The following is a rough transcript which has not been revised by The Jim Rutt Show or Nate Hagens. Please check with us before using any quotations from this transcript. Thank you.
Jim: Today’s guest is Nate Hagens. Nate is the Director of the Institute for the Study of Energy and Our Future, an organization focused on educating and preparing society for the coming cultural transition. Aligned with leading ecologists, energy experts, politicians and systems thinkers, ISEOF, that’s the initials of his institute, assembles roadmaps and off-ramps, that’s a key one, off-ramps for how human society is going to adapt to lower throughput lifestyles. You can learn more about the institute at energyandourfuture.org. I recommend you check out Nate Hagens’ YouTube channel. He’s got an interesting Twitter feed at NJHagens, and he has a new podcast called The Great Simplification.
Today, we’ll be talking about his book, Reality Blind: Integrating the System Science Underpinnings of Our Collective Futures. It was written with co-author DJ White of Earthtrust.org. Welcome, Nate.
Nate: Thanks so much for having me, Jim.
Jim: Yeah. This should be an interesting conversation. I really very much enjoyed the book. I realize it’s only volume one of a two-volume set. We’ll probably push somewhat beyond the confines of volume one into the obvious voids you didn’t get to, but yeah, let’s get down to it. First question, why the title Reality Blind?
Nate: Well, that was the name of my course that I teach at the University of Minnesota. It’s called Reality 101 because I think our culture has gradually moved into a consensus trance of money and technology. I think the core fundamental drivers of our current situation and our future are mostly unknown to people or at least people recognize them but are unaware of their origins. So this was a introductory text for college freshmen and sophomore to take a look under the hood of what makes the human ecosystem function, and this choice of terms, Reality 101 and Reality Blind, predated the fake news and everything from the prior election. I mean, we chose that name eight or nine years ago. We don’t normally care about reality. Fitness is connected to fitness and not so much the truth, but we can get into that, but yeah, that’s why I chose the name.
Jim: Yeah. You also note that we tend to remember stories far better than we remember unrelated information. Indeed, much of the thinking is the creation of coherence seeming stories out of disparate century inputs, information that flows from other people. That’s you. Of course, by the way, that shit’s often wrong, right? We’re operating on models that may or may not have much to do with reality sometimes.
Nate: Exactly. My view is we need a designated driver or lots of them or millions of them to navigate the challenges ahead. I mean, you’re in the X risk community. People I work with call it the polycrisis or the human predicament, but the more people that understand the system science of how we got here and how the pieces fit together, the better chance we’re going to choose the better pathways ahead. I think our culture right now has a lot of bright pro-social people caring about the future, but I don’t think they’re using a reality-based lens with which to view the paths, and I expect we’ll get into that in this conversation.
Jim: The predicament or whatever, listeners to my podcast now, we tend to call it the dub meta crisis, but I think we’re all talking about the same thing. I also wanted to note an interesting literary device that you and your co-author used, which is your alien name, Taal, T-A-A-L. As you say, Taal stands for through an alien lens. When I’m doing workup of a book for my podcasts, I highlight and make comments on sections all through the book. Turns out I made 321 highlights and comments on your book, and a disproportionate of them were actually on Taal’s part. How about that? Tell me a little bit about why you chose to do that.
Nate: So the book is Reality Blind Volume 1, and it’s got around, between that and Volume 2, it’s got about 300 concepts that we felt are important for a college student to know. Each concept is one or two pages only with a lay description of the science, of the cognitive bias of loss aversion or peak oil or how is money created, things like that. Then underneath that, we had through an alien lens, which was more of a way that we could do a Monday night football color commentary on the science rather than just be rote references and dry science. It was almost like, “Let’s imagine a hypothetical, pro-social alien philosopher that comes down to Earth and opines on this topic.”
The reason this fits so well, and perhaps you should be interviewing my co-author DJ White instead of me because he did most of the Taal writing and I did most of the science writing, and it’s because he thinks like an alien. So he didn’t really have to act much to write those things. So I thought it was a way to make these somewhat threatening and atypical topics be interesting to a 17 or 18-year-old.
Jim: Yeah. I think you did a good job. I actually liked it. As I said, your co-author did a wonderful job at taking the guts of the more detailed narration and getting it down to the essentials. So readers, when you read the book, don’t skip Taal. That’s some of the good stuff, right? In these kinds of books and these kinds of discussions, there’s always the question about the balance between three polls: reality, pessimism, and optimism. Before we jump into more details, why don’t you give us your thoughts on reality, pessimism, and optimism with respect to the coming big transitions that are going to have to occur if we’re going to make it successfully to the other side?
Nate: I have a lot of thoughts on that. Our current culture, it’s almost considered gauche or unprofessional to be too pessimistic and to have too many constraints on the human story. There always needs to be, “Here’s the problem, but if we add solar panels, we can fix it.” There always has to be this Madison Avenue glimmer of packaged hope at the end of something. I think that’s fine. I think I am hopeful and cheerful, but not so optimistic as far as relative to our cultural expectations. I’m actually quite optimistic about the future, but that’s because I have much reduced expectations relative to the consensus trance of society.
I think we have to look at the world from an ecology lens rather than a technology or money lens in which to understand what we face. So if we get a good grip on reality, the pessimism and optimism are less relevant. That’s the emotional response, which could be totally different depending on who’s reading it.
A very common experience of my students, Jim, was they signed up for the class because they were worried about climate change. Then they learned in the class a lot of other things, about human behavior and about the importance of energy to our society, and that energy is depleting. They learned a lot more scary stuff that made them more pessimistic about the future, but at the same time, it was the knowing of the things and it was the putting together of the parts and the processes that comprised the human ecosystem that actually empowered them, that at the end of the semester they felt like, “Wow, I know more scary stuff about the planet than I did, but I feel more agency and I feel more sanguine about it because I understand.”
So the ultimate challenge of telling a story is there’s a trade off between being accurate and being helpful. In my work, at least so far, I’ve just tried to be accurate. I’m not trying to spin things to make people feel better. I’m trying to describe our reality, but humans don’t like uncertainty. We like to hear things that are confident and unequivocal because, oh, my God, we’re going to colonize outer space and science the shit out of it on Mars, and technology will always find a way. That world view is pretty much behaviorally indistinguishable from, “We’re screwed. There’s nothing we can do. Mad Max is coming,” because both of those polls obviate the need for any personal response or effort or change.
So I try to steer away from the optimism and pessimism. I just try to describe things how they are because the reality of our future I expect is in between those polls. We’re going to have probably an Earth trek future. We’re going to need a lot more humans understanding the energy, ecology, human behavior nexus to craft a path forward.
Jim: Yeah, I absolutely agree. That’s why I gave a three-dimensional space: pessimism, optimism and reality. It’s been my longtime view that we have to focus on the reality part of it and not worry about optimism or pessimism. I see people, as you described, techno-optimists, “Oh, yeah, we’ll figure it all out. No problem.” Right? “Just double the amount of VC in it and all will be good.” Then we have, you and I both know, pessimists. “We’re doomed. We’re doomed. Live well and enjoy what we got because we’re all going to die.” In reality, it’s probably somewhere in between, but the only way to navigate the best that we can is to be reality-based, and I suspect, at least, suspected, at least, once I finished your book, that’s what you were getting at with reality blind, that if we are reality blind, we are not doing our best possible job at navigating the possible futures that we have.
