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Thomas Homer-Dixon, the Canadian student of complex systems and author of The Upside of Down, wrote in his 2006 book that “September 11 and Katrina won’t be the last time we walk out of our cities.”

Today, many big-city dwellers appear to be seeking refuge in less crowded towns and rural landscapes. The wealthy, at least, are seeking “bugout” homes away from major cities as places to ride out the pandemic, the economic downturn and the civil unrest that are gripping the world. Beyond news reports, I’ve heard from friends that homes are being snapped up in eastern Washington state and New York’s Hudson Valley by coastal city dwellers looking for a refuge in turbulent times.

It’s not just residents who are leaving. The New York Times reports that retail restaurant and merchandise chains are exiting Manhattan because it is “unsustainable.” New York City no longer teams with tourists, and its office towers are largely empty. That makes for empty streets with few customers for the city’s many retail establishments. This story is being repeated in other major cities including Atlanta, Chicago, Denver, Houston, Los Angeles, Seattle, and St. Louis.

In an op-ed appearing in The Globe and Mail, Homer-Dixon explained the underlying structural problems that have opened our global society to increasing risk:

The relatively new science of complex systems shows that such tipping events are made more likely by the unprecedented connectivity in the networks that humanity has laid down in a dense web across Earth’s surface – air traffic, financial, energy, manufacturing, food distribution, shipping and communication networks, to name just a few.

This science also shows that until we manage this connectivity better – which could mean, among other changes, reducing our international travel, simplifying global supply chains and bringing some production processes closer to home – we’re likely to experience more frequent tipping events of ever-higher destructive force.

…click on the above link to read the rest of the article…

Wireless charging: A colossal waste of energy

August 11, 2020

Wireless charging: A colossal waste of energy

It turns out the cellphone industry believes its customers just can’t be bothered with setting their phones in charging cradles or worse yet, actually plugging a charging cord into a phone. Users can now simply place a phone on top of a wireless charging pad to get their phones topped up.

For the privilege of being extra lazy these users of wireless charging expend up to 47 percent more energy to charge their phones, something that if widely adopted would require dozens of new power plants across the globe to accommodate.

Everything wireless seems like magic, and it is essentially sold as magic. It’s also sold as freedom, freedom from those pesky cords that limit where you can use your electronic devices. But the freedom is illusory. We are simply shackling ourselves ever more tightly to an addictive device that is contributing to an unsustainable fossil fueled way of life which is bound to crumble dramatically if we do not alter course.

That’s because, in addition to the wastefulness of wireless charging, wireless technologies require 10 times more energy than wired technology to transfer each unit of data and voice and do so at much slower rates than fiber optic cable. It’s no wonder then that wireless companies do NOT use wireless signals to transfer data and voice throughout their systems. Instead, they run fiber optic cables right up to the antennas that service your phone because those cables have much greater capacity and speed and much lower energy usage. (In the interests of keeping energy usage down, maybe we should consider returning to wired connections as much as possible. But that is a story for another time.)

…click on the above link to read the rest of the article…

Evictions, tenants and the fragility of a “correlated” world

August 3, 2020

Evictions, tenants and the fragility of a “correlated” world

As eviction moratoriums around the United States come to an end, it is expected that landlords will begin evicting nonpaying tenants en masse. Eviction by itself is an unremarkable phenomenon in America. Some 900,000 per year have been occurring routinely in the last several years affecting about 2.3 million people annually.

The scale this time is different. No one knows exactly how things will play out in the United States (or elsewhere for that matter). But, barring new moratoriums on eviction one estimate suggests 23 million people will be subject to eviction by the end of September, more than 10 times the number for an entire year.

Where all those households would go is a puzzling question as the limited space in facilities for the homeless could never hold them. And, given the continuing coronavirus pandemic, those facilities that are observing proper social distancing have had to limit their capacity.

Perhaps the U.S. Congress will come to its senses and pass aid for renters just as it has done for businesses. I am doubtful about such prospects.

But, I am also interested in another important question: Who will replace evicted tenants? Here the problem of correlation looms large. Generally speaking, landlords don’t worry too much if Joe in apartment 238 and Sally in apartment 424 both lose their jobs. Their job losses are usually related to their specific circumstances, a company moving its operations or a firing due to poor performance. These losses are uncorrelated to the situations of other tenants. There will therefore be paying tenants to take the place of Joe and Sally should the landlord have to evict them.

…click on the above link to read the rest of the article…

Cracks in the supply chain: Is metastable turning into unstable?

