Daily Digest

Daily Digest - July 28

Wednesday, July 28, 2010, 10:55 AM
  • Already Retired Workers May Receive Reduced Pensions
  • U.S. Cities, Counties are Poised to Cut 500,000 Jobs
  • Debt Commission: Dealing With Federal Debt Likely To Require Tax Hikes, Spending Cuts
  • City Manager To Reveal Her Plan In August To Cut $130 Million From Budget
  • Illinois Has Nation's Largest Budget Deficit
  • Local School Boards Tackle Difficult Budget Deficits
  • Bleak Forecast For Schools Budget
  • Linden Mayor Trying To Avoid $344 Average Tax Increase
  • Omahans Take Mayor To Task Over Taxes
  • Orange County Wants Tax Hike On Ballot
  • Audit: US Cannot Account For $8.7B In Iraqi Funds
  • Liability for Scrapping Yucca Mountain Could Run In the Billions
  • House Poised To Approve $37B Afghanistan And Iraq War Spending Bill
  • Erie County Facing Possible $36M Deficit
  • County Faces $31 Million Budget Shortfall In 2011
  • Hawaii Buys Homeless Plane Tickets to Mainland
  • College Students Hide Hunger, Homelessness
  • N.J. Food Pantries See Increase In Bare Shelves And Hungry Families
  • Low Food, Financial Donations Hit Conway-Based Food Pantry
  • Red Light Cameras Rake In The Cash
  • China Banks Resigned To Defaults
  • US CBO: US Could Face 'Difficult Choices' If Rates Spike

Economy

Already Retired Workers May Receive Reduced Pensions (New Jersey)

More pessimistic assumptions about rates of return peg the pension system liability as high as $173.9 billion — not to mention some $55 billion in unfunded health care costs. Experts and officials have begun to say it more clearly: There is no way New Jersey will ever be able to pay for the promises it has made to current and retired workers.

(State Treasurer)Sidamon-Eristoff said he would not rule out the possibility that even already retired workers may receive reduced pensions or have to pay more for medical care.p>

U.S. Cities, Counties are Poised to Cut 500,000 Jobs

U.S. local governments may cut almost 500,000 jobs through next year to cope with sliding property taxes, a decline in state and federal aid and added need for social services, according to a report released today.

The report, a result of a survey by the National League of Cities, the U.S. Conference of Mayors and the National Association of Counties, showed local governments are moving to cut the equivalent of 8.6 percent of their workforces from 2009 to 2011. That suggests 481,000 employees will lose their jobs, according to the report, which said the tally may yet rise.

Debt Commission: Dealing With Federal Debt Likely To Require Tax Hikes, Spending Cuts

Even some leading Republicans have said in recent days they expect that a debt reduction plan will include a "revenue" element. That means taxes.

It turns out the national debt, when you factor in the promised benefits of Social Security and Medicare versus what those programs are expected to bring in, is much higher than the $13 trillion national debt – between $61 and $106 trillion, depending on whom you talk to.

City Manager To Reveal Her Plan In August To Cut $130 Million From Budget (Dallas)

In less than two weeks, Dallas residents will have an idea what services will be cut in order to balance the budget. Dallas city leaders have been wrestling with ideas to eliminate a projected $130 million budget shortfall.

Illinois Has Nation's Largest Budget Deficit

The study released Tuesday by the National Conference of State Legislators also said all the states together will have a shortfall of $83.9 billion for fiscal year 2011, MarketWatch reported.

As of the present time, seven states are projecting deficits for the end of fiscal year 2010,and Illinois has the biggest, according to MarketWatch. Following Illinois are Oregon, Michigan, Kansas, Washington state, Pennsylvania, and South Carolina, the report said.

Local School Boards Tackle Difficult Budget Deficits (Florida)

School boards in Hillsborough and Pinellas counties are scheduled to meet today. Both are scheduled to tackle projected budget deficits for the upcoming fiscal year. The school board in Hillsborough County is set to hold the first of two public hearings at 3 p.m. today on its $2.8 billion budget plan. School leaders are looking at an estimated $41 million dollar shortfall.

