the European population grew from a few tens of millions up to the current 700 million people. In the process, it underwent at least three major crashes but, every time, it restarted growing. This bumpy expansion trajectory is typical of complex systems which tend to show what I call the "Seneca Effect," cycles of slow growth and fast collapse.

Europe, intended as a social system, is a complex system and it does tend to show the Seneca behavior. It is the result of the combination of resource depletion and pollution. Before the fossil fuel age, society had two main natural resources to exploit: fertile soil and forests. Both tend to be overexploited, that is destroyed faster than they can regrow. Forests are cut faster than trees can regrow and the fertile soil is eroded and washed to the sea faster than it can reform. The decline of agriculture not only puts an end to population growth, it causes it to collapse ruinously as an effect of famines and epidemics. The loss of the revenues from forests typically weakens the state and the result is internecine wars which, of course, hasten the collapse. Both wars and epidemics can be seen as forms of pollution and the final result is what I call the Seneca Effect: a decline which is much faster than growth.

But there is life after the Seneca Collapse. The disappearance of a large fraction of the population frees some previously cultivated land for forests to regrow. Then, when the population starts re-growing, people find the new forests as a near-pristine source of wood and -- once cut -- of fertile soil, and the cycle restarts. The new cycle may grow faster than the earlier one because society still remembers the social structures and the technologies of the previous cycle. This is the "Seneca Rebound" -- growth may be faster after collapse. You can see the Seneca Rebound in the curves made by Langer for Europe. Note how growth is faster after the collapses than it was before. This is because, I think, the Europeans had kept the social and technological structures they had developed before the crash -- there was no need, for instance, to re-develop their ship-making technology (3). So, they could exploit more effectively the resources that the collapse had freed.

Then, Forests are the basic resource needed to conquer the world and the Europeans exploited them effectively. Trees provide the wood for ships and the charcoal made from wood provides the material needed to make steel for weapons. Not for nothing, it was said that England had conquered an empire with ships of wood and men of iron.

But how was it that the Europeans were so much better than others at exploiting their forests? As always, success is a question of timing, opportunities, and luck. On the opposite side of the Mediterranean, the Arab civilization was socially and technologically as sophisticated as the European one - perhaps more - but their climate didn't allow forests to grow fast enough to avoid rapid overexploitation (2). The American civilizations we call "pre-Columbian" had forests, but they hadn't yet developed the technologies of steel and of oceanic ships -- they also lacked horses for transportation and as a military weapon. The Chinese, instead, had the technologies and also the forests and, indeed, they embarked in a parallel phase of explorations.

During the 12th-13th centuries an outbreak of the same plague that had affected Europe caused a decline in the Chinese population, that was followed - possibly as a consequence - by the Mongol invasion which led to the fall of the Song dynasty. When the Chinese economy experienced its own Seneca Rebound, the age treasure voyages started in the early 1400s, during the Ming dynasty, in a period when the population had restarted growing. (4)

China population trends according to a reconstruction published by Columbia University.

But the Chinese stopped their exploration phase and retreated within their borders. So, the Europeans found no competition in their worldwide expansion and that was the origin of the history we know.

These considerations are qualitative, but I think there is something in the idea of the "Seneca Rebound" as an engine that propels civilizations forward in bursts. If this is the case, if the world's civilization goes through a new Seneca Collapse, as it is likely to happen, will it restart expanding afterward?  If we manage to avoid that the coming crash is so bad that we lose the knowledge we accumulated over several centuries and that climate change doesn't erase humankind as a species, we may well restart expanding using renewable energy -- this time into space. Why not?




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(1) If you are interested in the late antiquity period, and you can read Italian, you should read "L'Impero Globale" a recent book by Alessia Roberta Scopece who finds many parallels that age and our modern Globalization.

(2) The destruction of the Middle Eastern and North African forests may have been irreversible, as I note in this post of mine. (h/t Steve Kurtz)
 
(3) Nor there was any need to reinvent luxury and, with the rebound, Middle Ages ladies started dressing like high fashion models, as I describe in this post.




(4) Another reconstruction of the Chinese population is shown below, from an article dealing with the same question as this one -- they arrive to completely different conclusions, but it is normal. 

Trump, the unavoidable: is political polarization destroying democracy?

Image from Pew Research Center. The increasing polarization of the US electorate has destroyed all the previous certitudes in politics, generating the unavoidable rise of Donald Trump.

The hurricane named Donald Trump has taken everyone by surprise by going against all the established rules in politics. So far, candidates were always trying hard to avoid taking extreme positions; aiming for the center of the political spectrum was seen as the way to win, and it worked. But Trump has taken exactly the opposite strategy, always aiming to positions that not long ago would have been seen as extreme and even unspeakable. But he is having success. How can that be?

For everything that exists, there must be reasons for it to exist, and this universal rule must be valid also for Donald Trump. And, indeed, the rise of Trump should be seen not only as having reasons to exist, but even as unavoidable. Let me try to explain why.

In 1929, Harold Hotelling developed a model of spatial competition among firms that today is still well known and takes his name. The idea is sometimes described in terms of what the best location for selling ice cream on a beach. Assuming that customers are distributed evenly along a linear beach, it turns out that the best position for all of them is to cluster exactly at the center. Something similar holds in politics: it is called the Hotelling-Downs model. It says that, in a political competition, the most advantageous position is at the center. This is a well known and traditional political strategy; those who are at the center win elections.

