"Straight Talk" features thinking from notable minds who the PeakProsperity.com audience has indicated that it wants to learn more about. Readers submit the questions they want addressed and our guests take their best crack at answering. The comments and opinions expressed by our guests are their own.
This week's Straight Talk contributor is James Howard Kunstler, author and social critic. His better-known works include The Long Emergency, in which he argues that declining oil production will result in the decline of modern industrialized society and compel Americans to return to smaller-scale, localized, semi-agrarian communities; World Made By Hand, and its sequel, The Witch of Hebron, all published by The Atlantic Monthly Press. He writes a weekly blog is also a leading proponent of the movement known as "New Urbanism."
1. When will the average US citizen wake up to the perils of Peak Oil?
JHK: When a crisis comparable to the 1973 OPEC embargo — with lines at the filling stations and hefty price-hikes — whaps them upside the head. For now, what I call the psychology of previous investment is a massive impediment to the public's ability to think clearly. By this I mean mainly our sunk costs in suburbia, including all its furnishings and accessories. That's where we put so much of our "wealth" over the past sixty years. I regard these as tragic mis-investments, of course, because the wealth has gone into a living arrangement that has no future. The housing bubble crash is greatly aggravating the problem, because it is de-valuing the whole kit-and-kaboodle. But the net effect for now is only to generate more anxiety among the public, which leads to more confusion, more cognitive dissonance, more static in the collective imagination, and more political noise — in short, more obstacles to clear thinking.
2. There seems to be no political will to tackle the reality of Peak Oil. What might tip that balance (before we hit the proverbial wall)?
JHK: Leadership in America has been abysmal on these issues — and not just in politics, but in business, media, education, the enviro community, even the clergy. For the politicians, I have to suppose that the implications of Peak Oil are just too painful to face. They simply do not compute into any winning formula. They won't go near it.
I'm quite convinced that Dick Cheney and George Bush were informed about the oil situation, in particular its relation to the national defense. After all, Robert Hirsch arrived on the scene loudly in 2005 with his report, commissioned by the US Department of Energy, which was quickly suppressed because its conclusions were so stark. Bush made occasional remarks about our "dependence on foreign oil," but he didn't have the guts to spell it out further, and he was a tool of Big Oil, after all, which has run a PR campaign for ten years denying the Peak Oil story. Anyway, he didn't want to interrupt the fabulous credit-driven boom of the years leading to his final months in office, when things really did go south.
Obama is another story, of course. He couldn't be so poorly informed as to not know about Peak Oil in most of its contours and implications, especially vis-a-vis the military, which has issued more than one report while he's been in office. So I conclude that he is a kind of charming bounder. I'm not necessarily sorry I voted for him, because I think McCain would have been worse, entwined as he is with the lunatic right-wing and its toxic aura of paranoid unreality.
It's unclear whether the media is too dumb to get the complexities of our oil predicament, or if they are just bought-off lackeys of the various corporate interests. Probably a combo on that. It is rather hard to understand, for instance, the vapidity of The New York Times — in particular its op-ed pundits, Krugman, Friedman, Brooks. The Times's straight reporting on the oil scene has been scant and fatuous. The Wall Street Journal, ditto. TV news operates in its own special sewage canal of idiocy, so one might not expect much from there.
Since business in America has resolved more and more into a set of rackets, one can't expect plain-dealing from that sector these days.
I've seen the failure of the environmental community up close. Two years in a row at the Aspen Environmental Forum, I listened to the cream of the Green movement rhapsodize over all the cool new "green" ways you can run cars other than on gasoline. You see, their base assumption — like everyone else in this society — is that driving cars incessantly is a God-given entitlement. They were in a techno-rapture over electric cars, bio-diesel, and so on. They didn't once mention walkable communities or public transit. They're just not into it. I consider their position utterly disgraceful.
The clergy is an interesting case. Notice especially how the Sunbelt born-again crowd are perhaps the staunchest defenders of suburbia — and everything that goes with it, including car dependency and and huge volumes of oil imports from unreliable foreign nations. They conflate suburbia with the constitution and Jesus. And, really, their belief system is so incoherent and ridiculous that it must really frighten the educated folk of other nations who see how we carry on.