In Pinellas County, the school board is scheduled to hold the first of two public hearings on its $1.3 billion budget at 5 p.m. School leaders are facing an $18 million budget deficit.

Bleak Forecast For Schools Budget (Virginia)

Susan Quinn, chief financial officer of the Department of Financial Services, said that if the 4.7 percent increase in county funding for the 2011-2012 school year is not obtained, about 1,200 positions within the school system could be eliminated.

Linden Mayor Trying To Avoid $344 Average Tax Increase (New Jersey)

Under the proposed budget municipal taxes for a home assessed at the city average of $140,000 would increase $344, according to city officials. A public hearing and adoption of the amended budget is scheduled for 7 p.m. Aug. 17 at City Hall. "This budget is upsetting," said Gerbounka, who doesn't propose, prepare or even vote on the budget. "As mayor I am very frustrated."

He said estimated tax bills just went out and he's received about 30 calls from residents, especially widows, crying because they can't afford the taxes.

Omahans Take Mayor To Task Over Taxes (Video)

It was the second public forum to explain Suttle’s plan to raise property taxes, increase the wheel tax and create a tax on restaurants, bars and catering services. The mayor said the extra revenue is needed to close a $34 million budget shortfall projected for next year....But for some, any additional tax burden is more than they can handle. “I still can’t go out for entertainment. I’ve cut down using gas by not going anywhere,” said Joan Hillman. “Where am I supposed to cut?”

Orange County Wants Tax Hike On Ballot (Florida)

It could cost homeowners more than $100 per year; it depends on the value of the home....A $90 million budget shortfall is looming for the Orange County School District's 2011-2012 school year and, before federal stimulus dollars dry up, the district must find a new stream of revenue. Tuesday night, the school board will vote on asking property owners to tax themselves to raise tens of millions of dollars for the district.

Audit: US Cannot Account For $8.7B In Iraqi Funds

U.S. audit has found that the Pentagon cannot account for over 95 percent of $9.1 billion in Iraq reconstruction money, spotlighting Iraqi complaints that there is little to show for the massive funds pumped into their cash-strapped, war-ravaged nation. The $8.7 billion in question was Iraqi money managed by the Pentagon, not part of the $53 billion that Congress has allocated for rebuilding. It's cash that Iraq, which relies on volatile oil revenues to fuel its spending, can ill afford to lose.

Liability for Scrapping Yucca Mountain Could Run In the Billions

Eleven years after the government pledged to begin storing nuclear waste for commercial nuclear plants, the Department of Energy decided to scrap its planned repository at Yucca Mountain, Nevada — leaving the Justice Department with dozens of lawsuits on its hands....“DOE’s most recent estimate of potential liability … was as much as $13.1 billion,” Hertz said. “This estimate does not fully account for the government’s defenses or the possibility that plaintiffs will not be able to prove the full extent of their claims, and they were created before the administration’s 2009 announcement that it would not proceed to build a repository at Yucca Mountain.”

House Poised To Approve $37B Afghanistan And Iraq War Spending Bill

The House appeared poised Tuesday to approve spending $37 billion on the wars in Afghanistan and Iraq, overcoming growing doubts among congressional Democrats who have concluded that the Afghan conflict is unwinnable.

Erie County Facing Possible $36M Deficit

While Collins (R) has long warned of fiscal "storm clouds" gathering in the future, the budgetary squall may be coming a bit sooner (and stronger) than he had hoped. "Relative to the rest of the state, Erie County is in the best shape of any county there is," Collins said. "But these storms clouds are everywhere."

County Faces $31 Million Budget Shortfall In 2011 (Lawrenceville)

Thanks to special tax bills sent out this March, commissioners have enough to balance this year’s budget. But with property values dropping, officials will have a $31 million budget gap to fill in 2011.

Hawaii Buys Homeless Plane Tickets to Mainland

With the homeless population up 15% over last year at a cost of $35,000 a head—and worries that tents on the beach will drive away tourists—the state is resorting to buying them one-way tickets to their home state.

