The Collapse of Complex Business Models

Maya Collapse

I highly recommend this article whether you work in an industry (i.e. Media) or live in a country (i.e. USA) collapsing under overly complex systems. The best quote I believe is the last paragraph.

When ecosystems change and inflexible institutions collapse, their members disperse, abandoning old beliefs, trying new things, making their living in different ways than they used to. It’s easy to see the ways in which collapse to simplicity wrecks the glories of old. But there is one compensating advantage for the people who escape the old system: when the ecosystem stops rewarding complexity, it is the people who figure out how to work simply in the present, rather than the people who mastered the complexities of the past, who get to say what happens in the future.

Rod Dreher: Peak Oil is Coming, and we’re Unready

great article over at DallasNews.com . Just read this excerpt.

Maybe we’ll come up with a new wonder drug to fight the superbugs. Maybe we’ll invent some new way to meet our power needs when oil can’t be had cheaply, or at any price. Maybe Wall Street will come up with some new financial instruments that will make us solvent again. It could happen.

But there are no guarantees. The thing is, we’re living as if we are guaranteed to go onward and upward into a better and brighter future. Our nation’s (relatively short) history encourages this fallacious thinking. Like spoiled children, we want freedom without responsibility. But that’s impossible. You cannot defy the law of gravity forever.

To be truly free is to be responsible. To be responsible is to make choices today that demonstrate wise stewardship of our resources and our liberty. To be responsible is to see the world as it is, not as we would like it to be. To be responsible is to sacrifice now, as previous generations did, so as not to bind future generations to the tyranny of debt, poverty, foreign powers or their own appetites.

A famed U.S. military leader has warned that the fossil-fuel supply on which American civilization depends utterly will run out someday in the 21st century and that our nation cannot afford to place our hope in “the sentimental belief that the things we fear will never really happen.”

“I suggest that this is a good time to think soberly about our responsibilities to our descendants – those who will ring out the Fossil Fuel Age,” said Adm. Hyman G. Rickover, father of the nuclear Navy.

In 1957.

We’ve wasted a half-century of precious time, another non-renewable resource. We probably don’t have another one to spare.

Portion of Median Daily US Income Spent on Gasoline

Portion of Income Spent on Gasolinefrom MountainSentinel.com

At $4 per gallon, gasoline consumption will take 11% of daily income. It is expected that gasoline prices might rise above $6 per gallon by the end of summer. Such an increase would require 17% of daily income to meet gas needs. The percentage of income spent on gasoline climbs over 20% as we approach $8 per gallon. And a price of $12 per gallon would eat up fully a third of the average income. Half of the average income would disappear into the gas tank at $18 per gallon. And at $36 per gallon there would be nothing left of the average income.

Now, let us bear in mind that this average income is a median. That means half of the population earns less than that amount. The rise in gasoline prices will have a much more drastic effect on this half of the population. To see how it will affect them, let’s look at the minimum wage.

Gasoline vs Minimum Wage This portion of the population is already spending at least 17% of their wages on gasoline. By the end of summer, they could be spending over a quarter of their income on gasoline. And, at $12 per gallon, they will spend more than half of their income putting gas into their vehicle.

I can think of nothing better to demonstrate what a travesty is our current minimum wage. For those who argue that a rise in the minimum wage will hurt employers, I point out that as gasoline prices rise, the minimum wage will literally amount to a slave wage. It will not be long before no one can afford to take a job for minimum wage.

Both of the above charts also point out what an insult is the Bush tax rebate. At $4 per gallon, this rebate amounts to enough gasoline to meet average driving demands for 75 days. Or 50 days at $6 per gallon. For those who only receive $300 in their tax rebate – that is, for the minimum wage earners, Bush is offering to subsidize their gasoline for 38 days at $4 per gallon, or 25 days at $6 per gallon. It would be better to apply this money to the record budget deficits resulting from Bush’s illegal wars.

As gasoline prices increase people will have to take money from some other part of their family budget to pay their gas expenses. The following chart contains the Bureau of Labor Statistics average US cost of living statistics.(8) The dollar figures are from a suggested yearly income of $30,850.64.(9) This figure is much higher than the census bureau’s median income.

 

Peak Everything: Eight Things We Are Running Out Of And Why

Graph Going DownAnother excellent article from the folks over at TreeHugger.com about various resources being depleted around the world and some of the root causes. Here’s a brief summary of these scarcities. Be sure to visit this page and the links for more to get more details about each Peak Resource.