July 14, 2020

Cracks in the supply chain: Is metastable turning into unstable?

You who are reading this sentence are metastable systems. So, is the biosphere, and so is all of human society. A metastable system is one that remains stable so long as the inputs necessary to maintain its stability are available.

For humans this includes food (energy) and water. For the biosphere the key element is the energy input from the Sun. For human society, which is a subset of the biosphere, the Sun is also the key energy input. Much of the energy used by humans is stored in the form of wood, coal, natural gas and oil which all ultimately come from living organisms dependent on the Sun for energy.

Hydropower is also a product of the Sun which drives the water cycle on Earth and therefore allows hydroelectric dams to be filled. Wind and solar energy are, of course, products of the Sun as well. The energy harvested by humans gets expressed in manufacturing and transportation in machines. It gets expressed in human labor, but also in the thought, planning, and communications needed to make things happen.

What we are witnessing as a result of this pandemic is a widespread challenge to metastable systems upon which our societies depend. The most obvious are those related to hospitals and health care products. We often read in the news that hospitals are near “the breaking point” as if the hospital walls will burst when too many patients crowd into the building.

What this really means, of course, is that beyond certain levels of activity, the normal systems of a hospital will not function properly for want of people to provide services, for want of supplies needed to provide those services—tests for the COVID-19 virus come to mind—for want of space to examine all those seeking medical attention and for want of money to finance it all.

…click on the above link to read the rest of the article…

Our conversation with a coronavirus

July 8, 2020

Our conversation with a coronavirus

We have all been flummoxed by the way in which the coronavirus called COVID-19 has behaved as if it has agency in the world. We say it “moves,” “adapts,” “evades,” and “tricks us.” We attribute an intelligence to it. We marvel at its ability to manifest itself in so many ways. And everywhere we read COVID-19 is an enemy, an invader, and a killer, one that uses stealth to spread itself. We must defeat it, wipe it out, and eradicate it.

Many places on the internet we are implored to understand COVID-19 in order to stay safe—but only until such time as we vanquish this foe of humankind with a vaccine.

It occurs to very few people that we might be in a conversation with this coronavirus which is transmitting information to us by its actions and responding to our actions with its own reactions.

The rise of antibiotic resistance is another reminder that we are, in fact, in dialogue with the natural world. Everywhere—after centuries of practicing an ideology that claims we humans can control nature and with the right tools always and everywhere bend it to our will—we are being reminded that we are part of nature, that we are, in fact, organisms in an environment.

The modern environmental movement reintroduced the idea that we humans must align ourselves with the natural world or perish. But much of that movement is now focused on technical fixes such as electric cars designed to enable humans to live pretty much as they have been in the recent past.

…click on the above link to read the rest of the article…

The financialization of the end of the world

June 23, 2020

The financialization of the end of the world

For those who are fans of cartoons from The New Yorker magazine and consistent readers of this blog, you might be able to guess my two favorite cartoons. In the first one, a man in a coat and tie stands at a podium and tells his unseen audience the following: “And so, while the end-of-the-world scenario will be rife with unimaginable horrors, we believe that the pre-end period will be filled with unprecedented opportunities for profit.”

In the second, a man in a tattered suit sits cross-legged near a campfire with three children listening to him intently as he says this: “Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders.”

Now, in the you-can’t-make-this-stuff-up category, financial writer Paul Farrell used the caption from the first cartoon in a 2015 piece for MarketWatch entitled: “Your No. 1 end-of-the-world investing strategy.” The subheading is: “How to pick stocks for the near term when long-term trends say collapse is near.” The subhead actually seems like it might be another caption from a New Yorker cartoon (or possibly one from The Onion). Why exactly would you invest in stocks—as opposed to seeds of food crops and sturdy garden implements—”when long-term trends say collapse is near”? But I’ll put that down to bad headline writing.

In Farrell’s defense, he frequently used his column in MarketWatch to warn his readers of the coming collapse of modern civilization if we don’t change our ways. He was obliged to give investment advice, of course, because that’s what the column was for.

Few other investment gurus are as intellectually honest as Farrell. Among prominent investment managers, only Jeremy Grantham comes close to understanding the scope of the challenges we face. Grantham wrote a piece in 2013 called “The Race of Our Lives” that outlines the myriad challenges humans face. He starts with a discussion of the fall of civilizations. (He updated his views in 2018.)