Proponents of the free flight to the mainland are getting criticized for dumping their problems on other states, and there's worry that some enterprising folks will game the system by flying one-way for a Hawaiian vacation, knowing they can cadge a free ride home. And then there's the irony that at least some of Hawaii's vagrants have already taken advantage of another state's fly-them-out-of-here program: It seems New York's Project Reconnect paid for at least five people's flight to Honolulu.

College Students Hide Hunger, Homelessness (NPR)

For many college students and their families, rising tuition costs and a tough economy are presenting new challenges as college bills come in. This has led to a little-known but growing population of financially stressed students, who are facing hunger and sometimes even homelessness.

UCLA has created an Economic Crisis Response Team to try to identify financially strapped students and help keep them in school.

N.J. Food Pantries See Increase In Bare Shelves And Hungry Families

“How do you split four cans of corn over 30 families?,” asked Sandra Burton, director of the Metro Park Assembly of God pantry in Woodbridge, which receives most of its supplies from the warehouse. “You don’t. You feed some of them this week and some of them next week.”.....“Our numbers have definitely doubled” this year, said Traci Lassiter, the director of the Apostles House food pantry in Newark. “Before, we were serving 500. Now, I’m serving a minimum of 1,000.”

Low Food, Financial Donations Hit Conway-Based Food Pantry

High demand and low donations are creating a perfect storm for a Conway-based organization that supplies food and financial assistance to those in need. Officials at the Churches Assisting People Center in Conway said they're struggling to keep food on the shelves of their food pantry, as demand continues to rise through the summer months.

Gail Steinfield, executive director of the CAP Center, said the organization is constantly running out of food, but has yet to refuse service to someone in need. "It's very, very hard these days for people to pay their bills and buy food," Steinfield said.

Red Light Cameras Rake In The Cash

"Those cameras," he said, "is not operating right."

To which Magistrate Bill Cristie replied, "do you have anything else you want to add?"

"No sir," Hernandez replied. He left $150 dollars lighter in the wallet......Same thing for Honda SUV driver Josefina Campos. She unsuccessfully pleaded poverty, telling the judge she hasn't even paid rent for the month. To which Cristie said gently, "I listen, I sympathize. But it cannot be part of my decision-making process." But Campos did get an extra 15 days to pay.

China Banks Resigned To Defaults

In most countries, the revelation that local governments would default on a fifth of their bank loans would be greeted with alarm. In China, however, the news came as a pleasant surprise.

“The fact that nearly 80 per cent of those projects have at least some capacity to service their debt is quite amazing,” said Qu Hongbin, chief China economist at HSBC.

US CBO: US Could Face 'Difficult Choices' If Rates Spike

In all three of those fiscal crises in other countries, sharp increases in interest rates on government debt forced the affected governments to make difficult choices. The U.S. government would also face difficult choices if interest rates on its debt spiked. For example, a 4-percentagepoint across-the-board increase in interest rates would raise federal interest payments next year by about $100 billion relative to CBO's baseline projection-a jump of more than 40 percent.

Article suggestions for the Daily Digest can be sent to dd@PeakProsperity.com. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

17 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - July 28

"The county has $6.12 billion in pension liabilities for current employees and retirees, of which about $800 million remains unfunded."

"Using data provided by state agencies, a Maine Center for Public Interest Reporting analysis shows within five to six years pension costs could be 20 percent of the budget — twice, for example, what the state gives to higher education, a system with 14 campuses, 50,000 students and almost 6,000 employees.

“It's a ticking time bomb that the next governor will inherit and that people don’t understand well enough,” said Alan Caron, founder of Envision Maine, a nonpartisan Maine think tank. “There isn’t going to be enough money to do what we’re already committed to doing, much less doing more of what we should be doing,”

Robert A. G. Monks of Cape Elizabeth was the head of two commissions that studied the state retirement plans in the 1980s and 1990s. He calls the looming pension costs “the 800-pound gorilla” facing the next governor.

The current and future payments to the pension system, Monks said, “will mean a process of diluting other state programs drastically.”"

..............................2A) State budget gap expected to exceed $1 billion (Maine)

"Gregoire said state government will face an additional $3 billion deficit in the 2011-13 budget cycle and a projected $9 billion deficit in 2013-15, driven in part by increased demand for state-subsidized health care, unemployment insurance payments and other social services."