  • Peak Corn

Blame Earl Butz. Richard Nixon and Gerald Ford’s Secretary of Agriculture brought in the Farm Bill that dramatically increased the amount of corn produced in America. He encouraged farmers to “get big or get out,” and to plant crops like corn “from fence row to fence row.” Further billions in subsidies to farmers encouraged production, and soon America was awash in cheap grain, and with it cheap meat. Food costs as a portion of the American diet dropped to the lowest level in history; we became corn. Michael Pollan writes: “If you eat industrially, you are made of corn. It holds together your McNuggets, it sweetens your soda pop, it fattens your meat, it is everywhere. It is fed to us in many forms, because it is cheap- a dollar buys you 875 calories in soda pop but only 170 in fruit juice. A McDonalds meal was analyzed as almost entirely corn.”

  • Peak Oil

In 1956, American geophysicist M. King Hubbert calculated that the rate of production of fossil fuels would peak in the United States in about 1970 and then start declining. He was laughed out of the conference room. However, ultimately he was proven correct; now we are probably at the worldwide Hubbert’s Peak. A hundred years ago you just stuck a pipe in the ground and the oil rushed out; now it is not so easy, and America’s oil comes from deep under the ocean, is cooked out of rocks in Alberta, or is purchased from nations with security issues. Now the United States, Canada, Norway, and the United Kingdom are well past their peak, while Saudi Arabia and Russia are approaching it. Oil is still being found (there was a recent big hit in Brazil, and there are thought to be big reserves in the Arctic.) but it harder to get at and a lot more expensive.

  • Peak Dirt

Really, Peak Soil – the world is losing soil 10 to 20 times faster than it is replenishing it. Drake Bennett in the Boston Globe tells us that dirt is complicated stuff, made from sand or silt, then years of plants adding nutrition, bugs and worms adding their excrement, dying and rotting.
“The resulting organic matter feeds a whole underground ecology that aerates the soil, fixes nutrients, and makes it more hospitable for plant life, and over time the process feeds back on itself. If the soil does not wash away or get parched by drought, it very gradually thickens. It takes tens of thousands of years to make 15 centimeters of topsoil, about 6 inches’ worth.”

  • Peak Natural Gas

Blame the price of oil. Everyone knows that the price of oil is way up, but it is an international commodity. Natural gas, on the other hand, usually is subject to more local rules of supply and demand in North America alone. However it does follow the market. Director of Energy Policy Malini Giridhar of Enbridge Gas told the Star: “Oil trades between 6 to 12 times the price of natural gas,The price ratio is now 11 times, which is close to the upper end of the range.” Commodities markets are pushing up natural gas in reaction to higher oil prices, she said, rather than to gas supply and demand.

  • Peak Water

Blame Willis Carrier. Before he invented air conditioning,not many people lived in the American Southwest, it was just too hot for much of the year. It was only after World War II, when air conditioning became common and affordable, that the mass migration of people and industry could happen from cooler Northern states to California, Nevada and Arizona. Without AC, Atlanta and Florida are almost uninhabitable.

  • Peak Electricity

Blame air conditioning. It is the biggest draw on the grid, and as the climate warms, the demand is only going to get higher. Coal is the quickest and easiest solution, but also the dirtiest; burning a ton of coal generates 3.7 tons of carbon dioxide. Coal plants also spit out mercury and acid. Our politicians are promising millions to develop “clean coal”, but that is unlikely to kick in before 2030.

  • Peak Rice

Blame rats. First of all, most of the rice in America is sold to Asians for whom it is a staple; it really doesn’t take much of a panic to run out of Basmati rice over here. Most rice is eaten in the country where it is grown, and only 6 percent of the rice crop is traded around the world. In some countries, as much as 17 percent of the crop is eaten by rats; so good secure rice storage might be the first place to start.

  • Peak Metal

Blame China. They can’t get enough of the stuff and they don’t care where it comes from- in Shanghai, 24,000 manhole covers were stolen in 2006. The United States now exports $61 Billion in scrap to china each year, now the second biggest export. India and Russia are also net importers now. Blame Growth. Demand for products made from metals is exceeding production capacity; copper mines are expensive and environmentally controversial and consumption is outstripping supply. Blame M. King Hubbert. He was talking about oil, but the Hubbert’s Peak theory applies to any resource- as supply gets scarce it gets more expensive to get it out, and in some cases the resources are running out. Lester Brown predicts that there is less than a 25 year supply of copper. Chile, which produces 1/3 of the world’s copper, should see production declines starting this year.