Nate: Exactly right.
Jim: In fact, you summed it up with a quote, “While the path to a profoundly wonderful human future is difficult, it is not yet foreclosed.” I think that’s a nice way to put it.
Nate: Well, I think those other, the technology will solve it and we’re doomed, those are very strong, almost religious camps because people have their identity associated with those things. So reality, in the sense of this educational materials, is threatening to certain people’s identity, at least I’ve found that to be the case. I thought that when I started this new podcast that I would get a lot of techno-optimists saying that I was too pessimistic and I don’t understand what hydrogen will do or nuclear or whatever, but the opposite has actually surprisingly happened. I get a lot more pushback from the doomers saying that I’m naively optimistic about human futures and I don’t understand blah, blah, blah, about runaway climate change and near-term human extinction. It’s very interesting to see the public response when you put out a video or an animated movie or something.
Jim: Yeah. I could easily see that happening. As you and I have talked about elsewhere, my strong advice to people, not worry about the peanut gallery, just tell the truth to the best of your ability and let the chips fall where they may.
Nate: You seem to be better at that than me. I mean, that is exactly my professional outlook and that is what I’ve been doing for 20 years. I think you have a thicker skin than me because I like people and I care what they think and say about me. So when I say something that is really maybe scary and depressing to someone, I immediately feel an empathy for them and I worry about how they’re going to take that information, and that and other things make me cautious when I say something. You seem to just wear everything on your sleeve and let the chips fall. I wish I had a little bit more of your temperament on that, Jim.
Jim: I know it’s been true since I’ve been a very little kid that I frankly don’t give a fuck what most people think. Oh, well, call them as I see them, and I’ve got my ass whipped a few times, but overall, it’s served me well. All right. Let’s dig down into some of the meat. Regular listeners of the show know I often take an evolutionary perspective on things. One of the key parts that we know about evolution is that it’s very contingent. Things happen, become frozen accidents, and the world moves on after that, but in a different trajectory because of that frozen accident, one of the things I learned in this book came from a Taal aside, actually, which was that he said, I presume this is true, “Your world did not evolve lignin-eating bacteria until 290 million years ago, by which time tens of millions of years of unoxidized carbon and hydrocarbons had already been sequestered underground.” That is a really interesting thought that this big buildup of underground carbon did not have to happen in an evolutionary sense, but it did.
Nate: It wouldn’t happen again as long as termites and other bacteria were available to consume things. So the implication there is that we are alive during what might one day be referred to as the carbon pulse where we are drawing down and burning ancient carbon and hydrocarbons 10 million times faster than they were geologically sequestered. Couple hundred million years ago, there was nothing to eat and decompose them. So the carbon and bonds that exist today were just a product of geologic heat and pressure, basically a ready-made fuel for us to extract and use because they weren’t eaten.
Jim: Yup, and you mentioned the term carbon pulse. Being a good disciple of my 11th grade English teacher, Mrs. Kingsley, I always look for the one phrase theme of the book, and my takeaway was, indeed, the carbon pulse, that your book is about the fact that we had a carbon pulse where part way through eating it and the implications of that are what we’re dealing with. Is that a fair assessment?
Nate: That is a fair assessment, and it probably is a good summary for the book, especially so because our culture is unaware of that. We tend to think of our riches and our productivity and our wealth as purely or mostly a product of human ingenuity and innovation. That’s true, but that has been on the backs of massive amounts of coal, oil, and natural gas, which are so powerful in what they provide to us that, for all intents and purposes, they’re indistinguishable from magic on human time scale.
A barrel of oil does 5.7 million BTUs worth of energy potential. If you translate that into work, it’s 1700 kilowatt hours. You or I hauling dirt or pushing a wheelbarrow or putting up roof shingles or what or planting a garden generate around 0.6 kilowatt hours of work per day, which means that a barrel of oil has 11 years worth of our physical labor embodied in it. Humans are a lot more efficient in turning our muscles into actual work. So you have to handicap that 11 down to around four and a half. So a barrel of oil does four and a half years of human labor. We pay $80 for it.
The global system of the international, all the economies in the world use 100 billion barrel of oil equivalents of coal, oil, and natural gas per year, effectively adding 500 billion human labor equivalents to our global economy in addition to the four or five billion real human workers. This has resulted in massive increases in our profits, massive increases in our wages, hugely inexpensive goods which we transport around the world. The human economy, as measured by the number of people and the per capita goods and services consumption of those people, is a thousand times bigger than 500 years ago. So we’ve built an economic system on this bank account of ancient sunlight, and our stories, especially in business schools and our econ departments, totally neglect this. They treat energy the same as any other commodity input when energy actually is incredibly special and non-replaceable.
So this is a carbon pulse. We’re treating it as if it were interest, but it’s actually principal, and we’re not allocating any cost to the waste streams, which, as you’re aware on your podcast, is acidifying the ocean and acting as a thermal blanket on Earth, the more CO2 that comes from these fossil laborers. It’s a pulse because if we take an aerial view, a 20,000-year view, it will look like an EKG meter on a heart monitor. It will be a brief blip in time in a couple hundred years where we will have found it, extracted it, burnt it, mostly wasted it at current trends. Then a couple hundred years from now, there will effectively be none left. With the termite and lignin comment, it won’t be there again. It’s a one time thing for any species on this planet, and ours is the species, ours is the culture that founded. You and I are alive midway through this pulse.
Jim: That is exactly right. I make this point quite often by analysis. I use a slightly different timeframe, a slightly different analysis. I typically say start 1700, about 300 years ago, when I point out there was only 650 million humans on Earth, less than a 10th as many as we have today. I use a slightly higher level of energy intensity as opposed to a thousandth or a hundredth, I guess, because if you include animals, wind, and the amount of water that we’re using at that time, it’s more like a 10x increase in energy intensity of our civilization since 1700. Again, these are round numbers, but the net result, even using my numbers, is 100x in a mere 13 generations, a blink of the eye, even in biological evolution, let alone geological time. So this is a one time thing.
In your book, you talk about fire as one of the great inventions of humans. One of the things I do point out and just push back a little bit about the fire as the big transition, of course it was, is after Western civilization, you know what the biggest energy per capita culture and human history was? Probably don’t know the answer to that one.
Nate: Outside of our current culture?
Jim: Outside of the modern West, what was the heaviest consumer of energy per capita?
Nate: I’ll probably get it wrong. My initial sense was Egypt, but since you are saying it’s a trick question, I’ll say that it was some hunter gatherers that would lay fire to clear out swaths of forest to replant, et cetera, back in the day.
Jim: You got that right on your second shot. It’s actually Australian aboriginal people, who had an extraordinarily intense, very intelligent land management system based on very regular burning. In fact, if you actually calculate the energy given up by that burning, it’s within a factor of two of modern civilization. Who would’ve thunk it?
Nate: What timeframe was that?
