The Oil Drum | Peak Oil and Economic Growth: Where Do We Go From Here?

182 comments on Peak Oil and Economic Growth: Where Do We Go From Here?

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HoustonB on March 28, 2008 - 2:40pm

"In a steady state economy, growth in wealth of one individual has to come at the expense of someone else."

That is true for all economies, steady state, expanding or contracting. Ignoring inherited gains and lottery wins, all individual gains in wealth come at the expense of others - the only issue is whether it is a small number of others or the collective commons.

If an individual stumbles upon a mountain of pure gold, or an ocean of oil, or a billion dollar gift from the (privately owned and money-issued-with-interest) Federal Reserve - then the wealth derives from the adverse impact imparted on the market (collective commons).

The highly trained professional (say a surgeon) derives increased wealth from others because society believes that their time is more valuable - using professional sports people as an allegory; if one swings a stick at a ball often enough, then one will inevitably get good at it. Does anyone truly believe that professional sports people and other entertainment people are really worth the millions they "earn", and don't get me started on "executives" at (for example) Bear Stearns, Carlyle Capital, Enron, US West, all the ratings agencies, the SEC, the FSA (in the UK), the actuaries and executives at the companies insuring the CDO's and on and on and on. They have bilked millions (literally) from the collective commons for far to long.

For people not to know the truth about entities like JP Morgan, the Federal Reserve System (sic), et al - is a VERY sad indictment of the USA.

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Moneyman on March 28, 2008 - 4:23pm

Of course, it is possible to become wealthy without "bilking" the rest of society. Most normal (not athletes or CEO's) people you would consider wealthy followed a time tested formula. Simply consume less than you earn year after year, and over the course of a career, it's actually quite simple to amass wealth. What's evil about that? I'm only 26, so I have not had time to save enough to be considered wealthy, but I have saved quite a bit more than probably 95% of the people my age. I live off of roughly 40% of my income, and save/invest the rest. Who exactly am I bilking this wealth from? Why should I feel guilty if in 20 years I have accumulated more wealth than my peers who blew all of their money on mindless consumerism. How does my thrift impoverish "great swaths of society". There are always exceptions, but by and large, the wealthy got that way by consistantly making good financial decisions and the poor are poor because they consistantly make bad financial decisions. In my opinion most of the rage against the wealthy is misplaced.

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vtpeaknik on March 28, 2008 - 4:27pm

If you "invest" your savings then in the long run most of your "wealth" will come from the investment gains rather than the actual savings. That's where the "bilking" is.

Alas, our current money system only allows us to save for our old age (or a rainy day) via the same system of usury. The only way to opt out is to for our earnings to be, right from the start, in an alternative currency.

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SensibleEnergy on March 28, 2008 - 4:42pm

"If you "invest" your savings then in the long run most of your "wealth" will come from the investment gains rather than the actual savings. That's where the "bilking" is."

Yeah, it really sucks when everybody wins.

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vtpeaknik on March 28, 2008 - 5:02pm

Everybody loses, since this is what's driving "growth", i.e. unsustainable drawdown of natural resources, and that'll result in collapse and die-off.

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Dezakin on March 28, 2008 - 8:14pm

Eventually sure.

If its after we consume the resources of the entire galaxy, who cares?

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Mamba on March 29, 2008 - 12:31am

If its after we consume the resources of the entire galaxy, who cares?

Well, that's the sort of dim-witted comment you became famous for on peakoil.com. Still the universe-raping, nuke-pushing cornucopian, I see.

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Kiashu on March 28, 2008 - 8:16pm

You could also invest in a business... in traditional Judaism and in modern Islam, nobody gets interest on loans, they just invest in your business with you and share the profits for a while until you buy out their shares.

Modern Islamic banks still do this. The Gulf isn't prosperous just because of oil money, you know. That's most of it, but their banking system helps.

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Mike M on March 28, 2008 - 4:41pm

Being able to live off of 40% of your income might be seen in some quarters as being paid too much to begin with. There are many who loose livelyhoods because they are marginalized by corporate greed. Out-sourcing. The biggest problem in society was allowing corporations to be treated in law as citizens.

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vtpeaknik on March 28, 2008 - 4:59pm

The reason corporations behave the way they do is because they are required to do what's best for the shareholders, i.e., what brings them the most (unearned) returns. Thus the "growth" imperative.

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HoustonB on March 28, 2008 - 7:33pm

Your ability to save is admirable. Please tell me that your savings are not based in US Dollars. Please tell me that your interest rate is above the true rate of inflation, that being the one that takes into account essentials like the cost of food and fuel. And while you are at it, please tell me you are not an extreme exception.

What do you mean by "most normal people you would consider wealthy"? As far as I'm concerned the vast majority of people are normal and they are far from wealthy! The average American is looking at 30% interest on their credit card bills - and the Investment Banks are getting loans from the Federal Reserve at less than 5%. Can you truly, hand on heart, tell any of us that this is equitable?

Do you think it is acceptable that Americans can buy Japanese cars with loans at 0% interest, but these same rates are not available to people in Japan (go read up on the carry trade).

I am not saying that working to become wealthy is immoral, I am saying that whichever way you look at it, someone else is losing something somewhere in order for you to be wealthy.

"There are always exceptions, but by and large, the wealthy got that way by consistently making good financial decisions and the poor are poor because they consistently make bad financial decisions." - this is ad hominem but you are naive.

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Moneyman on March 28, 2008 - 8:33pm

I distinctly remember in college, my wife and I had an annual budget of $14,400, or 1200 a month, roughly equal to our combined part time incomes. That covered rent, insurance, utilities, food, and if we were lucky, one or two "dates" a month. It wasn't much, but I never remember feeling deprived.... it was actually a pretty good life. After graduation, our incomes grew a lot, but we had no desire to increase our standard of living by the same amount. It's that simple. We may be an extreme exception... but not because what we are doing is difficult.

As for credit card debt.... these are the "consistantly bad decisions" I refer to. People who hold credit card debt made that choice by their own free will. Most will claim they had no choice... but they often neglect the years of cumulative bad decisions that led them to be "forced" to rely on credit cards. Usually, they bought a house they couldn't afford, an SUV that burns hundreds of dollars a month, and dined out more often than cooking at home. When a crisis hit, they simply lacked the liquidity to cope, and the house of cards came crashing down. In short,they failed to keep expenses below income.

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joemichaels on March 29, 2008 - 12:53am

Dear Mr. Moneyman,

I think you have to be in your twenties to believe that the system is so fair.

What happens when the savings that you sock away becomes worthless through hyperinflation or Wall Street pirates?

What happens when the blue chip company that has your pension invested goes belly up and hides assets then goes bankrupt?

There are so many ways to lose...With oil production peaking there will be massive amounts of wealth that will literally evaporate.

The late great Joseph Campbell said the following about money: "Follow your bliss. If you find money so much the better. If you chase the money, chances are you may lose the money...and then you'll have nothing."

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182 comments on Peak Oil and Economic Growth: Where Do We Go From Here?

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