3. If you were President and had free reign, what would be your energy plan?
- I would commence a public debate on whether we go forward with a nuclear power program, to weigh the hazards involved — but, frankly, there may be no other ways to keep the lights on in a decade or so. It may turn out that we are too short of capital to carry out such a program, or our society may be too disorderly in the years ahead to run it, or we may decide the hazards are not worth it, but the discussion must start now.
- I would direct major capital resources to repairing the conventional passenger railroads in the US, because commercial aviation as we know it will not continue another ten years, and ditto Happy Motoring, and this is a big continent-sized nation. If we don't get regular rail running, we may not be able to go anywhere. We should just put aside our fantasies about high-speed rail or mag-lev. We're too broke for that, and we need to temper our techno-grandiosity. But, believe me, Americans will be deliriously happy ten years from now if they can go from Des Moines to Chicago at 80 mph on time. During the Obama years, we've stupidly poured our dwindling capital resources into building more highways. This foolishness has got to stop. I would promote public transit at the smaller municipal scale as well, to go with regular rail.
- I'd begin the task of rehabilitating our inland waterways so we can move more goods around the nation by boat — and in particular the port facilities that have been mostly removed in places like St. Louis and Cincinnati and around the Great Lakes.
- I would put an emphasis on walkable communities. I would prepare the nation for the possibility of gasoline rationing, since events could shove us into criticality at any time.
- I would begin closing down scores of unnecessary overseas military bases, and I would terminate the nation-building project in Afghanistan since there is no possibility that we can control the terrain or the population there for anything more than the shortest run.
- I would direct the Attorney General of the US to mount investigations of the Bank of America, JP Morgan, Goldman Sachs, and other big banks in connection with the massive swindles and frauds in house lending and the securitization of mortgages — because the rule of law requires that somebody be held accountable for the demolition of the banking system.
4. Now take out your crystal ball. What is the most likely scenario you see playing out in global energy supplies over the next few decades?
JHK: I see the USA getting blind-sided by events. We import nearly three-quarters of the oil we use, and much of it comes from very dodgy places. The ideas derived from Jeff Brown's Export Land Theory tell us that oil export rates are certain to go down very steeply and soon. Before long, exporting nations will have to ask themselves whether they ought to keep some of their oil around for their own people.
In the meantime, China is very busy spending its foreign exchange reserves on "favored customer" oil contracts, more or less cornering a lot of the market. I think that will lead to conflict between them and us. We may even invoke the Monroe Doctrine over Chinese oil purchases out of Canada.
Also meanwhile, we'll see the feedback loop of demand destruction leading to supply destruction as the oil industry becomes starved of capital to get at new production to offset worldwide depletions, and that will result in wildly gyrating oil prices — all of which will shove the global oil industry — production and markets — into fatal instability. Nicole Foss's rap on this dynamic is an excellent reference.
The prospects for gross geopolitical mischief around this are huge, of course, meaning war in some shape or form — and it will clearly be a war over dwindling resources. Also, of course, you can't overstate the potential for disorder in the Middle East. The king of Saudi Arabia is well over 80 years old now and his successor is also old and ill. I'd suggest we may see a Shia uprising on the western rim of the Persian Gulf (that is, the Arabian side) that would bring down the Saud royal family and ignite a major struggle all over the region.
There is currently a lot of hoopla over shale gas in the USA, but I think that will disappoint us, since it requires gigantic ongoing capital investment, and capital will be in ever-shorter supply. And this is not to mention the other problems and hazards associated with shale gas "fracking," such as the extreme forms of groundwater pollution and cancer clusters.
Bottom line: in ten years or fewer the USA will be starved for energy resources and probably on its ass in one way or another.
5. The economy's a mess. What's the best possible outcome to this and how does it come about?
JHK: The best possible outcome would be a peaceful re-set to a lower scale of activity — the whole downscaling and re-localization package. It's hard to see that happening smoothly.
