Wandering Minds Need to Know
- steering a planet from within our human cultural 'Avatar',
dodging our own out-of-control information bubbles
© 1/28/10 p.f. henshaw 680 Ft Washington Ave NY NY 10040 212-795-4844
1 - World Energy use, Efficiency & Wealth show one process
(click the figures to enlarge images), ref's below
It's almost intuitively obvious that how capable you are in using energy will be directly proportional to your wealth, and your ability to use more energy.
Energy is nature's universal resource. It's needed to turn anything into anything and makes nearly all other resources replaceable. For the world economy energy has also been easily moved around to where it would be used more productively. Figure 1 shows that the world economy does actually allocate its energy resources to make wealth and energy use grow rather smoothly. World GDP and energy use for producing wealth are visibly both part of the same smooth process. Even how much wealth is created per unit of energy, the economic efficiency and productivity of energy for creating GDP, also changes in constant proportion to the others You can even see how they're connected in the smaller details too. The small scale waves in the GDP curve roughly correspond to the small scale waves in energy use. If one looked at more detailed efficiency and energy curves you could see the waves in energy and efficiency trends being out of synch. Periods of faster energy use increase alternate with periods of faster efficiency improvement, perhaps corresponding to recessions. It would be logical if pauses in growth were when "creative destruction" in economies was "retooling" to eliminate inefficient processes to later accelerate growth. Whatever the reason, it shows another level of consistent coordination in the money/energy relationship.
As people use it, money is just a number, and products are just a price. Both are detached from the energy and other things that physically deliver them. Using money can seem just a matter of trading scraps of paper, bidding up the price of things, buying low and selling high and all that. Hidden is how money is also a right to choose from all the kinds of physical work the economy does that use an equivalent value of resources. The result is that the reality of where products come from and our information about their values is detached. That makes it possible for the value we see in money to spin out of control.
When people get their information only from other information, having no way to check, minds can wander and sometimes get quite lost.
2 - US Energy use, Stock market & GDP showed diverging instability
(tap your head to find the misinformation...)
What this is about is also the special debt to the world many readers of this article inadvertently have, for how they profited from the long spree of accumulating false information and promises about our future. In some sense we need to give it back, and act as if what we set aside was savings for a larger purpose. The time our society waste by living like there was no tomorrow now only exists as the resources we now hold from that time that should have been put to better use. We should put them to good use.
Now in hindsight we can see the windfall at the expense of others, like profiting in the false dreams of others in a Ponzi scheme, being the ones that got away with the load, at the expense of our children though, and the society that was undermining its future. The bubble was based on misinformation, used for quick profits from empty promises leaving us unprepared for the change in the planet we need to call home. So our unstable economies now colliding with their natural limits are more unprepared for it than ever. We have a special obligation to discover and help communicate how our world can get back to reality.
Those who profited from our global financial overshoot need to give it back somehow, to unwind the distortion, correct the misinformation, not continue to hold our crippled economy hostage to making good on the false promises it foolishly made and is now still saddled with.
When people get their information from each other the only way the chains of retelling can stabilize is for some group to come to agreement on what to believe... Determining meanings by agreement, though, leaves only the agreement to verify itself. It seems that effect is displayed in the wildly wandering stock market over the past century. The markets do not seem to have followed or predicted in any way the rather smooth changes in either US or World energy use or GDP. The market just follows itself.
Creating information by agreement, not reflecting anything else, can give group thinking functional fixations. That's apparent in how important manners and symbolic gestures are to both major and local cultural differences, and what large barriers to communication they cause. Such cultural clashes of language conventions also shows it the strange academic walls that separate professional disciplines, even those studying the same subject.
Ecology and economy for example are studies of the much the same subject, but their languages simply do not seem to overlap. From the Greek word roots one is supposed to be "the logic of" and the other "the measure of" what the Greeks called "habitation". Each discipline agrees with itself on a vast terminology for a variety of development and production systems using organization and energy, but there is almost no connection between the two languages. It seems they are also widely thought to be in deep conflict. The difference between the two languages seems to be treated as too deep to attempt making a connection.
Could it be just the convenience of arriving at information by agreement, making things up together, is what does that?
Comparing figure 1 and 2 one question is why US energy use started to level off in the mid 60's, unlike the rest of the world. It raises a variety of questions, but it's clear where the world's energy investment was not going, to the US. We also know where it led, to the US leading the world in making up false promises on limitless betting schemes that fell apart. The logical reason why investors would not have continued to invest in energy productivity advances in the US is that it became relatively unprofitable. That suggests the limit of energy productivity growth in ~1967 was a natural limit for the US economy.
US GDP growth continued though, until the financial collapse of 2008. What might have foretold that includes the divergence of the energy and GDP curves, and the wild meandering of the stock market. The stock market simply wanders all over the place, seemingly with no direction at all. Having your solid indicators of the future going off in two entirely different directions, and your predictor of the future responding to neither of them... should be a sign. The market behavior suggests a "random walk", a "blind indicator", a trend that very largely just follows itself.
What occurred to me is that the one thing stock traders know for sure might be that they themselves don't know anything about where the market is going. So, as they brag and bluster maybe they are also craning their necks to look over the shoulder of someone who does know, they think, and copy the bets of their neighbor... Something of that kind seems evidently happening, and highly persistent.
The stock market fails show any meaningful trend at all, except collapsing when the economy did as the financial system panicked from having accumulated so much misinformation.
One thing that might have helped start the US economy's slide toward increasingly unstable finances was the ~1967 limit to growth for the US energy economy. Limits to growth were a big issue at the time, and for US energy use it definitely occurred. One part of the professional and political response was agreeing on an idea to eliminate limits to growth with more investment.