The state's budget situation is going to get much worse before it gets better, members of northeastern Louisiana's state legislative delegation said Tuesday afternoon.

"If you think this year was bad in the Legislature, wait 'til next year," said Sen. Robert "Bob" Kostelka, R-Monroe.

"The so-called 'cliff' we've been waiting for next year looks like Mount Everest."

"State-generated revenue for the fiscal year that ended June 30 was $7.2 billion, with $2.5 billion of that total coming from one-time funding sources.

Just four years ago the state generated $11.2 billion in revenue.

"We went to every room in the house and broke every piggy bank and put that money in the budget this year," Fannin said."

"The MTA, whose 8.5 million weekday riders make it the largest U.S. mass-transit system, is weighing a menu of fare and toll proposals aimed at raising revenue by 7.5 percent next year as part of a $12 billion budget. The authority’s board will vote today on authorizing public hearings in September.

The plans come as the MTA has cut service and trimmed its workforce to help close an $800 million budget deficit this year. The MTA raised fares for single rides on buses and subways to $2.25 from $2 last year."

"The Sentinel found 25 Orlando area car dealership closings, and only five are inhabited.

KISSIMMEE — The dealership has been closed for just a year, but already weeds grow uncontrolled, the paint is fading and chains surrounding the parking lot are covered in rust.

Beneath the covered walkway of what used to be Coggin Buick- Pontiac- GMC on W. U.S. Highway 192, shirtless skateboarders videotape themselves rolling up and down the concrete ramps.

In the past six years, more than two dozen new-car dealerships in Central Florida have moved or gone out of business, and all but a handful remain empty. And with the depressed Florida real-estate market and struggling automotive industry, salvation for the properties seems unlikely.

The Orlando Sentinel has identified 25 closed stores, and only five are inhabited. Two are now county offices, two are used-car stores and one is an RV lot."

  • Other news and headlines:

End of the Party: An Interview with Don McAlvany (Starts off with comments on the "stress tests". Ends with comments on gold. Much more info)

BP setting aside $32 billion for cleanup costs

Spill May Cost Gulf $22.7 Billion in Revenue Over Three Years, Group Says

Oil-Drill Moratorium Hits Small Businesses

Persian Gulf's Sukuk Yield Premium Widens After Defaults: Islamic Finance

India's most debt-ridden states

'Very grim' future looms for university finances (UK)

Gulf Coast Personal Bankruptcy Filings to Rise

More Than 1300 Space Shuttle Workers Get Layoff Notices

Dallas Commercial Construction Contracts Fall Again in June

County Health Care Services May Need Life Support (Los Angeles)

Moody's Cuts Outlook on Big Banks

US faces prolonged sluggish growth prospects

....................More news to follow a little later

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - July 28

"The 85,000-student school district is facing a deficit of about $363 million, has experienced about 130 school closures since 2005, lost half its enrollment in the last decade and last year, posted the worst scores among 18 large cities on a national standardized test."

"July 28 (Bloomberg) -- Greek island homes, long coveted by millionaires and Hollywood stars such as Tom Hanks, are being marked down by as much as 45 percent as the country’s debt crisis destroys demand for holiday getaways."

"There are now so many fake £1 coins in circulation the Royal Mint could be forced to scrap all of the coins and reissue the entire denomination.

Their warning came as new figures indicated there were £41 million fake £1 coins in Britain – one in every 36 in circulation. This is a record level and suggests that the proportion of counterfeit coins had tripled in the last decade.

The situation has worsened since last year, when one in 40 £1 coins were fake. Experts and MPs said the level of fakes were so high there was now a serious risk that consumer confidence in Britain's most popular coin was becoming compromised. "

The Collapse of East Hampton: How One of the Country's Priciest Towns Went Broke

idoctor's picture
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Re: Daily Digest - July 28

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Re: Daily Digest - July 28

Thanks Saxplayer!