It will be very painful because we're talking about liquidation and de-leveraging beyond even Great Depression levels. We have to allow a clearing of mis-investment. Unfortunately, this means not just the "toxic" paper from the colossal frauds and swindles of Wall Street, but much of the infrastructure of suburbia itself, which is losing value now even despite massive government efforts to prop up house prices and pretend that losses in commercial real estate haven't occurred. That clearing process is so tremendous that it is hard to imagine a way that it could occur without leading to gross political disorder — including the possible breakup of the USA into smaller autonomous regions. We're looking at institutional failure at never-before-imagined levels: pensions and Social Security lost, insurance companies and banks collapsing, the medical system in disarray, really the whole social safety net — and beyond just dissolving. This is a comprehensive economic collapse beyond the scale even of the Soviet collapse, which, Dmitry Orlov tells us, at least allowed people to stay in their homes and get around on public transit when all else failed.
One much-fretted-over outcome is authoritarian government in the USA. We can see the larval stage of that now with the tea baggers and the theocratic right-wing and a Republican Party that has made itself hostage to the John Birch Society — but I maintain, as I wrote in The Long Emergency, that it's more likely the federal government will become impotent and ineffectual, and therefore unable to carry out a "corn-pone Nazi" program, even if such characters got a hold of the offices.
In any case, America will be faced with rebuilding all the major pieces of its economy at a lower scale: farming, commerce, transportation, education, banking, you name it. This re-set will occur naturally — if we don't blow ourselves to Kingdom Come — but there's no telling how long the process might take. We do know that following the collapse of Rome, Western Europe endured nearly a thousand years of relative hardship. I'd add that societies are essentially emergent organisms and that this economic re-set would therefore be an emergent phenomenon — not something that required centralized planning or anything like it.
One notable side effect of all this will be a "time out" from technological innovation, which is destroying the ecosystem of the planet Earth, our only home. The human race needs a time out from all this techno-magic-mischief, a period to reflect on what we've done and how we ought to behave with this stuff. I don't even know for sure whether it's a time out or a game-over for technology, and I'm not convinced that we need to know at this point.
6. What steps are you currently taking in preparations for the upcoming “post-peak” years? What do you advise to those simply looking to protect the purchasing power of their current wealth?
JHK: Well, at 62 I've already outlived Babe Ruth, Mozart, Abe Lincoln, and George Gershwin, so however long I go from here is "gravy." But I do all I can to maintain good health. I eat mostly plants, as Michael Pollan would say. I get a lot of exercise. I lead a purposeful daily life. I stay current with the dentist. I made the formative decision of where-to-live over thirty years ago when I settled in a "Main Street" small town in upstate New York. My surplus wealth is invested for the moment in hard gold, the Sprott Physical fund, Australian and Canadian short term bond funds (cash equivalent), and potash mining. I am renting my dwelling, sitting out the housing collapse. I acquired the NY State handgun permit (not so easy). I have some tubs of brown rice, lentils, and curry powder, etc., stashed away. Alas, I didn't have the capital twenty years ago to get hold of forty acres and a mule — but that's not a bad idea for other people.
7. Are you able to tell (either based on your website viewership or book sales, or from any other source) in which parts of the country/population your teachings are gaining the most traction?
JHK: My only index of that is the size and mood of audiences where I speak around the country. The Pacific Northwest is always a lively spot. The people who show up are intelligent, informed, and interested. In Southern California I seem to be utterly unknown. Parts of the Midwest, such as Wisconsin and Minnesota, seem to be organizing for a different economy, but other parts (rural Illinois, Indiana, Ohio) are sheer zombie-land. New York City and Washington exist in bubble-fantasylands of their own. Rural New England is pretty Peak Oil aware, though the Boston-Cambridge hub is locked into transports of techno-rapture, probably due to the techno-grandiose culture of MIT. The baleful influence of Harvard shows up in the urban design and architecture field, where they are preoccupied with narcissistic careerism rather than repairing the human habitat. Dixieland is hopeless, what with their thrall to the born-agains and the misfortunes of their demographic (namely "Cracker Culture," which celebrates ignorance and violence). I don't follow my book sales, frankly, and my website manager knows more about the activity on my site than I do.
