Storm Warnings

Evidence of Approaching Instability

For more than half a century North American society has enjoyed a period of relative peace, prosperity and stability. Many people born during this era have grown up assuming that this is the way things naturally are. Unfortunately, history doesn’t support this notion. For most of our nation’s history, stock market crashes and major economic depressions were frequent occurrences, the wealth and resources now available to most Americans  and Canadians were only to be had by the rich, public nutrition and health were much poorer than at present, and most people could expect to struggle for sheer survival at some point in their lives. The last fifty-five years have been an exception to that rule. What is becoming increasingly clear is that this exceptional period has happened because of specific factors that have either come to an end already, or can be expected to end in the fairly near future.

None of these transformations means the end of the world – or even necessarily the end of the world as we know it. None of them are impossible to solve. Each of them, however, will demand resources that will have to be taken away from other areas of the economy and our society. All of them make it probable that the next half century may be a good deal less stable and prosperous than the last one.

We’ve identified seven potential crises of particular importance:

1. The Historical Situation

2. The Economic Consequences

3. The End of Cheap Oil

4. Other Energy Resources

5. Changing Climate

6. Failing Public Health

7. Crises in Synergy

We’ve also hazarded a suggestion of how these crises may shape the future:

Toward the Long View

1. The Historical Situation

In the aftermath of the Second World War, America and Canada found themselves in a remarkable position. Nearly all the other industrialized countries of the world had been devastated by war. Their economies were shattered, their natural resources nearly exhausted, their political systems unstable. By contrast, North America’s huge industrial capacity was undamaged and its governments reaped the benefits of victory in war. As a result, the United States became the world’s dominant economic power, and rose to a peak of prosperity never before seen in its history. Canada, geographically larger but much less populous, experienced a similar boom.

That prosperity was driven by the lavish use of energy and raw materials – so lavish that by 1980, the people of the two North American nations (less than 7% of the world’s population) were using fully one third of its natural resources. It was also driven by scientific and technological breakthroughs – the Green Revolution in agriculture, the development of antibiotics in medicine, the electronics revolution, and others – that seemed to open up limitless vistas of possibility.

But many of the advantages America and Canada had at the end of the Second World War have disappeared. The industrial systems of Europe and Japan, destroyed in the war, have long since been rebuilt. Newly industrializing nations have brought their own factories on line. Meanwhile, many of the technological breakthroughs that powered North American prosperity turned out to have unexpected downsides. With our resources dwindling, our industries struggling against foreign competition, and our political systems under fire from all sides, we now face a return to the economic and social conditions North America has experienced all through the rest of its history. Those conditions are considerably less lavish than the ones we have become used to.

2. The Economic Consequences

Even with the end of the conditions that originally drove the postwar boom, the major Western industrial powers – and the United States, chief among them – might have been able to accomplish much. By reining back on consumption, developing more efficient ways of using natural resources, and investing in industry, education, and other long-term sources of economic strength, the Western powers could have put themselves on a path toward prosperity and stability for many years to come.

Unfortunately, that’s not what happened. Especially in the United States, citizens reacted to the shortages and economic troubles of the Seventies by refusing to deal with their causes, and demanding an ever-increasing flow of consumer goods, no matter what the long-term costs might be. Once short-term fixes for the immediate problems were found, people went back to postwar habits of lavish consumption. Meanwhile American industries faltered for lack of the major investments needed to keep up with the competition, and education declined to the point that the United States has had to import an ever larger share of technically trained employees from overseas.

Thus the basis of America’s real wealth has trickled away. To a troubling extent, the difference has been made up by debt. By the year 2000, the level of individual indebtedness in the United States had risen to historically unprecedented levels. It’s symptomatic that the United States now has a negative net savings rate – in other words, every year we spend more than we earn, and draw down savings to make up the difference. That approach, as everyone knew fifty years ago, leads to bankruptcy in fairly short order.

Many people have tried to make up the difference by speculating in the stock market or putting money into other get-rich-quick schemes. None of these are particularly stable, and many are made up of smoke and mirrors – as the recent turmoil in the high-tech market makes clear. At the same time, these gimmicks take money that might otherwise have gone into more productive but less glamorous investments, and give nothing to the real economy in return.

3. The End of Cheap Oil

One of the most important factors in the last half century of history has been our continent’s incredible mineral wealth, and above all the richness of its oil deposits. The Allied victory in two world wars was made possible not only by the courage and sacrifice of soldiers and sailors from many nations, but by tens of thousands of American oil wells, pumping out a sea of black gold to fuel tanks and battleships. Few people nowadays realize the sheer scale of American oil production before the 1970s. In 1950, for example, America was the world’s single largest producer of oil, pumping out as much oil as all other countries put together.

