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169 comments on The Freezing Point of Industrial Society
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Interesting you came up with 17 dollars a gallon as the magic level. I actually believe its effectively half of that since your not including rising food and other costs. This is for people earning half of the current median income which is in general the poverty line so around 17,000 USD. I believe your results are too high. I can't see some one earing 17,000 USD as able to pay the full adjust prices this would entail food costs for example would probably triple not just gasoline costs. We are already seeing that food costs on a percentage basis seem to be tracking close to oil costs. Food at least for me is twice as expensive today as in 2000.
The key part that I think is missing is this concept of minimum standard of living or poverty line. In the US for example once you can no longer afford a car food rent for a apt and say a average 20 mile commute then your unable to live the minimum US lifestyle and you have to lower your standard of living. Obviously the first move is probably roommates and cheaper food followed by car pooling or public transportation. But note that this pullback in discretionary spending will send the economy into recession meaning a lot of people will face steep drops in their salaries. And for countries like the US that has a minimum wage the wealth distribution will continue to steepen.
Above this you have numerous levels of minimum lifestyles that generally consist of bigger houses cars and more toys.
Below this you have the renters. The point is you will see people cascade down this curve as oil price get more expensive the problem is that we will have a lot of people also falling off the bottom end as they get pressured out of minimum wage jobs by well educated former professionals.
I think this race towards the bottom starts at 8 dollars a gallon or so in the US once we get to that point a downward spiral is impossible to escape as spending slows more people lose income etc etc. Its seems to me your missing this sort of tipping point concept. All the boundaries seem right even if the effective dollar amounts are disputable for deindustrialization. As you say its never happened before so we don't actually have good examples for how this playes out. But I'd suggest that once we see steady contraction of consumer spending we fall into deindustrialization fairly rapidly. This depends on some key cost factors which causes a significant portion of the population to stop spending. Once this starts the shrinking economy is self reinforcing.
So a tipping point model seems more correct to me.
Mike - In essence, what you are postulating are cascading cross defaults similar to those discussed pre-Y2K...a shark's fin of economic collapse if you will and I agree with this view.
One reason I feel this way is that even countries that have deindustrialzed to some extent have still had access to both food, financial and technological assets outside their geographic area. In a global deindustialization (although I prefer the word collapse), it is unlikely that this will be the case.
My gut feeling is that the tipping point is closer and sharper then many people assume. If the US economy is 60-70% consumer driven, it would not take much to push it over the edge.
Todd
We're tlaking about different things. You're talking about what will ruin a large number of people's lives, I'm talking about what would change society entirely from being a wasteful industrial one to a mixed-industrial or manual economy.
It's quite possible to have tens or hundreds of millions of people living in abject poverty while a few million live wasteful industrial lifestyles. We have India as an excellent example of this.
So in your scenario with fuel at US$8/gal for several years, we could end up with 250 million Americans living in abject poverty, living in slums in the cities or squatting in abandoned houses in Detroit tilling the land about to survive, hoping to get enough cash to buy things to burn to heat them through the winter; while another 20 millions Americans live very well with wind and solar keep them going in medium-sized towns on the east and western coasts, and another 30 million make a decent but not good living as the service sector for those rich ones.
Only one-sixth the population lives a modern industrial lifestyle, but the society itself is "industrial". There exist metalled roads, mobile phone towers, grain grown with loads of artificial fertilisers, and so on.
Whereas if the fuel gets up to $70/gal or so for several years, then even that one-sixth minority finds they can't manage it. Roads, bridges, mobile phone towers, etc, can't be kept going.
There's a difference between the individual suffering of many millions of people, and a grand change of society from being industrialised to not, or vice versa. I absolutely agree that at lower fuel prices than would change society, there'll be a great deal of suffering. It's happening today, after all, with Ghanans unable to afford to fuel their irrigation pumps, and poor inner-city Americans having to choose between feeding their children and keeping them warm in winter.
But that's not a permanent change to the structure of society, which very high fuel prices will give us.
Yes but the point is once a society start the downward spiral and for our current economic system its when the the economy starts shrinking then it effectively deindustralizes so the techno society is dead. Note the reason its dead is because our current industrial society is incapable of in effect giving birth to its next logical descendant. For example even though our current society is for all intents and purposes a close descendant of the Greak/Roman society its not a direct descendant intervening was the middle ages. Thus the assertion is its impossible for our society to directly transition because of its very structure.
Now these islands of technology are in reality just that islands, oasis, enclaves whatever. I find it entirely possible and probably that a few million people will indeed manage to create enclaves that will eventually result in a post oil high tech society but this is nothing more then a larger version of the monastery of the middle ages that helped preserve knowledge until the renaissance.