8. You speak to a lot of audiences and groups. What has shifted over the years and what, if anything, gives you hope in those trends?
JHK: I must tell you that I think almost nothing has shifted among the body politic except perhaps the levels of angst and desperation for individual citizens brought on by personal calamity involving job losses, debt, house repossession, family breakup, and related effects of our economic collapse. Meanwhile the distractions from all this pain and stress are ever more moronic — Dancing with the Stars starring Bristol Palin — can it get any worse?
Mr. Obama, who I voted for, has done almost nothing to address our energy predicament, and the 2200-page financial regulation bill he signed does little to reform the problems in capital finance — so, here we are eight months after Fin-Reg entering another stage of the banking crisis. We are still absolutely sleepwalking into the future.
9. It seems inevitable that the suburbs (with 60-mile commutes) and places like LA will suffer badly in a Peak Oil future. Do you still hold the view that some regions are going to fare substantially better than others?
JHK: It ought to be self-evident. I mean, compare Phoenix and Portland, Oregon. Phoenix is utterly toast in a few years. They can't grow any food there without expensive and heroic irrigation. They have water problems. They're slaves to their cars. They're in a place where even the hamburger flippers need air-conditioning to survive. It's quite hopeless there. Portland, on the other hand, has turned itself into one of the finest walkable cities in the USA and the Willamette River Valley is one of the most productive farming micro-regions in the world. Human beings will continue to live and thrive to some extent there. Similarly, I think the Great Lakes region is undervalued these days. It is whole lot of good ag land surrounded by the world's most extensive inland sea — kind of a Mediterranean of fresh water. I remain pessimistic about Dixieland, which I think will be prone to violence and political disorder. In the longer run I believe it will become what it was before World War II: an agricultural backwater. But, really, everybody in every region of the country will be touched by the problems of the long emergency.
10. What question didn’t we ask, but should have? What’s your answer?
JHK: Will China dominate the world further into the 21st Century?
A lot of people think so. I'm not so sure about that. They have problems that are orders of magnitude greater than ours with population overshoot, dwindling fresh water, industrial pollution, relatively little oil of their own, and legitimacy of governance. They've become net food importers.
We look at them and their recent accomplishments in awe — and they've come a long way from the point thirty years ago, when most Chinese lived like it was the twelfth century. But they came to the industrial fiesta very late. They are making some rather dumb choices — like, trying to get their whole new middle class in cars on freeways, putting up thousands of skyscrapers. Their banking system is possibly more corrupt and dysfunctional than ours — since it's run by the state, with very poor accountability for lending. As a Baby Boomer, I well remember China's psychotic break of the 1960s, when the country went cuckoo under the elderly, ailing, paranoid Mao Tse-Tung — which is to say, they're capable of flipping out on the grand scale under stress. They are reaching out these days in a resource grab using their accumulated foreign exchange reserves. At some future time — say, if the global banking system implodes, and their forex reserves lose value — I wonder if they will reach out militarily for resources, and how the world might react.
In any case, I take issue with the Tom Friedman notion that the world has become permanently flat. The world is going to get rounder and bigger again. We'll discover — surprise! — that the global economy was a set of transient economic relations that obtained only because of a half century of cheap energy and relative peace between the big nations. Ahead now, I think you'll see the big nations shrink back into their own corners of the world. I'm not saying we'll see no international trade, but it will be nothing like the conveyer belt from China to Wal-Mart that we've known the last few decades. And the prospects for conflict are very very high.
If you have not yet seen the other articles in this series, you can find them here:
- Straight Talk with G. Edward Griffin: What's Coming Next Isn't Pretty – 11.29.10
- Straight Talk with James Howard Kunstler: The World is Going to Get Rounder and Bigger Again– 11.17.10
- Straight Talk with Steve Keen: It's All About the Debt – 11.09.10
- Straight Talk with Mike Shedlock (aka "Mish") – 10.26.10
PeakProsperity.com readers can submit their preferences for future Straight Talk participants, as well as questions to ask them, via the Straight Talk forum.