…click on the above link to read the rest of the article…

Insanity? Markets continue disconnect from economy and society

June 11, 2020

Insanity? Markets continue disconnect from economy and society

It’s hard to ignore the protests on the streets of the world’s cities of late. Those protests are coming from a populace who knows that the system they live under long ago stopped benefiting them. While the focus has been the senseless killing by police of an African-American man—all of which was caught on video—there are many other grievances: legalized financial theft by the one percent from the rest of us comes to mind, something that has resulted in growing and egregious inequality across the world.

It’s also hard to overestimate the hardship visited on the world’s people as many have been deprived of income and daily life by up to three months of pandemic-inspired stay-at-home orders and retail shutdowns. As I mentioned in my previous piece, the U.S. Federal Reserve Bank of Atlanta does a frequently updated estimate of U.S. GDP which as of this writing is minus 53.8 percent for the second quarter. (That’s annualized and seasonally adjusted.) The estimate for the current quarter started at minus 12.1 percent and has been dropping like a stone with each new piece of information. For comparison, U.S. GDP during the 2008-2009 financial crises shrank by only 4.2 percent.

And yet, the world’s stock markets are behaving as if the protests and the deprivation are inconsequential. After crashing in March in the wake of the spread of the coronavirus pandemic, major stock market indices are at or near all-time highs. For example, the S&P 500 Index was last around its Friday closing price on February 24, before the coronavirus pandemic market panic. How can this be explained?

…click on the above link to read the rest of the article…

Insuring against catastrophe: The coronavirus predicament

April 26, 2020

Insuring against catastrophe: The coronavirus predicament

People insure themselves against many types of potential catastrophes: a house fire, a car accident, the untimely death of a spouse, a serious health problem. For other unexpected expenses, prudent people, as we say, save money “for a rainy day.” For some reason people and governments have chosen not to insure themselves (individually or collectively) against two catastrophes that have been much in the news lately: pandemics and large investment losses.

There is a connection, of course, for the two are tightly coupled. Here are some of the similarities between the two:

Both occur at irregular and sometimes very long intervals.
Both require careful thought and regular financial outlays to hedge against.
Despite persistent warnings from experts, most people (and governments) did not act on such warnings.
Now that the worst has occurred, many investment advisors and governments say, “No one could have seen it coming”—even when such a statement can be proven immediately false with easily obtained video evidence!

Will we learn from our current experience?

The answer in some cases will certainly be no because the incentives in our system encourage those in high places to act imprudently. Executives of publicly traded companies have spent trillions of dollars buying back shares of their own companies in order to goose stock prices and make their stock options more valuable—without regard for the need for cash reserves to make it through a recession.

One case that’s making the news is that of the U.S. airline industry. In the past five years the industry as a whole spent $45 billion on stock buybacks in order to enrich top management and shareholders. Now, the industry is asking for $50 billion from taxpayers to bail out profligate managers and their companies. Wouldn’t it be nice if they were asking for only $5 billion instead?

…click on the above link to read the rest of the article…

The Saudi-Russian oil price war tag team: Are things what they seem?

April 13, 2020

The Saudi-Russian oil price war tag team: Are things what they seem?

To the casual observer Saudi Arabia and Russia, two of the top three producers of oil in the world, have been having a spat about what to do about low oil prices. (See here and here.) Each has accused the other of bad faith and counterproductive behavior. But is that merely what the two oil powers want you to believe?

We’ve been here before. Throughout most of 2016 Saudi Arabia and Russia put on a two-person show for the entire world, pretending time after time to move close to an agreement to lower production in order to prop up oil prices, only to back away or delay at the last minute. The two kept this up for most of 2016. They incited periodic spikes in the oil price without ever having to cut one barrel of production, spikes that kept prices higher for weeks until they drifted back down to levels that reflected reality.

But I believe the most important thing they were trying to achieve then was to create an atmosphere of continuing uncertainty. That uncertainty was supposed to scare investors and lenders away from U.S. shale oil producers who were still hurting from an oil price collapse that began at the end of 2014. Saudi Arabia and Russia wanted to prevent those producers from resurrecting U.S. production and undermining oil prices again. Simply stated, Saudi Arabia and Russia wanted the shale oil industry to go bust in a way that would prevent a recovery for many years.

But investors and lenders could not be frightened away, and they resumed financing shale oil operations in the United States.

…click on the above link to read the rest of the article…

Overreacting to coronavirus? The perverse logic of panic during a potential pandemic

March 29, 2020

Overreacting to coronavirus? The perverse logic of panic during a potential pandemic

The best time to panic, that is, overreact to a potential pandemic is shortly after a novel pathogen has been detected. So say famed student of risk, Nassim Nicholas Taleb, author of The Black Swan, and his colleagues. Of course, at that point, by definition few people have the virus and therefore it does not seem like a threat to the whole community.