In 1972, however, oil production in the 48 contiguous states peaked and began to decline, and the decline has continued ever since. New production from Alaska’s North Slope made up some of the difference in the 80s and 90s, but even the once-huge Alaskan reserves are now beginning to run out. The reason for the decline is simple: there is only so much oil on the planet, and America – the first part of the world to produce oil commercially – is also among the first to pump its reserves dry.

What makes the situation even more worrisome is that many scientists and engineers, in and out of the petroleum industry, have calculated that world oil production may be at the same point now that American oil production was in 1970 – near its all time peak, and ready to begin declining. The oil glut of the 80s and 90s was made possible by pumping the Alaskan North Slope, the North Sea fields, and Mexican oilfields at a reckless rate. All three of these are now beginning to run dry, and so are many other oil fields around the world. Oil prices are climbing again, and demand shows no signs of slackening. This is a recipe for economic trouble.

While there are still probably large oil deposits that have not yet been discovered, many of the huge deposits that have been the mainstay of oil production for years are nearing the end of their useful life; new discoveries will have to make up the shortfall, and still support a global economy that depends on ever larger supplies of cheap energy. And since 1964, the world has pumped more oil out of the ground each year than it’s discovered in the same year. In 1999, 28 billion barrels were extracted from the ground, and only 6 billion barrels of new reserves were found. At that rate, it doesn’t take long until the world’s “gas tank” starts running dry.

4. Other Energy Resources

It’s been pointed out, of course, that there are other sources of energy in the world. Some of these are also fossil fuels – for example, coal and natural gas – or other nonrenewable resources such as nuclear power. Others are renewable, such as solar energy, wind power, and biofuels. Some combination of these will have to make up for declining oil production.

Switching over from oil to some other mix of energy sources, however, will require hugely expensive investments in new infrastructure. Many fossil fuels, such as natural gas, are also being used up quickly and may not last much longer than oil does. The same is true of the fissionable isotopes of uranium needed to run nuclear power plants using current technology. Breeder reactors and fusion power – once considered a permanent solution for energy problems – have major problems of their own; breeder reactors have proven extremely expensive and unreliable in practice, while the billions of dollars lavished on fusion power over five decades still haven’t produced a working experimental prototype, much less a single kilowatt of power.

There’s also the problem that many other fuels receive an “energy subsidy” from oil. The machines that mine coal, for example, run on diesel fuel. Replacing all of those with coal-burning equipment would involve immense costs, and the new machines would have to burn much larger amounts of coal (a less efficient fuel) to get the same work done – thus using up coal at a much faster pace. Converting coal into a synthetic diesel fuel, on the other hand, requires putting much more energy into the process – thus, again, using up coal at a much faster pace. Some “energy resources” (such as shale oil) require so much energy to extract useful fuel that it’s a losing game to extract them at all.

Sustainable energy sources, long touted as a cure-all for energy shortages, face a different problem. Fossil fuels contain energy in a very concentrated form. In sustainable energy sources, by contrast, the energy is much less concentrated. Replacing fossil fuels with sustainable resources quickly runs up against spectacular problems of scale. For example, if all the cropland in the United States were planted in corn, and the corn converted to alcohol fuel by the best modern technologies, the result would equal less than 5% of the current annual US demand for gasoline. Similar limits affect other renewable energy sources. To support the present-day world economy on renewable resources, it’s been estimated, would take the equivalent of ten Earths – and we only have one.

Some petroleum scientists have suggested that, in effect, nothing can replace oil – that once cheap oil can no longer be used as an “energy subsidy” for less efficient fuels, our entire energy-dependent economy will be left high and dry. Others suggest that other fuels can be made to work, although at much higher costs. One way or another, the price of oil is likely to soar far beyond current levels as skyrocketing worldwide demand runs up against the reality of limited and declining supplies. The “stagflation” of the 1970s – rising prices in a contracting economy – may be a familiar feature of the near future, but potentially on a much larger scale.

5. Changing Climate

The question of global warming remains mired in political controversy, and a minority of scientists still question whether it’s happening at all. But the reality of changing climate and increasingly unstable weather can be seen in the news nearly every day. Most of the ten hottest years on record have occurred during the last decade. Some areas are suffering from sharp increases in rainfall, while others are scorched by unusually severe droughts. Meanwhile a rising world population has encouraged more people to live and work in places that are vulnerable to flooding and other climate-driven disasters.

In November 2000, Dr. Andrew Dlugolecki, a senior officer of CGNU – the world’s sixth largest insurance company – warned that the effects of climate change were already having a major effect on the world’s economies. Damage to property caused by climate change, including everything from flood damage to crop failures caused by droughts, has been increasing at a rate of 10% per year. Dr. Dlugolecki calculated that if this trend continues, the yearly economic loss caused by climate change will equal the gross domestic product of all the world’s countries combined by 2065.

2065 may seem a long way off. Long before that point is reached, though, the economic impact of weather-caused natural disasters is likely to take a significant and growing bite out of the world’s economies, and use up money and resources that might otherwise go toward a better life for all.

