Vail Valley Voices: We’ve prospered on a lie
July 22, 2010
If you read the news on sites like Reuters.com, where people can place comments under stories, there’s always one that says something to the effect of prosperity is right around the corner:
n Vote out the Democrat congressional majorities in November.
n Cut corporate taxes and personal taxes.
n Watch growth take off.
The major problem with this three-step program is that it is based in a delusion.
The major problem is that growth”is still presented as an economic solution when growth is the biggest problem humanity faces.
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Since we’ve been “watching growth take off” all of our lives, we believe a sound economy requires growth. In reality, sustained growth is not normal. It’s an oxymoron.
We Western nations have not been growing anything for over two centuries. We’ve been blowing through the principle of the world’s fossil energy inheritance. We have been blowing through our naturally-created trust fund called the primary economy for over 200 years, all the time behaving as if it will never run out.
I have lived around a ski resort for the past 25 years, so I’ll use a term all resort locals all can relate to: the “freshman class.” For 200 years, since coal and oil were “developed,” the world has been behaving like the annual ski resort freshman — the kid who turns 21, gets the big check that’s his share of whatever’s left from grandpa’s life’s work, checks into a resort town, spending the principal, rents a nice resort home at the base of the hill so he can walk home from the local bar every night.
Sure, resorts of all types have earned their bread and butter from people like this since inheritances were legalized. But when entire nations delude themselves to believe that an economy based upon nothing more than blowing through our inheritance is normal and that political parties or corporate tax rates have anything to do with success or failure, we’re all in trouble.
There are three major aspects to any economy. They cannot exist without each other and any layer of an economy cannot survive without the other one or two beneath it. This is as basic as the so-called science of economics gets.
Without real energy and natural resources, there is no primary economy. Given a primary economy of naturally occurring resources and energy inputs, human creativity and labor can add value to these resources. Government and laws, needed to provide the common security and order required for production generally arises at this stage, as do the taxes required to pay for these services, paid with portions of finished goods and dedicated amounts of labor.
When the surplus product of the economy reaches certain levels, a tertiary economy, based upon the intellectual or mental constructs of “money,” “credit” and “value” become important. Markets are created and settlements are made with agreed-upon means and terms.
Resort residents generally believe that a resort’s primary economic resources are rich people, the products of the world’s tertiary economy. People with so much money that they can afford to live in a place with no real resources at all other than “a nice lifestyle.” People who can purchase second and third homes and can afford to pay all of the people who build them and provide the overpriced things that get stuffed into them and maintain them. People who can afford to pay people who make sure their single-family castles don’t burn down or get burglarized during the 50 weeks a year they sit vacant with the utilities on and the landscaping manicured. People who thoughtlessly burn fossil energy that keeps their private infrastructure comfortable and pretty, just in case the owner person decides to divert the private jet into town for a round of golf as they are on the way to or from somewhere else.
Of course, resorts also grift a lot of income from people who can afford to throw away what a resort charges them to spend a week or two away from their own local economy.
Since the developed world has managed to produce a large segment of population living in a tertiary economy, holding perceived excess wealth due to our mindless exponential spending of the entire world’s energy trust fund, many people’s perceived primary economies now do depend upon other people’s tertiary economy. Sadly, this places the entire population in an economic conundrum that is dependent upon mindless inheritance-squandering mistakenly called “growth,” and no good can come of it.
A resort’s primary economy, like all economies, resides in its natural resources and the local, natural energy needed to sustain life there, just like any place else. As such, our local ski resort area is fairly resource-poor and can be harsh place to live, which is why Native Americans only visited in the summer.
Once the area was settled by migrating Europeans, this area’s primary economy provided barely enough resources for sheep grazing and subsistence game hunting until 50 years ago, when hillsides graced with an appropriate downhill slope for use in a new winter recreation scheme called downhill skiing.
The modern resort industry economy uses the constructs of money, credit and especially, the marketing and salesmanship success among a class of people who operate so far above the actual perception of a primary economy that they have forgotten it exists, that “a ski resort home is worth $5 million,” even though these homes and entire communities are located in areas that barely supported sheep grazing before a liberal application of an economy of inherited energy, trust-fund petrochemical wealth.
The problem is that all developed economies have always remained dependent upon nature’s inputs.
Our local area and modern civilization’s tertiary economies remain utterly dependent upon the continued “growth” in the squandering of our inheritance of fossil fuels. The excess wealth provided by this inheritance has made “growth” possible for three generations.
The fund is not inexhaustible. That any of of this tertiary growth was normal is simply delusional.
Many of today’s economists believe that adjustments to the constructs of the tertiary world of credit, where “future money” is transferred into the present, can repair the broken lower layers.
A boiler in the basement that needs fuel can’t be topped up by adjusting the thermostat upstairs in the living room.
Likewise, when a secondary economy reacts to realities in the primary economy supporting it, the lack of ever-expanding cheap trust-fund energy and a lack of demand for labor due to millions of jobs being shipped overseas, adjusting the interest rate on home loans won’t fix anything.
For a while, as declining jobs and wages were replaced by cash advances and borrowed money with no underlying economic basis, the illusion of wealth, tweaking the thermostat seemed to help. This construct fell apart two years ago.
The problem is that nobody has lived within the fixed wage of the natural primary economy for so long that we’ve forgotten it exists.
We humans never produced fossil fuels. They were produced by natural systems over nearly a half billion years. We’ve just spent them as fast as we could, at the cost of mining them, calling this production.
In all living things, growth is normal for a while. There comes a time, though, when we must grow up. If we don’t stop growing physically, we turn into mal-formed freaks. If we don’t grow up, we are doomed to behave like children. Children are not efficient self-governing entities.
Expectations of a return to exponential growth based on expanded squandering of humanity’s finite inheritance of eons of solar power, saved and invested by nature for over 500 million years, are suicidal.
Expecting to “watch growth take off” by fiddling with the thermostat when there’s far less fuel in the boiler is no different than watching a resort freshman, naive and tipsy, walking home from the bar back to the expensive rented house at the base of the hill and his rapidly-declining bank account balance, another young trust-funder who thinks he’s smart since he avoids a DUI by paying 10 times normal rent to live so close to the resort’s nightlife.
Bill Sepmeier lives off the grid on Sweetwater Creek.