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Existential crises

The killer problems that politicians dare not even mention

Once again the people of Britain have been forced into an election that they did not want.  Facing opposition from her own party, observing the early indicators of a coming recession, and faced by a divided opposition, British Prime Minister Theresa May has chosen to trigger an early general election.

The negotiation of Britain’s exit from the European Union is likely to dominate the campaign.  However, the Labour opposition will attempt to focus attention on the perilous state of the UK’s public services.  There are, however, four existential threats that simply will not get a look-in during the campaign:

Climate Change

Climate change is the best known of these issues, and will probably account for a paragraph or two of each of the parties’ manifestos.  However, this will amount to little more than lip service; perhaps accompanied by the sop of some inadequate additional investment in renewable energy.  Even the Green Party will devote more space to immediate economic concerns than to the radical measures that are now necessary to preventing the collapse of the human habitat.  The kind of policies that might make a difference – such as banning commercial air travel, making city and town centres car-free zones, drastically restructuring our industrial agriculture, and making massive investments in electrification of industry – will be considered far too radical to place in front of the voters.

We can be reasonably certain that the kind of climate policies that make it into the parties respective manifestos will be those that might have worked if we had implemented them in the early 1980s when climate change was in the future.  Today – with the evidence of a fast-shifting climate all around us – they are wholly inadequate.

The Energy crunch

The state of Britain’s energy is hardly mentioned in mainstream media.  Just one of its symptoms – rising energy prices – will make it into the election debate.  However, we can expect our politicians to take the coward’s way out and blame the energy companies for high prices rather than acknowledge the serious crisis that successive governments from all parties have landed us in.

North Sea oil and gas production peaked in 1999.  In the 18 years since that peak, production has fallen by more than 60 percent; leaving Britain increasingly dependent upon imported energy.  At the same time, the income from oil and gas exports has all but dried up, leaving the North Sea more or less economically unviable – some commentators now calculate that the cost of decommissioning the North Sea infrastructure is higher than the value of the remaining oil and gas reserves.

Electricity is in crisis too.  Nuclear power plants that should have been retired years ago have been granted permission to keep operating just to keep Britain’s lights on.  Unprofitable coal plants have been closing well ahead of schedule, and proposed gas plants have not materialised due to the high investment costs and lack of short-term returns.  New nuclear has been plunged into chaos as a result of the bankruptcy of Toshiba’s nuclear division and the near bankruptcy of EDF and Hitachi.  Renewable energy generation – especially wind – has increased significantly, but this has brought intermittent over-production problems.  National Grid is now obliged to fund big companies to use more energy and pay conventional power stations to shut down in the summer months when there is too much energy from renewables (the costs of which get passed onto the energy companies and, ultimately, their consumers).

We, on the other hand, are walking with our feet.  When oil prices spiked between 2010 and 2014, the UK’s carbon footprint went down.  That is, some people stopped driving altogether, others cut back.  Consumers across the developed world doing the same thing triggered the collapse in oil and gas prices since 2014.  While this may look like good news, the reality is that energy companies have massively cut investment in new projects, leaving the global economy seriously short of oil and gas in the early to mid-2020s.  In electricity too, wealthy consumers and businesses have avoided increasing energy prices by deploying their own renewable energy systems.  At the same time, millions of households at the bottom of the income scale have been plunged into fuel poverty; effectively disconnecting themselves rather than pay increased prices.  This means that the cost of maintaining and growing the energy supply industry is falling on an increasingly squeezed middle.

Even the solidly level headed Financial Times has recently called for some kind of state ownership as the only means of keeping the UK’s lights on and its businesses running in the next decade… but don’t expect that to appear in anyone’s manifesto.

Resource scarcity

Even less well known, Britain faces some manifestation of Liebeg’s Law in the next decade.  This states that a system – in this case the UK economy – will fail as a result of its least available component.  In 2012 a joint report from the UK’s environment and business departments warned that:

“The risks identified by businesses relate to increasing competition for resources, price volatility and potential interruptions in supply, caused by a combination of growing worldwide demand, concentration of supply in a small number of countries, trade restrictions in some cases, lack of currently viable alternatives in key applications, and time lags in the supply response to increased demand.

“These trends are already having an impact on UK businesses, in more acute cases leading to concerns about access to resources. 29% of profit warnings issued by FTSE350 companies in 2011 were attributed to rising resource prices.  In a recent survey of their membership by EEF the Manufacturers’ Organisation, over 80% of chief executives of manufacturing companies said that raw materials shortage was a risk to their business in 2012.”