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Re: Daily Digest - July 28

Saxplayer, the article on the NJ Pension system is chilling; like getting splashed in the face with cold water!  This is what I  fear is coming at both the sate and federal levels.  I am very concerned for people like me, who are still working, but are no longer sure our retirements will be there, I am even more sickened for people like my elderly parents -and others like them-- who are already dependent on these pensions, and no longer physically able to "make a living" for themselves.  What's going to happen to them?  It's not a pretty picture. 

I suspect many of us may be dealing with the need to move our parents in with us (or our siblings), as this pension debacle unfolds. 

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Re: Daily Digest - July 28

Pinecarr,

I cashed out my California pension 2 years ago.  According to John Williams (shadowstats.com), if the federal government used GAAP and US workers were taxed at 100%, we would still be running buget deficits.  Remember, states need revenue to run too.

Each of us needs to carve out our own future.  Invest locally, connect with community, and think outside the box.  Pray.

Nate

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Re: Daily Digest - July 28

Thank you Saxplayer.  

Quite an assembly of news today!

rhare's picture
rhare
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Re: Daily Digest - July 28

It amazes me how many of these stories are about how much the various bureacracies have to raise taxes instead of doing wholesale slashing of spending, but I guess bureaucrats will continue to make sure they are covered first. :-(

Daily Digest wrote:
With the homeless population up 15% over last year at a cost of $35,000 a head

The whole $35K/homeless person in Hawaii?  Wonder what that goes for?  The median income for a 2 person family in Hawaii is $67K.  It sure seems like the cost of providing minimal services to a homeless person would be far less than the per-capita median.  I'm certainly guessing the median income family is not homeless.  I guess when you add in the overhead of those that manage the homeless programs, it gets mighty expensive!

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Re: Daily Digest - July 28

rhare wrote:

Daily Digest wrote:
With the homeless population up 15% over last year at a cost of $35,000 a head

The whole $35K/homeless person in Hawaii?  Wonder what that goes for?  The median income for a 2 person family in Hawaii is $67K.  It sure seems like the cost of providing minimal services to a homeless person would be far less than the per-capita median.  I'm certainly guessing the median income family is not homeless.  I guess when you add in the overhead of those that manage the homeless programs, it gets mighty expensive!

They have done a fair number of studies showing that it is cheaper--and I mean much cheaper--to house the chronically homeless for free, provide them with services, and even let them drink or drug themselves to death if they want to rather than leave them on the streets to fend for themselves.  Naming just some things off the top of my head, the costs related to chronic homelessness come from interactions with law enforcement and emergency services, vandalism and other petty (and not so petty) crimes they commit related to their addictions or illnesses, the crimes that are committed against them (there are anecdotally a surprising number), and their lack of health care (infectious diseases are rampant as you might imagine and carry a high social cost).  While it is a distasteful result for many on American work ethic grounds if nothing else, many Republicans and Democrats alike end up supporting housing and service programs when confronted by the actual dollars.  This is just one of those things that appears completely contrary to logic and common sense but is nonetheless true.

And Sax, you are unbelieveable!

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Re: Daily Digest - July 28

Saxplayer: I'm beginning to wonder if you are some high power exprimental data collecting machine that resides in the depths of some military industrial complex.

AMAZING!!! Thanks.

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pinecarr
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Re: Daily Digest - July 28

Nate wrote:

Pinecarr,

I cashed out my California pension 2 years ago.  According to John Williams (shadowstats.com), if the federal government used GAAP and US workers were taxed at 100%, we would still be running buget deficits.  Remember, states need revenue to run too.

Each of us needs to carve out our own future.  Invest locally, connect with community, and think outside the box.  Pray.

Nate

Nate, I think you made a really smart move!  As soon as I realized what the likely future of my pension was, I racked my brains to try to figure out some way to do the same thing myself.  But I can't touch my retirement savings without quitting my job, and can't quit my job because I have a couple of loans I still need to pay-off (made before I knew better!).  But I did stop contributing to my locked-in retirement savings, and have since been investing that money in those things my family and I need to build a more resilient lifestyle (wood stove, garden, mini-orchard, grapevines, etc.). 

I think your advice nails it!

