The Big Gooey

The supposed purpose of financial markets is to discover the economic price of things. That phraseology depends on an economic theory. I believe financial markets show who controls what; i.e., finance is an aspect of the human power game. Of course, it is also possible to see the power game as an aspect of financial markets. To hold both views is simply to assert there are transformations which relate political and financial decisions. Restated, the fundamental insight of Karl Marx and many others about power and money is that they are really aspects of the same thing; thus, the antique term, political-economy.

Conservatives and their thralls don't believe that. Most Americans probably don't believe that. Their view is that what happens on Wall St. is somehow different in kind and independent of what happens in Washington. While almost everyone will concede that political decisions affect economic decisions and vice versa -scarcely anyone thinks they are totally divorced -  most Americans believe they are not tightly coupled. There is the economy, and then there is politics. Considering the relationship as a matter of coupling shows that the difference between socialists and capitalists is a matter of degree: how tight is the coupling between politics and economics?

But, are there more fundamental forces in play? Yesterday's seeming ray of light from Teheran was nought but a glimmer. We should ignore it. Regardless of day to day political-economic decisions, there may be sequences of events or particular circumstances that determine outcomes.

What I try to keep in front of me is the trend of things. As I get older and nearer the grave, I am less and less interested in the blips and blops. Young dogs chase their (and other) tails for the hell of it. Perhaps because I can't do that anymore, I am forced to take a less active, necessarily longer term view. But what is the trend?

With respect to energy, it seems inescapable that we have finally got to the end of new oil. That means the oil that's there is the oil that's there. If people keep using it, the cost of oil will have to go up and up as it becomes more and more scarce. Right now, there's a great sigh of relief all over the land, as it is fairly quick and cheap to substitute ethanol (that's ethyl alcohol, the stuff in wine, beer and whiskey) for gasoline. That's wonderful, except for one little fact pointed out on CBS News the other night. The cost of growing corn has gone up from $36/acre to $64+/acre on account of the increased cost of oil. What the cost reflects is the fact that oil makes corn. So, it is questionable whether using ethanol saves any oil, even if it replaces gas. (Cavil: Ethanol made from cellulose with little or no oil input may in fact be more economic and save oil. But, so far, that process is in biology/biochemistry R&D, not production.)

Maybe ethanol is just the latest perpetual motion machine. People love perpetual motion machines. In the Victorian era, lots of efforts went into developing them, perhaps leading to the discovery of the Laws of Thermodynamics. Thermodynamics, qua Entropy, says perpetual motion is impossible. But who cares about science?

Ethanol, methanol.Oil-ol. Doesn't matter, because there is another factor in play. Ethanol is "cleaner burning," meaning it produces fewer noxious by-products and aerosols in internal combustion engines. But, it does contains carbon, so it results in CO₂ when combusted with O₂. Ethanol (C₂H₅OH) does little or nothing to reduce CO₂ emissions. Methanol (CH₃OH) is a much better fuel than ethanol because it contains a higher proportion of hydrogen. Hydrogen is a much fuel than carbon, as it burns in oxygen at a higher temperature than carbon. We could move to methanol, as this is a byproduct of ethanol fermentation, but methanol is harder to store (it absorbs a lot of water) and corrodes plastics, rubber, glues and even some metals. Racing cars use methanol because the owners can afford to maintain the vehicles in spite of those liabilities. But even methanol doesn't solve the greenhouse gas problem. The bottom line is this: one way or another, the long term trend has to be reduced use of carbon based fuels. Otherwise, we will fry and asphyxiate ourselves. (Any bets on which comes first?)

Just the foregoing factors imply that civilization in the United States cannot continue as it is. There will have to be radical changes of lifestyle. Homes will have to be smaller and more efficient. Living as communities in larger buildings, with less footprint, will be favored. Our infrastructure - roads and such - will have to take up less space. If there is a move back to urban structures - condos or apartments - travel by rail or other mass transit will be favored. In short, America will have to get more like Europe or Japan.

These same lessons will come down hard on India and China, too. Right now, they are following the expansive American pattern of development, sprawl and all. But that cannot go on unabated.
 

Are these limitations bad things for the human race, for the United States? If you cannot see around them, or if your life is wrapped up in polluting the planet, I suppose so. But I think it is not that hard to live other ways. It's your choice. It's everyone's choice. The thing to watch is where people put their feet.