Jim: Pre-contact, late pre-contact. Call it 1600 or thereabouts. So anyway, my point is that while fire is huge and interesting and a gigantic change, and we can talk about all the things it did, we’re not going to today, I like to put the date of where this trend occurred in 1712, where the Newcomen steam engine was invented, which was the very earliest successful heat engine, where we took heat and turned it into work. This is one of these great interesting contingent points in evolutionary history. The thing was amazingly inefficient. It was so inefficient, it only had one practical economic use, which was to pump water out of deep coal mines so they could keep mining.
The reason being it was so amazingly inefficient, it had to have very, very, very, very cheap fuel, and where’s fuel going to be cheaper but right out of mine. If it hadn’t been for these first deep coal mines in England that happened to be in areas that were subject to flooding, would that heat engine have even been invented anytime soon? Hard to say, but that is where I would say we became participants in this exponential, exponential of the carbon pulse where the first very inefficient steam engine was created. Then of course, a series of innovations along the way, often branded with Watt and his steam engine, which was probably the biggest single step up, but not the only one. From that single use case, essentially, the whole modern world has grown.
Nate: Yeah, I would agree with that. The one caveat and one side note, the caveat is I think our social organization, the big inflection point was the agricultural revolution. I think that was the paradise lost moment for 290,000 of our 300,000 years as homo sapiens. We were hunter gatherers. We didn’t have much energy surplus. We got what we needed in 15, 20 hours a week of hunting and gathering, and the rest of the time we sang and danced and told stories and took naps, but once we started to accumulate surplus via agriculture, that changed everything. Then you’re right, the exponential, exponential happened when we started to access things vertically under the ground, and instead of horizontally via farming.
The side note I would say is a lot of people who understand the importance of energy still have this flawed view that if we get more efficient at something, we will then save energy, and this is what William Stanley Jevons wrote about in the 19th century with respect to the steam engines. He predicted that, “Oh, these steam engines aren’t going to cause society to use less energy, but they’re going to become very abundant because they’re so powerful that the energy saved will then be applied to some other process,” and exactly what you were just saying with the new common steam engine, that they were able to pump the water out of the mines, which allowed them to access more coal and open more mines and more engines, et cetera.
So we have had 200 years, Jim, of getting more energy efficient. Our technology continues to get better and we continue to generate the same amount of GDP with using a little bit less energy every year. Yet over that 200 year period, with the exception of COVID and financial crisis and some recessions, we are using more energy than ever before as a global culture. So all this invention and making energy devices more efficient has not reduced our energy use.
Jim: It certainly will not, and that’s a hugely important concept. Again, the things to take away from this book, the Jevons paradox. When you make things cheaper, people will use more of it. It’s actually not that paradoxical, right? Then of course, the other thing that’s worth knowing is the learning curve. Originally, it was quite difficult to make gasoline from petroleum. So we had petroleum products around in the late 19th century, but only when the price of gasoline and diesel fuel got cheap enough due to learning curve did we have the explosion of the automobile and the long haul truck.
So you lay in the Jevons paradox and learning curve, that we tend to get more and more efficient at extracting useful energy per unit of dollars, at least for a while, on a substrate, and you have this double exponential of the carbon pulse. So listeners, remember the Jevons paradox. When people tell you that more efficiency is the answer, it can be part of an answer, but it’s not the answer by itself.
Nate: Let me add one more thing there, Jim. What you just said is absolutely true, except if we had someday an economic system that wasn’t based on perpetual growth and monetary system that didn’t need us to generate the interest on prior money creation. In such a situation, and I don’t know exactly how that would look, efficiency and innovation would make huge benefits for society if it wasn’t automatically rolled back into more growth. If there was some cap, then that sort of efficiency improvement could be a huge benefit for society.
Jim: Absolutely correct. Regular listeners know this is the main theme of my podcast, that exponential growth in a finite world eventually doesn’t work, and we’ve already reached the point that it doesn’t work. We’re actually past it. We just don’t know it yet. Oh, by the way, I have laid out an idea for a monetary system that can operate in a non-exponential growth fashion. People can check it out on YouTube at Dividend Money: A Replacement for Central Banker-Managed Fractional Reserve Banking. I believe it’s a monetary system in the implied financial systems that go with it that could allow us to have a meta stable society that improves in quality without having to improve in quantity, and that’s an important distinction. It’s one of the reasons I dislike the term degrowth for instance, right?
Nate: Oh, yeah. I don’t like the word degrowth either. I understand why people are advocating it. I think degrowth is something to root for, but I think post-growth is what’s going to happen and what we’re going to have to prepare for. I think while you read the book, there’s a metabolism to our current economic system and we’re not going to voluntarily leave this fossil pixie dust in the ground.
I mean, look at right now a lot of climate activists are simultaneously protesting what’s happening with climate change, rightly so in my opinion, but at the same time, they’re complaining that gasoline prices are too high and trying to get Biden to tap the SPR or do other things. So I think we have a momentum, and we can get into it if you want, but my theory is that humans have on mass in eight billion person strong global economic system become like that heat engine you mentioned. We have become a defacto heat engine, and there’s no one in control of this, not the billionaires, not the politicians.
We’ve outsourced our decision making to the market, and the market needs to grow, and the growth requires energy, and energy and profits are 99% linked, and energy and fossil energy are 85% linked. So there is a strong metabolic momentum driving us forward, and I think we will continue to drive forward until we run out of the amount of energy able to continue growth. My thesis is that will happen in the next decade.
Jim: Of course, that’s interesting. My analysis comes from the other side, which is we can’t get off the treadmill until we change the underlying financials and market structures because my thesis has been that it’s the money on money return that drives everything else. As you say, it’s even the billionaires that are forced to play the game against their own will in many cases, and until we make the changes in the institutional structures, the culture will continue to cruise ahead, though perhaps being smacked in the face by reality may get people to wisen up.
Let’s take a slight side take here. You actually have a lot in your book about the human cognitive limits, et cetera. We’ll go into those lightly. I thought that was a very nice synthesis at the highest level towards the end of those sections, where you described the nature of the human being who evolved for 200, 300 thousand years prior to the invention of even agriculture. As the gene agenda, why don’t you talk in some depth about what you mean by the gene agenda? Then we’ll talk a little bit about how the gene agenda in some ways is the biggest barrier to us making the successful change.
Nate: Yeah. So it’s not really an agenda, it’s just the default programming of a successful biological organism. You and I, Jim, have spoken a few times, and we don’t know each other real well, but you and I share a common ancestor all the way back to proconsul 19 million years ago in the trees and even before that. What was successful for our ancient ancestors, human and prehuman, was conserved in our genome. So if you consider 20 years a generation, that’s 20,000 generations of our forebears living on mostly the planes of Tanzania and Africa, what were the things that really mattered and were conserved? Certainly, tribal bonding, status, all kinds of physical characteristics. You can look at the sclera in our eyes, the whites in your eyes. Humans have more than other primates because it has to do with social intent. You can see where other people are looking and divulge intent from that.
So the agenda of the gene is the suite of behavioral preferences that we carry with us today that we inherited from our great ancestors effectively, that we go through our modern day in stimulation and technology-rich society effectively trying to match the emotional states of our successful ancestors in a wildly different environment. So you can study a stock trader on a functional MRI machine that will get the same dopamine response as a orangutan or an ape finding a berry.