In hindsight it is perfectly obvious that the extraordinary efforts now being made by individuals and communities across the world to prevent the spread of COVID-19 should have been made in those areas where the virus was first discovered when it appeared. However, it is natural that authorities do not wish to be criticized for “crying wolf” and, if they are elected officials, beaten at the next election for unnecessarily interfering with the life of the community.

But it is precisely what would be called an “overreaction” that might have stopped COVID-19 in its tracks at the beginning. I’ve written previously about those whose jobs are to make sure that small problems never become large and that some problems never even appear. The piece was called “Asymmetrical accolades: Why preventing a crisis almost never makes you a hero.”

In the present case, a doctor, now deceased from coronavirus, who warned Chinese authorities about the spread of the disease, was disciplined and criticized. The Chinese government has now offered a rare apology for its actions. As you can see, only in retrospect are such Cassandras heralded as prescient. (It is worth noting that when someone calls you a Cassandra, you should remind that person that the curse of Cassandra is that her prophesies always turned out to be true though no one ever believed her in advance.)

…click on the above link to read the rest of the article…

Note to EIA: Major shale operator sending cash elsewhere

February 10, 2020

Note to EIA: Major shale operator sending cash elsewhere

John Hess, CEO of Hess Corporation, a large U.S.-based independent oil producer, recently told a Houston audience where he’s putting the company’s money these days: Offshore drilling.

That should strike those who know of Hess Corporation’s heavy involvement in the Bakken shale play (in North Dakota) as a bit strange. Hess says the company will “use cash flow from the Bakken to invest in longer-term offshore investments.”

Hess told his audience that “key U.S. shale fields are starting to plateau, calling shale ‘important but not the next Saudi Arabia.'” Setting aside whether Hess is actually getting investable cash from the Bakken, the constant refrain from the U.S. oil industry has been precisely that shale plays ARE the next Saudi Arabia.

Someone should send a note to the U.S. Energy Information Administration (EIA) that maybe it’s not all going to work out. If Hess is right about a peak in U.S. shale oil production soon, that peak will come about a decade earlier than the peak forecast by the EIA.

None of this will come as a surprise to geologist David Hughes whose most recent update on U.S. shale oil and natural gas production suggests that not only will Hess be proven generally correct, but that production will fall much farther than the EIA believes in the coming decades. Hughes continues to rate EIA estimates of ultimate recovery from America’s shale oil and natural gas fields as “extremely optimistic, and highly unlikely to be realized.”

U.S. shale oil production has been a major driver in the growth of world oil supplies. Last year the United States accounted for 98 percent of global growth in oil production. Since 2008 the number is 73 percent. It’s not hard to imagine that a slowdown in U.S. oil production growth or worse yet a decline in overall U.S. production would mean trouble for the entire world.

…click on the above link to read the rest of the article…

Code blue: Pandemics and hospital surge capacity in a just-in-time world

February 5, 2020

Code blue: Pandemics and hospital surge capacity in a just-in-time world

We may be about to see the sad fruits of so-called just-in-time (JIT) inventory systems applied to hospitals in the United States and elsewhere. Fourteen years ago I first wrote about the vulnerabilities of such systems across society including health care systems. (Other observers have more recently noted this problem in health care.) If the corona virus spreads rapidly around the world, those hospitals which have adopted such systems will be least able to cope.

Here’s why: JIT systems are designed to minimize inventories in order to free up cash for other useful and profitable purposes. If you no longer have to store large inventories, you don’t need to build and maintain substantial rooms and storage areas for that purpose. And, the money actually invested in those inventories, whether for auto parts or for medical supplies, can be deployed elsewhere to make a profit. With JIT, supplies arrive at your door as you need them. The “storage room,” if it can be called that, is a delivery truck on its way to your loading dock.

The trouble is, a wave of corona virus victims showing up at hospitals could quickly exhaust lean inventories of medical supplies. And, the supplier providing those supplies may quickly run out as demand surges. After all, a smart supplier will be practicing JIT as well.

The JIT mentality has also crept into the area of bed capacity in hospitals. The number of hospital beds available in the United States has dropped dramatically in the past 20 years. The reasons are understandable: more outpatient procedures, earlier discharges, and more home care. Why have extra unused beds sitting empty? Get rid of the excess inventory of beds and all the resources needed to maintain them can be used elsewhere.