Arguing that the formation of enclaves is preservation of society is false it is preservation of knowledge and probably a good life style for a few but the industrial society and middle class are dead. The society in these enclaves will I'm sure take advantage of abundant cheap labor and focus on technology for the production of luxury goods.
This means I suspect that we probably will keep our computers/communication and medical and biological knowledge alive in these enclaves since this knowledge creates luxury items of interest to the wealthy and of course the military to protect them. But this is a far cry from preserving our current technical society. Its probably closer to how military production works today for small runs of combat aircraft the economies of scale critical to our society are not relevant. You can readily preserve high technology without preserving the need for economies of scale thats the real foundation our our society.
As and example a fairly small lab of smart guys could probably continue to create ever faster better microprocessors in low volume this is how the Russian military works and how a lot our ours works. Computers would be relatively fantastically expensive with this type of manufacture. So the technology will continue to develop but its focus would be on small scale almost R&D production.
So a world where you have only say 150 million people that can afford cell phones is radically different from today. Your say looking at producing maybe 25-50 million communicators a year at best. Thats a utterly different world. Sorry for the mobile phone analogy but its the area I work in. And these can be state of the art since they are practically one off productions.
Well, we don't know that it will be so, that industrial society will simply die, and be unable to transition to something nicer. We don't have examples of it in history, we have only speculation. I enjoy that speculation, but I think it's important to note where we're taking from history (for example, talking about Ukraine changing from a wasteful industrial to a mixed-industrial economy) and where we're just speculating (for example, talking about the US goes tits-up).
The important thing about islands of technology is whether the islands are expanding or shrinking. Assuming infinite fossil fuels, the islands of industrialised society in China and India are going to gradually expand until they cover the whole country. Being in the sea doesn't seem so bad if the shore is advancing towards you. The point is that fossil fuels aren't infinite, so a fossil-fuel-based technological island would be shrinking, not expanding.
I agree that all inds of high tech stuff will become more expensive. I'm inclined to think (but cannot of course proove - speculation again!) that this would be a vicious circle, with high cost leading to lower purchases which leads to higher cost, and so on. The technological island shrinks.
A world of shrinking technological islands is a rather bleak one to imagine. It's a bit feudal, really, with inbred rulers over impoverished masses. :(
[double post, damn my dial-up]
Memmel great points as usual.
But note that this pullback in discretionary spending will send the economy into recession meaning a lot of people will face steep drops in their salaries.
If you stop buying anything, someone goes out of work.
Look at a mall. Nearly all discretionary spending. If no one buys no one works.
I think the analogy for our current economy is a RamJet Engine.
It runs great if it's already at 500 mph or so. If you STALL a ramjet, it's all over. You crash.
In essence a Shark. Stop swimming and it sinks.
Manufacturing(of daily used products) is about the only thing that will jump start an economy. But even that needs fuel...
John
Right and commodities like food/oil etc are markets that are trivial for the wealthy to corner. So if anything wealth will concentrate even faster in the hands of a few once your down to the base markets food/clothing/shelter.
I'm big on sharks these days so love that one :)
Okay so the bottom line is the middle class is toast and the economy to support it will wane.
Technological loss probably can prevented by formation of enclaves. You also have billions of desperatly poor so effective slavery and deindustrialization anywhere a human can be employed is almost certain. I recently read a story on how fiber optic cable was deployed in india. Cant find the story but I saw with my own eyes poor women and men living in high rises in Shanghai as the built them.
So what does this mean ?
I think the western assumption that somehow high technology and a enlightened equality based society is going to be shown to be false. Technology can easily co-exist within the framework of a serf/slave society. North Korea in a sense could in a sense be seen as and example of a technologically advanced society co-existing with slavery. China/India/Brazil/KSA for that matter.
The problem is westerners have little understanding of the high technology deployment in these strange societies yet they seem to represent the future.
Hell Germany and Russia made great technical advances during WWII and afterwards in Russia but no one in their right mind would consider these almost perfect examples of Ecotechnic societies good. Thus Ecotechnic in and of itself is not a good thing in fact we in general see societies that have the properties of Ecotechnic are effectively dictatorships.
The next step in this analysis is how the collapse in the poorest societies will affect the richest, and how the collapse in the poorest neighborhoods will affect the richest. That makes the analysis a lot more complicated. To me it comes down to the question: what will we Americans do when the Chinese container ships stop arriving?
Build production capacity in USA as they did in China with the resoucres available due to recession.