So our hunter gatherer ancestors who got a gazelle or something to bring home were getting the same neurochemicals by playing video games on our parents’ basement, accessing a cold fire server somewhere, where our brains think we just bagged a game for the tribe, but in reality, we’re just playing Overwatch on our mom’s couch. There are countless examples of this that together comprise what we refer to as the agenda of the gene.
As this relates to our, you call it the meta crisis, what are the things that matter? Number one, we are incredibly status conscious. We compare ourselves to others. In our modern culture, that’s usually a pecuniary way, a monetary consumption-based metrics. We also are biological organisms. We care greatly about the short term versus the long term via something called steep discount rates. We have belief systems that divert us from reality because the beliefs give us fitness where the reality doesn’t necessarily until it does, but that’s another story.
We are incredibly social, ultra social. We’re not a solitary species like a leopard. We are very socially aware and socially connected and now have a global economic system. We’re all just like Catholicism or Christianity or Judaism or something like that. Our current religion is economic growth on the planet. We’re also incredibly tribal, where we defend people in our ingroup and we easily ostracize people in our outgroup. This has, obviously, you’re an expert on this on what’s happening with the polarization and such, on the algorithms and the internet, all of these things comprise to have a Achilles heel with respect to sustainable futures because unless we understand why we’re doing the things we’re doing and how we might get those same neurotransmitter cocktails in the future by using less material throughput, then we’re just treating the symptoms of our global dysfunction, not the root cause.
Jim: Yeah. You mentioned a whole bunch of them, the key ones, the variable reinforcement. I don’t recall if you mentioned this in the book, but one of the things that’s part of the analysis of people I work with is that we now also have the fact that capitalism or the economy has figured out how to program those primate gene agendas. The status has always been part of, even back to chimpanzees, chimpanzee life is nothing but a war about status. Turns out the war is mostly about who can beat whose ass up in a one-on-one fight, but what our economy has done has converted that status signaling into things like, “Do I have a Porsche? Do I have a 10,000-square foot house? Do I have a thousand dollars pocket book? Do I have a $200 haircut?” Those are the things that really, really concern me is that we have a culture that has developed a psychologically astute insight into the gene agenda and the economy basically continues to spin itself up exploiting that gene agenda.
Nate: Well, you’re absolutely right, and 20 years ago, this wasn’t the case, but now all the medium size and above advertising agencies have evolutionary psychologists on staff because they trigger the, “You don’t have this, you suck, but if you have this thing, you will be cool and respected,” and it’s a very common theme. Advertising, Jim, might be the single most deleterious invention of the human species.
Jim: I think you may be well correct. Of course, it was famously developed by a number of people, including the inventor of behavioralism in psychology, and also Freud’s nephew wrote the famous book, Propaganda, and I’m with you that the system goes extra rancid when it has enough understanding of human nature to explicitly program it for its own agenda, which is exponential growth, and that’s where we’re stuck.
Nate: Yeah, no, I completely agree.
Jim: That’s a big barrier to overcome and may take some big fucking hammers to do it. We’re not going to tweak our way out of that one, I don’t believe.
Nate: Eddie Bernays is who you were thinking of.
Jim: Bernays’, yeah, famous book, Propaganda
Nate: The documentary called The Century of Self.
Jim: Yeah, I don’t know about that one.
Nate: Oh, it’s a must see. It’s a little disturbing.
Jim: Okay, and then of course, there’s other things like supernormal stimuli which falls into this, the foods that are irresistible to the chimp brain, and what are those foods? Cheetos. It’s not a kale salad, I can tell you that. Then one my friend, Brett Weinstein, he and his wife focus on a fair bit is hypernovelty. Now, this is a curious one because it’s not obvious why we should have had an evolutionary preference for hypernovelty, but we seem to. One of the more recent manifestations is this plague called fast fashion, where clothes designs come in and out of fashion on a weekly or monthly basis and people are expected to throw their two-month-old clothes away and buy new ones. Why that appeals to the gene agenda? I’m not entirely sure. I still wear the same damn clothes I’ve been wearing for 30 years, but it does seem to be another one of these hooks.
Nate: Well, first of all, the gene agenda is like saying that men are taller than women. That is a truism. The world over men are five and a half inches taller than women, but there are a lot of women who are taller than a lot of men. So the gene agenda on these things are tendencies. They’re not absolutes on every human, but generally, we care about status. Generally, we’re susceptible to supernormal stimuli. Generally, we have cognitive biases list as long as your arm, but as far as the fast fashion, I’ve not heard of that before, but it sounds like it’s a combination of status seeking and supernormal stimuli.
The reason that it’s evolutionary adaptive is a supernormal stimuli is something that was adaptive in ancestral times but is isolated and heightened as a signal in modern times. A classic scientific study was when scientists took a popsicle stick and painted it red and put it into a bird’s nest with baby birds, but the popsicle stick was redder and larger than the actual baby birds, but that physical cue to the mother bird is she preferentially gave worms and bugs, offered them to the popsicle stick rather than her own birds because red and large indicated historically that that baby would have a higher chance of survival.
It’s the same thing in human systems is novelty was recognizing that movement down by the riverbank or that flash of color in the bushes. Those things led to outsize reward. The problem is in our current world is dopamine is a molecule that motivates people to do an action towards a reward, but in this fossil fuel bonanza culture, we’ve disconnected the reward from the work. So we have to do very little work to get these massive amounts of dopamine from porn or Cheetos or pizza or playing Overwatch or shopping on Amazon or anything like this. So effectively, behaviorally, we are turning billions of barrels of ancient sunlight into microliters of dopamine.
Jim: Yup. That’s what the economy is tuning itself to do. If I had to put out closely to your analysis on fast fashion, I’d say it’s linked to the drive for sexual selection. People think they’re going to get laid if they wear fast fashion. They may not explicitly think that, but they’re implicitly programmed.
Nate: Natural selection was a huge driver of behaviors and the winnowing of generations in our past, but sexual selection is equally a driver and it is incredibly active today for both sexes.
Jim: Complete aside, but I also like to point out people talk about the AI’s taking over with the most common way of people in the West meeting their spouses via online platforms, which are driven heavily by AI-informed algorithms. I can say that AI is already highly modifying human evolutionary future by deciding who to match up. So how about that for a bizarre and weird thought? Nothing to do with our story. I’d like to tell that story, nonetheless.
Nate: Well, I met my current girlfriend on match.com. So maybe the AI was steering me, but if so, I’m happy for it.
Jim: All right. Well, there’s a good story. I have heard a lot of good stories from it. I’m one of these guys that my wife and I have been together for 44 years, so I don’t know anything about this shit, just what I read in the funny papers. Let’s talk about the trophic pyramids. This turns out to be pretty important. It takes more and more energy to move from sunlight hitting the Earth up to humans driving around in their Mercedes.
Nate: Yeah. So part of being reality blind is that most citizens in the global north, well, most citizens of the world don’t really have training in ecology, and ecology and ecological processes underpin just about everything in our world. Trophic pyramids are the cascading of energy, which turns to food in the natural world. At each stage, there is around a 10% loss. So the sun grows grass, the gazelle’s eat the grass, the lions eat the gazelle, and at each stage, only around 10% of the calories are turned into biomass at the higher level. So if you go up three levels, it’s only one out of the thousand or so of the calories turns into your mass, which means that if you’re living high on the trophic pyramid, it takes an awful lot of stages at the lower stages of the pyramid to support you.