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Re: Daily Digest - July 28

dave s wrote:
They have done a fair number of studies showing that it is cheaper--and I mean much cheaper--to house the chronically homeless for free, provide them with services, and even let them drink or drug themselves to death

Perhaps, but the problem with this amount they show is that it means it's costing more for the homeless than many working citizens get paid and make a living.  So I still find the $35K just plain whacked.  I mean if you agree to support the homeless then they should receive no better treatment than those paying taxes and not taking hand outs.  Same goes for prisoners.  It's just demoralizing when someone works and is a productive member of society and those that leach have better lives.  In this case I suspect they don't have better lives, just cost more due to the bureacracy, which was my actual point. 

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Re: Daily Digest - July 28

Dave,

They have done a fair number of studies showing that it is cheaper--and I mean much cheaper--to house the chronically homeless for free, provide them with services, and even let them drink or drug themselves to death if they want to rather than leave them on the streets to fend for themselves.  Naming just some things off the top of my head, the costs related to chronic homelessness come from interactions with law enforcement and emergency services, vandalism and other petty (and not so petty) crimes they commit related to their addictions or illnesses, the crimes that are committed against them (there are anecdotally a surprising number), and their lack of health care (infectious diseases are rampant as you might imagine and carry a high social cost).  While it is a distasteful result for many on American work ethic grounds if nothing else, many Republicans and Democrats alike end up supporting housing and service programs

The main problem with this, is that it amounts to paying people for not working, and that this naturally will lead to people not working. The bureaucracy will need to expand to make sure that abuse of the program is limited, increasing the cost further and increasing opposition. At the end when funds start getting really tight, you have a situation where a part of the population is (rightly) viewed as a problem by the rest of the voters, and other social policies have to be examined to handle it. As an European, I know where this tends to end.

-S

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Re: Daily Digest - July 28

As a health care worker in Atlanta, I can tell you we frequently have large numbers of homeless, as patients, for extended stays, in our hospital. With lice, worms and severe MRSA, VRE and complicated respiratiory and  tissue (skin) problems, it takes weeks getting them back on their feet to walk out the door. Two weeks of care will run 20k and this may happen 2-3 times/year. This is why it's cheaper to keep them in a group home, they are not 'working' the system -- but they are surviving. The question is -- will we continue to afford this homeless caregiving?

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Re: Daily Digest - July 28

As a compliment to the discussion created by saxplayer00o1 excellent Daily Digest today ,this highly telling post created by xrayMike79 on his Timeline/Stages for Collapse of our Way of Life thread. I am quite sure he won't mind my reproducing the article here: -

xraymike79 wrote:

Solutions aren’t the answer

Any robust species will naturally expand, if it can, to occupy its habit. However, in nature ’success’ has a cost. A flourishing species must find new energy and nutrient resources, and must negotiate with its environment to process its wastes. Ecologist and historian Kenneth Boulding called this the ‘metabolic cost’ of evolutionary success.

Likewise, as human societies dominated their habitats, they sought solutions to the problems of paying this metabolic cost. Societies often fail to see that those problems were the results of previous solutions. Irrigation allowed ancient city states to solve the problems of population growth and scarce rainfall, but extensive irrigation produced salty, depleted soils.

To win new lands for food production, empires abandoned their cities and moved to new watersheds. Eventually, they clashed with other migrating communities, so they designed weapons and built armies to ’solve’ conflict. The subsequent arms race created new problems. They solved this with bigger armies, but big armies need more food. New problem.

Innovative technologies helped solve these problems but technologies, like armies, must be fed resources. Ships consumed forests. Machines demanded iron and oil. Computers require copper, plastic, silica and lithium.

Where does it all stop?

Anthropologist Joseph Tainter studied societies to find out where the problem-solution-problem cycle stops. Most complex civilisations and empires simply collapsed under the weight of their metabolic costs. Their solutions became bigger problems until they consumed all available resources, depleted their habitat, and collapsed. Persia, Rome, Maya and Easter Islanders travelled this route to failure.

In The Collapse of Complex Societies, Tainter describes how civilisations trapped themselves in increasing complexity until they experienced diminishing returns on their solution investments. At that point, new complex solutions no longer paid for themselves. To feed the bigger army meant expanding the empire, but a bigger empire has more borders to defend and more over-taxed, irate citizens to pacify.