…click on the above link to read the rest of the article…

Iran, energy and war

January 6, 2020

Iran, energy and war

The American obsession with Iran is about oil and natural gas. If these two resources had been absent, it is hard to imagine such an intense American focus on the country from the time of a U.S. Central Intelligence Agency-backed coup of Iran’s elected government in 1953 to today. The Foreign Policy magazine piece linked above is based on declassified CIA documents and summarizes the coup this way: “Known as Operation Ajax, the CIA plot was ultimately about oil.”

This should come as no surprise. Iran was an oil power back in 1953 and it remains one today. Iran is presumed to have the third largest oil reserves in the world and the second largest natural gas reserves. Even if the numbers cited are somewhat inflated, Iran’s reserves are not small, and the country is likely to play a large role in world energy markets for many years to come.

The recent escalation of tensions between the United States and Iran because of the U.S. assassination of a prominent, popular and by all accounts highly effective Iranian general will allow the advocates of war to trot out all manner of excuses for such a war: terrorism, regime change, the credibility of the United States, Iran’s nonexistent nuclear weapons, and the United States’ geostrategic posture vis-à-vis big power rivals such as Russia and China. (Does anyone really know what the last one means?)

What won’t be discussed are the deep historical antagonisms which have developed starting with the 1953 CIA-backed coup. For example, few people remember that the United States supplied economic aid, dual-use (both civilian and military use) technology, training and arms through other countries to Saddam Hussein in the Iran-Iraq War.

…click on the above link to read the rest of the article…

Ocean floor mining: What could possibly go wrong?

December 22, 2019

Ocean floor mining: What could possibly go wrong?

A recent article on undersea mining in The Atlantic brought back a detailed childhood memory. When I was in fifth grade, my class put on a sort of mini science fair and performance art program for parents. My project focused on the prospect of mining the oceans. I drew a large mural-like color illustration showing a submarine stationed just above the seabed where it hoovered up minerals with large hoses.

The submarine had wide pipes running from it to the surface where a ship received the nodules of ore gathered by the hoses. During my presentation the classroom was dark, and my mural was illuminated using three small articulating lamps turned on and off by a classmate as I went through the distinct phases of the mining operations in a room meant to mimic the dark and foreboding deep.

It turns out these many years later that my cursory research into ocean mining as a fifth-grader yielded a roughly accurate portrayal of what is about to happen in the oceans starting early in the coming decade. The world’s nations may conclude a treaty governing undersea mining through the auspices of the United Nations as early as next year. Once that is concluded, large scale mining of ocean bottoms is expected to begin.

One method—already in use in coastal waters controlled by individual countries—will be to suck up nodules of ore lying on the seabed with huge vacuums and filter out the sediment that comes with it. This method will move quickly to the deep ocean once the treaty is approved resulting in huge, dense clouds of particles suspended underwater for possibly hundreds of miles from underwater mining sites. Scientists are worried that both the vacuuming and the plumes will destroy entire ecosystems about which we know little.

…click on the above link to read the rest of the article…

Economists and climate change: Building castles in the sky

December 5, 2019

Economists and climate change: Building castles in the sky

Economist John Kenneth Galbraith once said that “the only function of economic forecasting is to make astrology look respectable.” Unfortunately, when some economists turn their sights on the economics of climate change, their unreliable methods imperil not just the economic life of humankind but its very existence.

I have written previously about this phenomenon in 2007 about how economists underestimate the critical importance of small (by economic value) but critical parts of the economy such as agriculture, forestry, and energy and in 2012 about how unsuited our current infrastructure is to the unfolding climate.

The trouble is that against all evidence, some climate economists keep building castles in the sky. Nobel Prize winner William Nordhaus is among the most prominent economists working on climate change and its economic effects. In short, Nordhaus, who is mentioned both in my 2007 and 2012 pieces, tells us not to worry too much about climate change. It will be cheaper to adapt to it than to prevent it or slow it down.

The problem with Nordhaus’ thinking (and that of many others like him) is that he cannot conceive of abrupt discontinuities in the workings of the planet or the workings of human society. In short, he cannot conceive that climate change could alter our environment so thoroughly and disrupt our agriculture so completely that it would lead to catastrophic results.

It is for this failure of imagination that economist Steven Keen recently took Nordhaus to task, showing through a careful critique of Nordhaus’ equations, that even those equations demonstrate catastrophe ahead when provisioned with the proper numbers and understanding. When Keen adds in what we know about tipping points in the climate system, he finds that Nordhaus’ own equations reveal that “[a]t 3 degrees, damages are 8 times as high.

…click on the above link to read the rest of the article…

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