The implications are that our trophic pyramids for most of our ancestral existence were very tethered to the hydrological flows of the Earth, the soil, the rain, the sun, and global biomass, and the animals that it’s supported, but now, we have this gargantuan trophic pyramid that on the bottom end is supported by mostly fossil energy and materials, a very bloated service sector. Then on top, this extremely bloated financial sector is this misshapen, not really natural to the ecological Earth, at least our past. So yeah, trophic pyramids are the flow of resources to various heterovores, detritivores, omnivores in the system.
Jim: Yeah, and it is true that humans have shrunk the height of the pyramid, which has made it more efficient, right? We go from multiple, multiple levels. We reduced it to corn to feed the cow, to eat the cow, right? So we in some ways made the pyramid more efficient, but we’ve done so by destroying diversity and basically triggering what people talk about as the fifth grade extinction.
Nate: The sixth grade extinction, yes, and I don’t think that that is … I mean, there’s a lot of debate on that. I think what we know for sure is there’s been massive population extinctions. So since 1970, we’ve lost 70% of the populations of animals, birds, amphibians, and fishes, and insects, but a mass extinction is when we lose the majority of species, which we are losing species a hundred times faster than the background rate, but we’re still not nearly at a mass extinction.
My worry is that a lot of the costs or the downside to capitalism and our current structure are back loaded. So we may not have seen the worst of this because, certainly, it will be good news from a climate perspective if we use less fossil carbon and hydrocarbons, but if we use less of that, will we be accessing more forests and more wild animals and things like that? That’s something I worry about quite a bit.
Jim: Yeah, and of course, there’s two ways to look at this, but here’s a darkly optimistic way. Despite the fact that humans utterly dominate the large animal mass, probably of all the statistics I’ve read along this line, probably the one that’s most disturbing to me is that of all the bird mass, all the birds on Earth, 80% or more is now our domestic poultry. How about that for a weird scary number? On the other hand, and this is the darkly optimistic part, where the hell is my number here? Mammals are only 0.03% of biomass. So truthfully, if all the mammals disappeared, life would go on.
Nate: Yeah, but you have to qualify that. A lot of that mass is algae and just shrubs and things like that. We have to talk about conscious life evolved on this planet and nowhere else in the known universe, and conscious life, dolphins, and cetaceans, and humans, and bonobos, and things like that will be the most fragile first thing to go if there is an ecological bottleneck. So I don’t think that the fact that mammals are a tiny, tiny fraction of all biomass is all that important of a stat.
Jim: That depends on the long enough time frame it might be because it may turn out that the most significant thing that the Earth has accomplished so far was the Cambrian explosion and the development of multicellularity plus neurons. As long as we don’t drop below that, the ability to reevolve all the way up may still exist, but that’s an aside. That’s a crackpot point of view. Let’s assume that preserving our chain of being and our chain of life is the most important thing.
Nate: I don’t think we’d have time to do that in 500 million years or so. The sun will have expanded so much that the oceans would boil over. I mean, there is an Earth clock, and I think the general scientific assumption is in around 500 million years, which is a hell of a long time, but the Cambrian explosion was longer ago than that. In 500 million years, we won’t have a habitable planet. A lot of people think that will happen a lot sooner than that, but just on a strict physics standpoint.
Jim: Yeah. I have to go look that up because what I’ve always heard was it’s more like two or three billion years. I’ll have to look and see if there’s new information on the evolution of the sun.
Nate: On that topic, though, Peter Ward is written 20 books on this. He’s a very good friend of mine. He would be a good guest for your podcast I can introduce if you’d like.
Jim: Yeah, that’d be great. I’ll do the research first because I’m sure there’s other theories as well. There’s so much of this kind of stuff we could talk about, but let’s get now right down to the core of it, which is where we actually are with dependence on energy and what is it that we may be able to do about it and not be able to do about it with these emerging technologies because I would frame this, again, to try and take away high level themes. Can we use the gain from the carbon pulse to build a post-carbon way of life that’s of high quality for a scary number, eight billion people, in time?
Nate: The short answer to that is yes, we can, but there’s a technical part of that and there’s a social and political governance part.
Jim: Let’s start with the technical. Let’s start first with explaining the concept. I don’t remember exactly your terminology. Other people would call it energy on energy return.
Nate: Right. So energy is the currency of life and animals were the first investors. Cheetah or leopard in Africa chases a gazelle, and it expends calories when it does that, and if it chased 10 or 15 times and didn’t get a gazelle, eventually it would get weak because it didn’t have enough caloric input to keep up its efforts. So those animals that have an outsized energy return, they chase a gazelle and they get a hundred to one payoff and how much energies they expended in calories and how much they ate with the prey had evolutionary advantages. This has been shown through all kinds of scales and species in nature. Energy is the currency of life.
This also applies to human systems that if we invest a little bit of energy, forgetting about dollars for the moment, I wrote my PhD thesis on this topic, which is measuring our energy and natural resource terms not in dollars, but in how much energy and water and copper it took to get this energy and water and copper. So human systems that have an outsize energy return have advantages, which is why many global wars have been fought over energy and fossil carbon and hydrocarbons used to have, it would take one barrel of oils worth of energy to discover a hundred other barrels, and that went down to around 30 to one in the 1970s and is now approaching 10 to 15 to one.
So these energy sources that we’re getting are still incredibly powerful, but we’ve built a civilization on a very high energy return. So as we get lower quality fossil fuels like shale oil or light tight oil or the really low quality coal grades, we don’t get as much energy return. What ends up happening is we have to allocate more of our societal energy surplus to the energy sector itself, which leaves less for libraries and shopping centers and hospitals and NASCAR and other things. I think that’s what we’re going to be facing in the coming decades is we’re going to turn into a mortar-like mining machine where we allocate much more of our energy and resources to the energy infrastructure.
So there’s a couple things going on here, Jim. One is energy primacy. So this is that every good and service on the planet requires energy to invent, to imagine, to create, to construct, to deliver, to run, to maintain, to repair and to dispose of. So we need energy for everything. Then I talked earlier about the massive energy benefits we get from this fossil energy, but the other thing we didn’t talk about is this stuff is depleting. I mean, it’s obvious to anyone that just pays attention to finding an apple tree and you grab the apples that are at your reach first and then eventually you have to get a ladder to get the ones in the top of the tree. The same thing is happening with our oil resource.
So the United States has more oil wells drilled than the rest of the world combined. Our country is like a freaking pin cushion, and we are one of the top three oil-producing nations in the world, but we’ve long ago depleted the Beverly hillbillies just under the surface oil. We’ve accessed oil in the north slope of Alaska. We’ve accessed oil under the Gulf of Mexico. We are now accessing the source rock itself, which is called shale oil. Beyond that, there’s nothing left. The shale oil is abundant and we have the technology to access it, but it depletes very rapidly at around 80% of its ultimate production you get in the first two years and then you need to go and drill more and drill more. So this is like this Alice in Wonderland red queen phenomenon where we have to run faster and faster just to stay in place.