To finance the rising cost of growth, an empire must discover new energy subsidies. Ancient Rome increased its energy consumption by annexing distant forests, taxing landed peasants, and capturing slaves. However, the hunt for more energy costs energy. “Imperialism,” Boulding explained, “makes the empire poor.”

Finally, a growing civilisation experiences negative returns on its investments. The modern disasters in Bhopal or the Gulf of Mexico provide examples of negative returns. As our industrial system seeks out more energy, we find ourselves digging up the Canadian tundra, destroying wild watersheds, draining lakes, and boring deeper into the Earth’s crust below the ocean.

We may notice that the greatest driver of environmental destruction is the growth process itself. Tainter points out that the only known examples of avoiding collapse – in both nature and in human history – involve simplifying, not growing. Eventually, we have to stop building false ’solutions’ that create new problems and negotiate a lasting peace with nature.

The high cost of high tech

We may believe that a new technology will solve the problems of growth, until we account for the full ecological cost of that the new technology. To build hybrid cars and computers, we seek out copper, lithium, zinc, aluminium, and rare earth metals, displace communities, and push deeper into Earth’s remaining wilderness.

Timothy Gutowski and colleagues calculated that as computer chips shrunk in size and grew in power the material and energy intensity per unit mass increased a million-times. This is even before we factor in the cost of armies swarming over Afghanistan to secure the lithium for batteries.

We tend to think that since our computers require so little energy to operate, that they are ‘efficient’, but we’re measuring the wrong thing. We need to measure the ‘embodied’ energy and material required to mine and ship resources and to build telecom infrastructure, server networks, software, research labs, and office towers. According to the International Energy Association report,’Gadgets and gigawatts‘, electricity consumption for computers, cell phones, iPhones, and other devices will triple by 2030, and this does not include the bulldozers digging up resources.

Remember when people claimed computers were going to save paper? This never happened. In 1950, at the dawn of the computer age, humanity used about 50 million tons of paper each year. We now use 250 million tons, five times the paper. Growth swamps efficiency. Computers stimulated growth and created more uses for packaging and paper. Meanwhile, during that period, the Earth lost over 600 million hectares of forest.

In ‘The Monster Footprint of Digital Technology‘ Kris De Decker points out that utility stations operate at about 35 per cent efficiency, so the actual energy consumed is almost three-times the electricity consumed when a device is switched on. This is the metabolic cost of growth, the rising cost of complexity, paid long before you boot your computer or recharge your iPhone.

Where does this energy come from? It comes from damming rivers, loping off mountain tops for coal, and boring wells deep into the Earth’s crust below the ocean.

In Deepwater now

Like our ancestors, modern human enterprise took the low hanging fruit and harvested the cheapest oil first. In the oil heyday, 50 years ago, oil flowed from shallow wells with 99 per cent net energy efficiency.

Today, we dig into oil sands, destroy vast tundra and grassland, melt bitumen in giant furnaces, fill lakes with black sludge, kill migrating waterbirds, displace caribou and human communities, trigger lung disease, mix bitumen with condensate refined thousands of kilometres away, ship the goop through long pipelines, endanger our coasts with oil tankers, and heat the planet like a flambé to deliver crude oil at 50 per cent net energy efficiency.

More costs, less benefit, represents the ‘declining return’ on our investments. Eventually those returns turn negative. In the Gulf of Mexico, British Petroleum lobbied politicians to cancel regulations, drilled a 6,000 metre well in 1500 metres of water, and cut corners to save money.

At 21:49 on April 20, 2010, gas from an improperly sealed well reached the BP drilling rig, ignited, blew up the rig, killed 11 people, devastated the Gulf’s coastal economy, and launched an ecological holocaust on the scale of Bhopal, Chernobyl, and Minimata. The blowout has killed thousands of seabirds, turtles, fish, and marine animals. Some 50,000 to 150,000 barrels of oil per day pours into the Gulf of Mexico. On top of this, BP has added over 1-million gallons of toxic Corexit dispersant, banned in the UK, which contains the neurotoxin 2-Butoxyethanol, arsenic, cadmium, cyanide, and mercury.