In the mid 70's a financial plan to restore growth emerged that seemed to eventually lead to the financial deregulation a financial abuses now so implicated in the collapse. It was a celebrated cause of the emerging neo-conservative Republican economists. The idea was called "supply side economics", that if investors could invest more of their earnings, it would assure rapid growth. It actually did, but not at all as intended. It appears to have starting the self-perpetuating inflation of the financial bubble.
The irony for US investors is that the natural end of growth for the US energy economy might be what prompted the theory that a flood of investment funds would cure a lack of productive uses for investment.
Where investment in the lagging US economy actually did find bigger returns was in ever shorter lived and riskier things, bidding up the value of fixed assets like housing, moving US technology overseas to employ cheaper workers, and borrowing on the expectation that future earnings would continue to multiply the ability to borrow indefinitely. It took on a life of its own, with each riskier and less sustainable strategy being taken as confirmation that all risky strategies would last forever. Following each other's example everyone kept pushing it further.
Computers and the information revolution have been a bonus in many ways, but they have also very importantly been the innovations that allowed, and were the instrument of, the other three disastrous investment strategies. Using investment strategies that were too complicated to understand began in the 70's not the late 90's or the 00's. Computers could churn out very narrow margins and electronic transfers allowed money you needed in the morning to be loaned out as you slept. It all seemed like a great miracle, though, if one took short term profits as a map of the future as nearly the whole society actually did. One might also have looking at the curves showing how expectations were diverging from realities, like figure 2.
What actually followed, starting about 1980, was a twenty five year long whole system financial bubble. As investments in energy productivity increasingly went to other countries the paying investments in the US increasingly came from inflating asset prices and borrowing against future asset inflation. A whole culture of doing less to make more developed. That kind of investment creates a spiral of misinformation that accumulates, the classic trap leading to financial panics that people throughout history have been caught by over and over. It's the "sure bets" that let you multiply your bets that are the most deadly part.
Money was being "made". How it works is by reinvesting profits continually in what looks like a "sure bet" because everyone else is reinvesting their profits in it too. There were other realities pointing the opposite direction, of course, but people told each other that if you invested more you'd make more. It was a mania not wealth. It seemed like the ideal market! Everyone was getting to bet in a "sure thing" in which they could reinvest their winnings to multiply their bets, letting them make ever more money without "doing" anything for it.
We all know "there is no free lunch" but where people seem to make an exception is for an "ever multiplying free lunch". I joke, actually. I don't think that's exactly how the misunderstanding occurs. I think it really starts with our not tending to ask where our information comes from. If you don't know where your information comes from an "inexplicable run of fabulous luck" might be a true windfall. A run of fabulous luck is in fact one of nature's common signals for the beginning of things that are actually wonderful, like love affairs. People just pay enough attention to tell the difference.
The trouble with another person's group misinformation, of course, is you can't tell them! Facts are not useful for changing anyone's system of beliefs.
Lots of people getting to this point in understanding the problem just give up. If basing information on agreement is dangerous because of confidences we DO control, but have no basis for, part of the solution would be paying attention to things we do NOT control. To find something more reliable than agreements the most immediate thing we don't control is the natural world. Accumulating misinformation, in any case, seems to be a persistent "loose screw" in human reasoning, giving us a lot of freedom but perhaps, but also a true maze of blind spots.
In figure 2 you can also see the decade long accumulative stock market bubble that preceded the crash of 1929 and the great depression of the 1930's. The market bubble of the 1920's was a one decade long period of run-away market inflation. Following the great depression the financial institutions and government responded vigorously, of course. They upgraded the regulatory systems for the whole economy to be much more stable. This time the run-away market that developed, seemingly in response to natural growth limits for the US economy, could continue before collapsing a little longer. This time we had a 25 year global spree of multiplying misinformation about real values, rather than just a ten year one, it seems...
When people aren't thinking about this "telephone game effect" of everyone believing circular whispering about things not in evidence at all... they get caught. To make agreements reliable one needs a common reality of some kind to refer to and find common ground in. The hurdle is the need to "take a break" from your own habitual interpretations to look at that common ground in a fresh way again. Simple evidence over which you have no influence becomes a "tabula rasa" letting you discover, or rediscover, the original meanings. It lets both simple and complex things simply tell their own story. That's not automatic, but not impossible. It's quite enjoyable in fact, if sometimes hard to do. That's the frustration.
If this gives you a better picture of how people almost can't help but let their cultural agreements turn into bubbles of misinformation sometimes, and the tangled in webs mismanaging the planet we have become ensnared in, then I'm hopeful. Human cultures are our "Avatars" for navigating the planet. They package all our ideas, they define what's "real" for us. If they get easily lost in bubbles of misinformation of their own making, we need to do something about it.
One thing that seems clear is that we need to stop trying to increasingly interfere with and control nature. We really aren't in control of even ourselves. We don't yet understand why most things in nature need to be free of our control to take care of themselves. Discovering and rebuilding the relationship is the only way we'll survive, and is where we should be putting our resources.
1) Fig. 1- lEA world data 1971-2006: Economic product (GDP in 2000$), Energy use (TPES in btu's) & Economic Energy Efficiency ($lbtu), each scaled to their relative growth rates and indexed to 1971 value; The "efficiency effect" is implicitly the result of improving 'know-how' in using energy to create what people will buy.
2) Fig. 2 - Historical US energy use in quads and Dow Jones prices adjusted to inflation by Charles Hall and Wm Tamblyn with trend curve for energy data, notes and historical US GDP curves from US BEA data added by P. Henshaw.
3) Detailed view of Energy use and Energy productivity trends
(text and figures may be occasionally updated.)