So the other component here is energy depletion that we are, actually, we’re not running out, we were running out of oil from 1859 the first time that we drilled a well. The challenge here is not that we’re running out, the challenge is that we’re running out of the amount and of the low cost in order to continue economic growth. Now, you bring up alternative sources. So there’s things that we refer to as renewable energy. Technically, that’s a misnomer because the sun is renewable, wind is renewable. The technology we build to harness the sun and the wind is, at best, rebuildable. Every 25 years or so, we have to have these poly-silicone wafers and these giant wind turbine blades with neodymium magnets, and that stuff is as complicated and sophisticated and energy and material-intensive as a pickup truck or a refrigerator.
So this stuff has different energy properties than fossil fuels do. First of all, most renewable energy tech generates electricity. Electricity is only around 20% of global energy use. The rest is heat and transportation and things like that. We can switch some of these processes that we currently use gasoline or diesel or natural gas for into electric, but some things can’t easily be switched and some can only be switched at a very, very high cost.
The other challenge with renewables, of course, is that the sun doesn’t always shine and the wind doesn’t always blow. So if we want 24/7 access to energy, which we’ve become accustomed to, we need to have either another simultaneous generation source, currently very prominently natural gas or we need to have a battery backup, and those are more costly, full system-wide. So what ends up happening is in an attempt to decarbonize the economy for climate change reasons, we are rematerializing the economy because like an electric vehicle uses six times the metals and rare Earths than a conventional car does, for instance, because of the large battery.
So one of the challenges with our renewable future is that energy and GDP are 99% linked. Materials in GDP are a hundred percent linked. So trading for low carbon is all of a sudden we’re going to run into bottlenecks with lithium and copper and water and rare Earths, and this is already happening. So I personally don’t think that we can continue a 19 terawatt economy using renewables alone.
The other real big blind spot, Jim, is there are a lot of techno-optimists, and it is true that we have amazing technology and we’re inventing more stuff every year, but all these technological stories about the future and inventions and anticipated innovation are happening in a period where we have effectively grown our energy access for 200 years with the exception of recessions and financial crises. We have more access to these armies of fossil workers to help our global economy every single year, and it’s with that lens with which we’re viewing the future. I’ll pause there. That was a long response to your question.
Jim: Yeah, that was good, and it is true that the energy on energy return of even something like oil has fallen massively over time. As you were pointing out, the domestic oil around 1930, US oil was thought to have a hundred to one energy on energy return. The current best estimates for domestic oil, and this was in 2000, was well under 20 to one. So we have been able to adapt to that fall off over time. The alternatives are behind even that, but not that far behind. Wind, in theory, can be 20 or 25. Solar vol tank, that’s a little more questionable, seven or eight maybe, something like that.
Nate: Yeah, this is a really fraught topic. I wrote my PhD thesis on this and, therefore, I feel qualified to say how dangerous the topic is. I think energy return on investment is the concept of net energy. It’s the same thing if you make a hundred thousand dollars a year. Most people just say, “Oh, well, you have a hundred grand.” Well, you really don’t because you have to pay 30 grand to the government. It’s the same concept with net energy and energy return on investment. You have to include the energy and material cost in what you get, but beyond that, when people try to refine a number like 12 to one or eight to one, it depends hugely on the boundaries of analysis you do to come up with that number, and a lot of people can come up with whatever number they want using wider or narrower boundaries in their study.
I would say that just measuring the energy return of solar panels and wind turbines are probably 12 to one is a reasonable number, but if you want to measure the actual electricity that we get, you have to build in the cost for the backup and the intermittents and all these other things, which drops them to around four to one in my research, and that four to one could be boosted back up to six to one or seven to one if we were to over build solar and wind, and then when it was really windy and sunny out, we would use that excess energy to create low carbon chemical inputs that could be used for ammonia and other things. We’re just not doing that right now because we’re optimizing for growth. We’re not optimizing for a livable future.
Jim: Yeah, indeed. There are many things that could be done, and we talk about this next is how do we nudge the system towards this. For instance, yes, probably cannot electrify all uses. For instance, making of cement looks like a pretty tough one. Steel is fairly difficult. Long haul trucking, probably though. Elon claims he can solve that one, but Elon says all kinds of things. On the other hand, as you loosely alluded to, there are ways to use electricity. For instance, I’ve looked pretty carefully into what Siemens corporation in Germany is doing in building an electricity to hydrogen to hydrocarbon stack, and they are already claiming that they can develop diesel fuel, could be used for long haul trucking or air travel, at a little bit more than 2x the current costs of diesel fuel.
Of course, that’s making a bunch of optimistic assumptions, for instance, that they have built significant solar farms in some place like Morocco that has very high percentage of sun closer to the equator, et cetera. They even do assume pessimistically that they would have to get their water source from decolonization, but you run the numbers, 2x isn’t that bad considering we haven’t even scaled the thing up. So there may actually be some interesting hacks by building large scale solar in places with high solar incoming energy and then converting that into transportable high density fuels as an example.
Nate: You’re right. There’s a lot of sundry and optimistic assumptions associated with that, but it’s definitely plausible, and we’re going to need a lot of things like that. I don’t think there is a one size fits all answer, and underpinning it all, getting back to the agenda of the gene and why I don’t think technology is going to be a savior for our current predicament is we are flipping between, we don’t have enough energy, our energy is too expensive to continue this way of life or would we want free energy that is too cheap to meter.
If humans had absolutely free energy right now, we would fry the planet in short order. So the fundamental issue is we have an economic system based on growth that’s 99% tethered to energy. So if that’s the case, all the global corporations and governments expect 3% growth in perpetuity, which means we will double the amount of our energy and material use in the next 25 years and double it again in the following 25 years.
So technology is like someone coming at you with a hammer with intent to hurt you. If they switch the hammer to something else, the intent is still there. So I really am a believer in the ability of humans to innovate and combine energy materials into a technology that’s useful for humans, but we’re going to need some different aspiration other than continued growth, which I think you agree with.
As far as the diesel, let’s just assume that it was able to do, and the other problem is that’s keeping everything else constant and we have wars and supply chain problems and ongoing depletion. So there’s a receding horizon aspect to that 2x diesel that once we actually developed our other circumstances, we’ll have deteriorated a little bit. So it might not actually be 2x. It might be three x, but even at 3x, if we could get diesel for $10 a gallon, that would also be indistinguishable from magic to most of our ancestors. It’s just that our current economic system and our expectations are tethered to something that is much cheaper than that because what we’ve done with the industrial revolution is we’ve replaced human and animal labor with machines, where we add thousands of units of fossil energy to replace one unit of previously human or draft animal energy. We’re able to do this because this stuff is so unbelievably cheap, but since we’re adding thousands of units to each process, like aluminum smelting or you mentioned concrete creation with these vast blast furnaces and the components that are mixed with machines, et cetera, that if energy prices increase even 10 or 20 or 30 percent, it causes the really energy-intensive processes to no longer be profitable. So sure, $10 diesel in the long run sounds like a miracle, but our current economic system couldn’t handle that.
Jim: No. I just looked it up. Price of diesel in Europe is about $8 a gallon.
Nate: Right. I mean, Europe did an amazing thing 20 years ago when they taxed the hell out of their energy. Gasoline there is around $10 a gallon.