6. Failing Public Health

Twentieth-century medical technology, with the aid of powerful antibiotics such as penicillin and tetracycline, overcame many diseases that once killed or crippled tens of thousands of people a year. For a while, it seemed as though nothing could stop the march of medical science, and people throughout the developed world ended up thinking of good health as a birthright.

But scientists and the public alike failed to reckon with the incredible resourcefulness and adaptability of microbes. As early as the 1970s, many common germs were beginning to show signs of resistance to antibiotics. Currently, there are dozens of dangerous germs that can’t be stopped by the standard antibiotics – and some, such as Staphylococcus aureus, that are beginning to appear in forms resistant to all known antibiotics. Drug-resistant tuberculosis is a growing epidemic in many parts of the world, including the United States. Even more troubling, Yersinia pestis – the organism that caused the Black Death, which can be found in rodent populations in many parts of the world, including western North America – has now started to appear in antibiotic-resistant forms.

At the same time, new diseases are beginning to appear on the horizon, as climate change and ecological disruption bring people into contact with unfamiliar microbes. Many of these new diseases are caused by viruses, which can’t be killed by antibiotics in the first place. Some of these new diseases, like the lethal Ebola fever, have stayed limited to faraway parts of the world. Others, like AIDS and Hepatitis C, have spread around the globe and sent death rates soaring in many countries.

The triumph of public health measures in the developed world has played an important part, and an underrated one, in the last half century of prosperity. Businesses have benefited greatly from a healthier labor force and fewer replacement costs. Now those benefits are slipping away as public health declines. Medical scientists and public health officials are scrambling to respond, but there are no “magic bullets” in sight and the situation continues to get more serious.

7. Crises in Synergy

Systems theory uses the term synergy for the complicated results that happen when two or more factors affect the same thing at the same time. In medicine, for example, it’s long been known that drugs that are harmless by themselves can have disastrous results if they’re combined in the wrong way. The same is true in economics, where small changes that would normally have little effect can combine and snowball, producing recession or inflation.

Any one of the potential crises discussed here could be solved fairly easily if it were the only problem that industrial society was facing. What makes the current situation so precarious is that all of these problems, and others, are coming into play at the same time. We don’t have an infinite supply of money, energy, natural resources, industrial capacity…or time. If we choose to put the available resources into solving the approaching energy crisis, for example, that takes resources that might otherwise go to revitalizing our industrial capacity or fighting the war against disease. If we try to do all of them at once, we make it more likely that we won’t have the resources to solve any of them. Meanwhile, all of these resources need to be diverted from ordinary economic channels, at a time when people’s expectations are at an all-time high. All this adds up to an explosive situation.

Toward the Long View

In the traditions of the Six Nations of the Iroquois, each decision had to be made in the light of its impacts on the next seven generations. Modern industrial society has more often made decisions purely on the basis of their impacts on the next election or the next quarterly profit statement. In fact, all of the crises discussed here, and more, could have been avoided fairly easily if those making decisions in earlier decades had taken the long view.

This wasn’t done, and now those of us alive today are stuck paying the bill.

How will that bill come due? Given the shortage of crystal balls, it’s impossible to say for sure. Some people who are aware of these potential crises claim that they will lead to the complete collapse of industrial society and a return to the Dark Ages. Others insist that every one of these problems can be solved quickly and easily by progress, and that there’s nothing to worry about. As usual, the truth of the matter probably falls somewhere between these extremes.

Still, some educated guesses can be made. Many economists have been saying for some time now that the economy is overdue for a recession, and the instabilities of the global economic system make it likely that, when it comes, the recession may be as bad or worse than any in living memory. Rising oil prices and falling stock values are already a reality for many people, and if these trends continue – as seems likely – poverty and want will become a good deal more common than they are now. Without cheap energy, many current habits and lifestyles will become prohibitively expensive, and many people in the industrial world will have to relearn lessons that their great-grandparents knew well. As disease becomes more common again and the climate less predictable, many people will find themselves suddenly destitute, in a society that will no longer have the resources to support current welfare state measures.

Overall, the picture painted by these looming crises suggests that the brave new world of the twenty-first century may resemble the world of the nineteenth century more than anything out of the science fiction visions we’ve all grown up expecting. Future historians may picture the twentieth century as a brief period of petroleum-fueled exuberance, surrounded on both sides by the more difficult times that have been normal throughout recorded history.

Unfortunately, political systems aren’t likely to respond to the potential crises of the near future in anything like a productive way. Politicians learned a long time ago that you don’t get elected (or reelected) by confronting difficult problems, or by asking people to give up things that they think they deserve. Nor are large corporations, their eyes fixed on the next quarter’s profit margins, likely to take the long view and act in ways that will benefit everyone in the long run.

It’s precisely because of these limitations in big government and big business that voluntary, grassroots-based community organizations such as lodges, churches and clubs will need to take the lead, just as they did a century ago.