The Gulf of Mexico tragedy is not unique. It is only the latest symptom of a civilisation out of control, stumbling blindly to pay the metabolic cost of reckless, unsustainable growth.

Deep GreenGulf of Mexico, The Cost of Complexity

~ VF ~

Vanityfox451's picture
Vanityfox451
Status: Diamond Member (Offline)
Joined: Dec 28 2008
Posts: 1636
The Collapse of Complex Societies ~ by Joseph Tainter

The Collapse of Complex Societies ~ by Joseph Tainter (Read Online Book)

[quote=]

Wikipedia Review

Joseph A. Tainter (Born December 8, 1949) is a U.S. anthropologist and historian.

Tainter studied anthropology at the University of California and Northwestern University, where he received his Ph.D. in 1975. He is currently a professor in the Department of Environment and Society at Utah State University. His previous positions include Project Leader of Cultural Heritage Research, Rocky Mountain Forest and Range Experiment Station, Albuquerque, New Mexico and professor of anthropology at the University of New Mexico. Tainter is also the author or editor of many articles and monographs. His best-known work is The Collapse of Complex Societies (1988), which examines the collapse of Maya and Chacoan civilizations, and the Roman Empire, in terms of network theory, energy economics and complexity theory. Tainter argues that sustainability or collapse follow from the success or failure of problem-solving institutions and that societies collapse when their investments in social complexity and their "energy subsidies" reach a point of diminishing marginal returns. He recognizes collapse when a society rapidly sheds a significant portion of its complexity.

~ VF ~

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dave s
Status: Bronze Member (Offline)
Joined: Feb 20 2009
Posts: 56
Re: Daily Digest - July 28

Well, I have somehow become the local homeless advocate here, which is far from the case, but here goes...

rhare wrote:

Perhaps, but the problem with this amount they show is that it means it's costing more for the homeless than many working citizens get paid and make a living.  So I still find the $35K just plain whacked.  I mean if you agree to support the homeless then they should receive no better treatment than those paying taxes and not taking hand outs.  Same goes for prisoners.  It's just demoralizing when someone works and is a productive member of society and those that leach have better lives.  In this case I suspect they don't have better lives, just cost more due to the bureacracy, which was my actual point. 

Generally, when someone says "bureaucracy" in the perjorative sense they mean too many people employed by the government to handle whatever the particular governmental function it is that is being discussed, with all the attendant pay issues and paperwork issues.  There is really no meaningful bureaucracy in that sense employed to service merely the homeless.  And the chronic homeless, who are said to be about 10% or so of the entire homeless population (the rest moving in and out of homelessness as their fortunes wax or wane), typically do not directly avail themselves of much in the way of government services that do exist.  It is that 10% that is said to account for nearly all of the costs of homelessness we are talking about here.

simentt wrote:

The main problem with this, is that it amounts to paying people for not working, and that this naturally will lead to people not working. The bureaucracy will need to expand to make sure that abuse of the program is limited, increasing the cost further and increasing opposition. At the end when funds start getting really tight, you have a situation where a part of the population is (rightly) viewed as a problem by the rest of the voters, and other social policies have to be examined to handle it. As an European, I know where this tends to end.

Yes, the American work ethic argument.  It actually turns out that this argument does not hold much water when it comes to homelessness.  The vast majority of people will never be homeless and would certainly never choose to be homeless.  Of the people who do become homeless, the vast majority of those will have family or friends that will help them out.  Of the people without family or friends, the vast majority will not want to remain homeless and will not, in fact, remain homeless.  Of the people who do remain homeless (the chronic homeless), addictions and mental illness account for their vast majority rather than laziness.  In sum, being homeless is no picnic and you have to be drunk or crazy to want to do it. 

But what you say is exactly the problem.  Homelessness by and large is a hidden problem and dealing with it in a cost efficient way such as how I described it makes headlines as a positively un-American thing to do.  By the way, this solution was recognized by the second Bush administration as something worth doing.

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