Jim: I say their economy still works, right? They had to make some changes, so will we, clearly, right?
Nate: Right. Exactly. That’s ultimately what my work is about is how are we going to make those changes. I mean, the US is arguably bigger people, longer commutes, bigger cars, more entitlement, more polarization, more addiction. The end of growth in America is going to look very different than in Denmark or Germany, I expect.
Jim: We also have a more extreme climate, which also burdens us, substantially. In fact, you look at the three countries that are most similar in their energy consumption, it’s Australia, Canada, and the US. In fact, Australia and Canada are both a little higher per capita than we are, and they have all those same attributes that you just described, and the three of us will have the biggest problem of all.
Nate: It’s interesting. One of the reasons that Canada uses more energy per capita than the US, of course, they have to drive a little further, but they also use more air conditioning, which you would think would not be the case given that they’re north of us, but they do.
Jim: I did not know that. Of course, it’s right hot in the summertime out in Saskatchewan and places like that. That is very odd that they use more AC than we do. I would not have guessed that one. That’s an interesting data point. Okay. So we have some possible routes forward. What’s your best estimate on what that looks like? My own take, frankly, is not only do we have to stop the exponential growth, but we probably, at least for the West, have to actually bring down our level of consumption, at least for a considerable period of time. What’s your thought on that? I don’t think we could even make the transition staying flat.
Nate: All right. Let me preface my answer by saying that I don’t know, and I like to look at the world and the future as a set of probabilities that I change in my mind based on who got elected or what policies happen or what’s going on with Russia and Ukraine or maybe something I learned or maybe something I had wrong. So I have a distribution in my head that there’s a midpoint of the distribution, which I think is the most likely, and then there’s some things on the left and things on the right that are less likely, and that distribution changes over time.
The heart of my distribution is as follows, that we are going to kick every can possible to continue economic growth. When the productivity from combined, from lower productivity from extraction of energy, lower productivity from extraction of minerals, higher productivity from new technological inventions using those two things, when that trifecta in aggregate declines, the total amount of productivity for our whole system will decline. When that happens gradually recently, we offset it by printing money. I think that will continue to be the case that the credit productivity by issuing claims on future energy materials will overcome, at least in the short term, declining natural resource productivity.
So we will, via rule changes, via central bank guarantees, kick the can as far as we can. Until maybe there is some massive new innovation, some new energy source that we can’t yet talk about on this program because we don’t know it yet, that could continue growth even a while longer. I don’t see anything like that. I think our financial overhang is so severe that I think this disruption will happen in the next decade.
The problem is, Jim, is it’s not just energy. It’s all of this financial money that was created, was spent on expanding nodes and networks of the global super organism. So there is a physical underpinning to these monetary claims. So complexity becomes a big risk, the six continent supply chain just in time inventories from this global byzantine supply and letter of credit structure. So the total world energy use right now is 190 terawatts continuously.
So what does that mean? A light bulb, A 100 watt light bulb, that is about how much energy you or I or any human uses continuously going around your day. You’re burning around the same amount as a hundred watt light bulb. The average American uses 10,000 watts per day in our axosomatic footprint. The planes, and lights, and shopping centers that are one-three hundred and thirty millionth of our total energy pie. So we use a hundred times more energy than our bodies actually need. Globally, this is 190 billion of these light bulbs turned on all the time.
I personally think that in the next decade or so, we’re going to have a 30% drop in that amount, globally. That will be incredibly painful for the global north because we are so used to propagate energy consumption. The global south, of course, will also bear the brunt of this because of supply chains, and that’s where we export food to and everything. However, the saving grace is countries like India have 80% of their population already working in agriculture, et cetera. They’re already living in the primary economy. Whereas too many Americans, Canadians, and Australians are living in the tertiary economy or way down the food chain on services and gadgets and things that probably aren’t really necessary.
So I expect we’re going to, because of financial overhang, have around a 30% drop in the size of our economy in the not too distant future, which is akin to what happened in 1929 and the ’30s. Now interestingly, that would bring us back to a mid 1990s amount of per capita consumption, which doesn’t have to be a disaster, but we are just totally not prepared for this, and instead of preparing for it, we’re actually obfuscating it with new stimulus and artificial loan guarantees and central banks sticking their fingers in the hole of the dike so that most people are kind of unaware of that on the horizon, though a lot of people are, of course, walking worry. They know something is wrong with our culture, but I think the something will manifest in a biophysical haircut in the next decade or so. That’s the midpoint of my distribution.
Jim: That’s the short term, and then we have to figure out what do we do next because we’re still not even close to carbon neutrality. Even if we were to cut our output by 30%, we’d still have to grow our non-carbon a bunch, and we have to evolve to a carbon neutral culture sometime after that.
Nate: Yeah. That’s not going to happen. We are going to use less carbon because we’re not going to be able to afford the extraction of it. So I think a lot of the really extreme climate scenarios are unrealistic because we just don’t have that amount of extractable carbon, but I also think the net zero stuff is totally delusional, Jim. We have to spend a lot of energy to do things like carbon sequestration and some of the technologies that are in that suite.
Being energy blind means that we don’t realize how utterly dependent our societies are on coal, oil, and natural gas, and we just can’t wish them away. A lot of the renewable energy, getting back to that, it has been helpful for our GDP. It’s given us more energy. It is done bupkis for climate. We have higher emissions now even with the massive scaling of renewable energy.
So the positive scenario I see is somehow changing our governance and our cultural aspirations, which I don’t know how we’re going to do that, but if we’re able to do that, we could use our remaining, quote, unquote, “clean fossil” fuels like natural gas and oil, hopefully not coal, to use those as seed corn to invest in a lot of these renewable technologies that we mentioned to meet the future halfway and some 10 to 12 terawatt global society. Yeah, we’re going to have to use less. Those are swear words to our culture. The American way of life is non-negotiable. Well, if we don’t want global World War III and climate Armageddon, we probably are going to have to do a little negotiating.
Jim: This is going to be the next big thing is what about global equity, right? Why should the people of India and Africa, et cetera, accept the fact that the people of the West and the advanced economies of Asia consume massive multiples of energy? So if you include some movement towards global equity, my own calculations show the US, Canada, and Australia have to cut their consumption probably by 75% and Europe by about two thirds.
Nate: That’s also not going to happen. It gets to the degrowth thing. We’re not going to voluntarily cut our consumption by 75% so that we’re equal with other countries. I mean, it sounds nice, but our tribal natures, that’s just not going to happen. I think there could be some convergence over time because I think the richer countries will probably, because we’ve been more financially geared, will contract more on a percentage basis, but yeah, there are no easy answers. I mean, we have eight billion humans, Jim, and so the time for billions of humans is spread out over time.
I think we have two population problems, right? We have eight billion humans and we also have populations of refrigerators and air conditioners and cars and SUVs and jets and things like that. So the aggregate drain on nature and drain on our fossil and mineral bank account is a combination of those two things. The number of people and how much they consume per person, and yeah, it’s a little bit of a wily coyote moment. I mean, the United States has four and a half percent of the world’s population and uses around 20% of the resources.