The continuing global depression following the 2008 financial crash has probably staved off the problem in the short term because falling consumer demand in the developed countries has curbed resource use in the developing (i.e. manufacturing) countries.  However, as early as 2007, an article in New Scientist warned that:

“The calculations are crude – they don’t take into account any increase in demand due to new technologies, and also assume that current production equals consumption. Yet even based on these assumptions, they point to some alarming conclusions. Without more recycling, antimony, which is used to make flame retardant materials, will run out in 15 years, silver in 10 and indium in under five.  In a more sophisticated analysis, Reller has included the effects of new technologies, and projects how many years we have left for some key metals. He estimates that zinc could be used up by 2037, both indium and hafnium – which is increasingly important in computer chips – could be gone by 2017, and terbium – used to make the green phosphors in fluorescent light bulbs – could run out before 2012. It all puts our present rate of consumption into frightening perspective.”

Unfortunately, economists – and the politicians who listen to them – treat resources, energy and the wider environment as “externalities” – things that can be assumed to always be there in the quantities we want, whenever we want them.  In reality, the “great acceleration” in the years since 1960 has resulted in global demand for resources outstripping supply so that – again, sometime in the early to mid-2020s – the global economy will begin to experience intermittent supplies of key ores, minerals and alloys.  And again, none of this will make its way into anyone’s election manifesto.

Global economic collapse

Contrary to popular belief, the financial crash of 2008 was not an isolated event in the banking system.  Rather, it was the culmination of more than 500 years of debt-based economic growth that began in medieval Europe and spread around the world.  Although the types of monetary system that provided the foundation for this growth has changed in form (between various forms of gold and silver-backed currency to today’s fiat currencies) its essential debt-based nature has persisted.

In effect, our economy begins with debt.  We either borrow or print money to invest in the next ground of production.  This creates a debt-resource growth cycle because of the requirement to pay interest on the debt.  In practice, this means that our economy must grow to survive.  That means that at each turn, it must use more energy and more resources in order to generate more wealth with which to pay back the interest on the debt.  This has been the key driver behind the expansion of what sociologist Immanuel Wallerstein named The Modern World System.

So long as the system has had access to an unlimited supply of energy and resources, we have always been able to grow – albeit through cycles of boom and bust.  But earth is not infinite.  Having spread to every corner of the world, there is nowhere else to go.

To give just one example of the threat: China now consumes more than half of the world’s coal (and reserves are depleting fast).  If China was really growing at the 7 percent of so that its government claims, then by the end of the next decade, China would be consuming more coal than the world is currently producing.  Given that other developing states – notably India – would also like a share of that coal, the obvious conclusion is that China will simply not be able to maintain economic growth.  As a result, it will not be able to maintain its excessive public and private levels of debt.  The result is likely to be another round of banking crashes.

There is now more than six times as much debt in the world as there is real wealth to repay it.  Governments around the world have tried to address this by cutting interest rates back to nearly zero while printing new currency reserves to prop-up the banks.  But sooner or later, an absence of real wealth creation is going to bring that particular Ponzi scheme down.  When it does, we are likely to see a retreat into nationalism and re-localisation.

All of the party manifestos will include some platitudes about returning the economy to growth, most likely through some form of infrastructure spending.  But none will acknowledge the structural impossibility of maintaining economic growth on a finite planet; still less talk about the kind of radical restructuring that will be needed to prevent a catastrophe.

The “solution” (or more correctly, “mitigation”) to our problems/predicament will be to move as rapidly as possible to some form of circular economy in which we properly re-use the resources that we already have rather than scrambling for the Earth’s final reserves.  This, coupled to far less consumption and a global effort to electrify as much of our energy uses as possible, together with massive investment in appropriate renewables would allow us to extend the best elements of the global economy into the future.  This said, underpinning all of our problems is the debt-based currency system in which an elite is able to use its power to create currency (through one form or another of printing it out of thin air) in order to steal a fraction of the wealth that each of us – businesses and workers – has already generated, and then to charge us rent (i.e. interest) for the privilege of using that currency.  Until or unless we democratise the way in which money is created, then the drive for exponential economic growth will continue to deplete our resources and energy supplies, collapse our economy and ultimately undermine the environment that we depend upon to keep us alive.  But, once again, not one of the political parties will even mention debt-based money in their manifestos.

So yes, we can have another heated debate about the pros and cons of voting for this or that political party.  We can get angry, throw our respective rattles out of the pram and abuse our political opponents; labelling them as fascists or communists, racists, misogynists, morons and cretins.  But the truth is, given the crises that we – and our children – will have to face in the next decade or so, this election is no more than a distraction.  No doubt the result will make a minor difference to each of us.  But when it comes to the real problems of our age, the parties are all unnervingly complacent.

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