So, did Donald Trump disprove the Hotelling-Downs model with his strategy based on taking extreme position? No, but all models work only within the limits of the assumptions that produced them. If the assumptions change, then the models change as well. The Hotelling-Downs model, as it is commonly described, works on the assumption that voters' preferences tend to cluster in the middle of the spectrum of political views, something like this

Image source

Imagine that the horizontal axis describes the voters' preferences about, say, war and peace. At the two extremes of the diagram there are absolute warmongers and absolute pacifists, At the center, there is a majority that takes an intermediate position; preferring peace but not ruling out war.

This was the situation up to not long ago for most issues. But the recent data indicate a remarkable ongoing transformation, something more like this:

(image from Pew research center)

You see how the preferences among American voters are splitting into two halves. Liberals and conservatives are becoming more and more different, a split that may increase in the future.

In a previous post of mine, I interpreted this trend as the result of the growing impoverishment of society, a phenomenon that increases the competition for the remaining resources. The increased polarization derives from the fact that some categories or social classes tend to find it easier to gather resources by stealing them from those who have them rather than creating them out of natural resources (e.g. banks vs. citizens or the elites vs. the middle class). If this interpretation is correct, political polarization is here to stay with us for a long time.

The problem is that polarization has deep political consequences. If society is split into two ideologically incompatible halves then the mechanism of the "primaries" enhances the split even more. The Hotelling-Downs model still holds, but separately for the two halves. At this point, in order to win votes, a candidate may be better off by aiming for one of the two peaks, either at the left or at the right; a position that's in practice obligatory with the primaries, where voters are split into two halves as well.

Indeed, Donald Trump has been playing king of the hill in the republican hump while pushing most of the other candidates in the Republican desert of the center. The only Republican rivals that survived Trump's onslaught are those, like Ted Cruz, who are competing with him for the same rightmost peak. Something similar has generated the relative success of Bernie Sanders on the opposite side of the political spectrum; even though that may not lead him to the nomination. So, Donald Trump was really an unavoidable phenomenon.

And now? It seems increasingly likely that Trump will obtain the Republican nomination by means of his successful polarizing tactics. But, in order to win the presidency, Trump should abandon the safe but limited hill on the right and try to conquer the center. But can he really do that after such an aggressive and divisive nomination campaign? Trump has nearly supernatural communication skills, but this may be too much even for him. The problem is that the President of the United States is supposed to be the president of everyone, not just of those who voted for him. But, we already saw a dangerous crack in this arrangement with President Obama, when a considerable number of people seemed unable to accept the idea of having a black president. As president, Donald Trump would be likely to generate similar reactions from a different section of the public. That could produce a split in society that, euphemistically, we could define as a little difficult to manage.

But, again, Trump is not the cause of anything, he is just the unavoidable result of the rising internecine competition within an increasingly poorer society. He may fail in his bid for the presidency, but the social and political factors that created him will remain. And these factors might easily lead to something much worse than Trump if the economic situation deteriorates further, as it probably will.

So, where is the institution we call "democracy" going? It is difficult to say, but, in order for democracy to exist, there must exist certain conditions, in particular a reasonably equitable distribution of wealth in society. And this is something that we are rapidly losing. As we slide down the Seneca Cliff, democracy may be rapidly lost as well.

The Oil Crash: it is happening now!

James Schlesinger said once that humans have only two modes of operation: complacency and panic. This bimodal kind of functioning seems to be applied also to the oil market, where everything is judged on the base of a simple binary rule: high prices: bad; low prices: good. So, with oil prices falling rapidly during the past few days, the general attitude seems to be mostly of rejoicing. All worries about peak oil are being swept under the carpet and SUV owners seem to be happily expecting the fall of gas prices that will allow them to fill up their tanks on the cheap.

Unfortunately, the bimodal perception of the world makes people blind to the fact that nothing happens in isolation in the world. It is the basic law of complex systems: you can't do just one thing. If something changes in a complex system, it is because something else has made it change. And if something changes, then something else will have to change. Complex systems work in this way. And changes are unavoidable and not always for the good of those experiencing them.

That's true also for the crude oil producing system, which is not an isolated system. Changing some of its features reverberates all over the world. So, bringing down oil prices has an effect on other parameters. Look at this figure (from an article by Hall and Murphy on The Oil Drum)

Of course, these data are to be taken with some caution - they are only estimates. But there are other, similar, estimates, including a 2012 report by Goldman and Sachs where you can read that most recent developments need at least 120 $/barrel to be profitable. So, you see what is the problem? Prices under 80 $/barrel destroy the profitability of about 10% of the oil presently produced. If prices were to go back to values considered "normal" just 10 years ago, around 40 $/barrels, then we would lose around half of the world's production. Anyone saying "peak oil"? Well, yes, this is the mechanism that generates peak oil: an irreversible decline of the world's oil production. But it is not just a question of reduced oil production: if oil demand collapses, then the whole world plunges into deep recession, as it happened already in 2009, when prices briefly collapsed down to about 40 $/barrel.

Maybe this is just a temporary fluctuation; maybe things will go back to "normal" in a few months. After all, the market worked some magic during the past 4-5 years that kept oil prices high enough to generate profits high enough to make the industry able to keep producing at the usual levels (and even increase them a little). And these prices seemed to be not so high to destroy demand (not too much, anyway). But, in the long run, it is a no-win game. Depletion makes extraction progressively more expensive and not even the mighty market can work the magic needed to keep selling something that customers can't afford to buy. The oil crash takes time to unfold, but it is happening, and it is happening now.



Ugo Bardi teaches at the University of Florence, Italy. He is a member of the Club of Rome and the author of "Extracted, how the quest for mineral wealth is plundering the planet" (Chelsea Green 2014)