We feel like that’s our birthright. I mean, it is our birthright in the sense that we happen to live in a geological province that used to have ancient oceans and, therefore, it’s blessed with huge amounts of natural gas and oil and was a virgin forest and planet until a couple hundred years ago, but as far as global equity, my only comment there is I don’t know what to do about that, but you could even draw the boundaries further, which is not only the other eight billion humans, but also the other 10 million species we share the planet with.
Humans are appropriating 30 to 40 percent of the net primary productivity from the sun directing it towards one of those 10 million species and, of course, other generations. What is the net present value of how many billions or even trillions of humans might live in the future and other species that are not going to have access to the carbon pulse nor are they going to have access to healthy ecosystems that you and I did relatively as we were growing up and alive on this planet.
Jim: Oh, that’s a cheery thought. Yeah, I did find it interesting that Matthew did in the book on the possible number of humans downstream from us. Though I must say from a complexity science perspective, I am not willing to say too much about what happens very far out into the future.
Nate: Oh, me either. I think I’m focused on up to 2030 because I think 2050 is a total fricking crapshoot because there’s so many things that can happen in the near term.
Jim: My own take is if we can steer humanity through the 21st century without collapse, we’ll have done a good job, and it’s not going to be easy for a lot of things to do. I’m going to toss out a couple of potential positives or at least ameliorative of the things you talked about. This is one that I have studied a lot, and if there’s any area that I think I have some expertise in, it’s this issue of financial collapse. Very important for people to remember that finance and money are not wealth, right? Wealth are factories and cars and farmland that’s being farmed. Well, it’s human capital, things that we know how to do. I can write a Python program. That’s a form of human capital.
In fact, we can entirely replace our financial infrastructure almost with a snap of the finger, and it’s happened before. We could declare a global debt jubilee, for instance, scrap all existing financial contracts, get rid of all currencies, and replace them with an entirely fresh financial infrastructure. Guess what, people? All the wealth would still exist. Now, some of the wealth would be misallocated, and that’s important to acknowledge. Probably in a new scheme, things like private jets should just be scrapped for their aluminum because they’re not going to make any sense on the other side of the transition, but that big move is still there.
People say, “Well, that sounds like fantasy.” Well, it actually happened. In 1920s, three countries in Europe, Germany, Austria, and Hungary, suffered the famous massive hyperinflation where you see the pictures in the history books of the people with wheelbarrows full of cash to go to the store to buy a gallon of milk. What did they do? How’d they get out of that trap? They declared essentially a clean slate. They issued new currency. You could pay off your old debts in the old currency, which meant that all the debts literally went to effectively zero.
How long did it take for those economies to restart? The answer was two weeks, two weeks. We have a problem around this stuff and that we have reified finance and money and made it more real in our minds than it really is. It’s a human creation and we can reengineer that whole layer with, I think, less storm and drum than you might think.
The second is that a 30% drop in some level sounds scary, but our huge buildup in this crazed consumer economy actually gives us vast layers we can give up. Do we actually need $5 coffees from Starbucks or thousand dollars pocket books or Porsches or more clothes that will fit in our closet? We have built up a huge reserve that we could easily go buy, buy, didn’t need that.
Actually, there’s some interesting biological analogs. I think one of the most interesting one is the peacocks tail. Turns out the peacocks tail on a male peafowl is quite expensive to maintain, to grow it, to drag it through the woods, to keep it looking nice for sexual reproductive reasons, et cetera, but one of the clever things about the peafowl’s strategy is in bad times, he doesn’t grow the tail, right? Guess what? He survives the bad times till the good times when he regrows the tail. It may actually be useful for us to think about the late stage, say 1975 and on, explosion in consumer abundance as a peacock’s tail, that if it went away, ain’t no big deal. You do that in combination with a financial and monetary reset, and maybe it’s less disruptive than we might otherwise fear.
Nate: On your second point, I fully agree, and I think listeners to your show and my show, I would hope that they are the cultural vanguard for changing the metaphoric peacock tail in their own lives as a cultural evolutionary maybe change for the social evolution in our species. We don’t need all this stuff to be happier, healthy. On your first point, I disagree with that. I think the financial gearing is such that it does affect our physical world more than you might think because every single dollar or cash or stock or bond or demand deposit or anything that people think they own is ultimately a claim on energy because when it is spent, when it’s called in, “I want to spend this $10 in my wallet or this a hundred thousand dollars in my bank account,” or whatever, it will be spent on things requiring energy and materials.
One of the differences is between now and the 1930s is now we’re going to have depleting fossil carbon pulse, where the 1930s, the pulse was still ahead of us. So there’s that, but I think the financial situation now is very similar to what it was in the ’20s and ’30s, where we were offsetting our problems by creating more financial claims, and what ends up happening is we are now, effectively, if you’re a family and you make 50 grand a year, you owe the bank $175,000 in debt, and interest rates are going up, so you owe the bank more every year. You are spending more than your 50 grand, so you’re having to borrow more every year, and the bank is starting to not trust you as much.
That example there is exactly what the global economy is right now. It’s around 350% debt to GDP. GDP is the income stream required to maintain and service the debt. So this is a pretty large issue. I ultimately agree with you that we’re going to have to have a saner financial system, but I don’t know that some belt tightening or contraction, I think that’s going to be inevitable, and I hope that you’re right on we don’t need a $5 coffee or those other things you mentioned. Personally, I think the more people that start to act and think that way now will be a psychological and social buffer for when we’ll be forced to do those things.
Jim: Yeah, that’s good, but I guess I’ll push back on the first point on the financial side, which is everything you say is absolutely true about what we’re about to see going into. We’re about to go into a real tailspin. I’ve been predicting this for a long while that when interest rates go up, the whole debt foundations become entirely untenable. We were able to run up our national debts because of very low interest rates. Now with interest rates skyrocketing, it’s going to crush the economy, but we so overbuilt debt that it’s going to so crush the economy that I do believe that we will, a deep point in this, basically decide to press the reset button.
There’s nothing that says those claims have to exist. Those are ledger entries. That’s symbols only. It’s not actual wealth. We could restitch a system that’s entirely new and fresh and turns money into a symbolic signaling mechanism that’s actually pro-social and not the current system that we have. That would be a huge disconnect, and a lot of people will be really pissed off, but it can be done and we should not take that out of our quiver of how we get through this mess.
Nate: Well, I think it can be done with a very large haircut for maybe mostly wealthy people, but it is a musical chairs thing that not everyone is going to be made whole.
Jim: Oh, certainly not. The capitalist class mostly will be wiped out. Oh, well.
Nate: Well, in the 1920s, there was a lot of wealth in Germany and the people that maintained their wealth were the ones that held a majority stake in the factories and the businesses because the paper wealth largely evaporated, but like you say, the factories and the productive capacity of the world stayed the same.
Jim: Yeah, that’s why I want to go a step further and reallocate the ownership of those capital goods as well. Anyway, this has been a wonderful conversation. I really thank you for writing the book with your co-author and getting these ideas out into the world and the good fight that you and your associates have been fighting.
Nate: We just scratched the surface with this conversation, Jim, but I enjoyed it and I look forward to interacting with you further. I’m going to introduce you to my friend as I had promised last week, and good luck with your stuff as well.
Jim: Yeah, that’ll be great, and when you do your Volume 2, let’s get you on the schedule and we’ll do another episode.
Nate: Sounds good.