Laying down the odds on scenarios for our future

While out jogging this cold, gloomy morning, I began thinking about our collective future.  While predicting the future is impossible, it is possible to estimate percentages of certain events happening in the future.

So, with that in mind, I did a quick back-of-the-envelope (without an actual envelope) set of calculations about the possibilities of our future over the short term – say three years or so.

So here we go:

65% – the odds that peak oil will ensure that the US is entering a time of prolonged, if not permanent, economic decline.

Peak oil is an economic issue as much as it is a geologic issue.  Now that we have passed maximum supply, we are entering a new period of adjusting to high prices.  Yet our economy was built on the premise of cheap prices. High prices constrain growth.   Growth has been the measurement of our civilization for over 100 years.  Without growth, the best we could hope for is stability – a steady state economy.  Yet there are no policies in place to ensure that happens.

The other possibility is decline.  Over the past four years we have printed trillions in fake money to try and stave off decline.   Yet growth has not really been restarted in any meaningful way.  Oil prices are still a barrier to true broad based growth.  And if prices are this high in murky economic times, then what would happen if things were rosier?  The reality is that we’ve come to the end of growth as we’ve known it in a conventional sense.

Yes, I know, this will get me lambasted by nearly everyone, as we all have a stake in seeing growth return.  But nothing I’ve read or heard suggests that there is any lasting way to keep growing as we have on a finite planet.  Technology, innovation and human ingenuity can do wonders.  They just can’t change the fundamental laws of the universe.  Americans are so poorly educated in science that few of us can truly understand that there are indeed limits on what can be done.

25% – the odds that our economic system will collapse suddenly.

By this I mean that one or both of two things could happen.  One is that the financial system which relies now exclusively on credit would simply see the availability of credit disappear.  To begin with, more money has been loaned into existence than ever has a chance of being repaid. This alone will limit future credit availability.  Further, trust is a huge part of credit, and we see that trust has nearly evaporated.  These will combine to basically force a return to a cash and carry world.  But the supply chains that keep food on the shelves and consumer goods in stores don’t currently operate that way.  A lack of credit would stop global supply chains cold.  If that happens, how will food and other stuff get to Lexington?

The other thing that could happen is a sudden and prolonged oil crisis. If global oil flows drop more than say 5%, then global commerce will grind to a halt.  Once again, our economy is extremely vulnerable to lack of oil, or to very expensive oil – which is essentially the same thing.  Without food and goods being trucked into Lexington daily, what happens?

In either scenario, the consumer economy will be severely damaged.  More than 70% of our economy would be teetering.  It is horribly fragile already; collapse would be easy to imagine.

10% – the odds that World War III will be begin and oil will be the leverage point.

For example, we only care about Iran because Iran has a lot of oil.  If we, our allies, or our surrogates attack Iran to destroy its nuclear capacity, the world will face serious repercussions.  China and India have no fear of Iran.  They only want its oil. If we start a conventional conflagration in order to prevent a nuclear one, it will have massive repercussions for oil flows.

China especially will be unlikely to tolerate any significant disruption of supply from Iran. “Iran is China’s third-largest crude supplier, shipping around 540,000 barrels per day (bpd) in the first six months of this year, or more than 10 percent of Beijing’s 5.1 million bpd of imports. The flow grew 50 percent from the first half of 2010.”

Maybe they will help head off a crisis in advance, maybe they find a way to supply arms to Iran, or maybe they intervene directly to defend Iran.  This last is unlikely – yet- as the Chinese do not have the navy and air power to match the US.  However, the longer it takes to deal with Iran, the more time the Chinese have to continue their massive military expansion.  10 years from now, the Chinese military will be much more able to deal with foreign conflicts.  And securing oil supplies will be that much more important.

0% – the odds that we’ll take any meaningful action on mitigating global warming.   Republicans – who are self styled as conservative – meaning conserving of things, supposedly for the future – are nothing but live for today risk junkies.  They are betting that everything science tells us about the rapidly changing climate is either wrong or a hoax.   This is the antithesis of true conservatism.  What it is really about is a complete inability to imagine anything but greed and pollution and waste fueling the world.

Democrats on the other hand,  have no backbone in helping to prepare this country for the onslaughts of a changed climate.  Obama has completely whiffed.  It will be years before another mainstream presidential candidate will say the things he did.

Leadership in the business community knows that global warming is real and that, unaddressed, it will be very bad for business.  But they live in three month increments and will never be rewarded for long term thinking.

In a shrinking economy, organizations that ordinarily provide leadership will find it increasingly difficult to raise the funds to compete with lobbyists in order to sway legislation.

That leaves us as individuals.   Most of us have no interest in the subject.  Of those that do, few are truly committed to the fundamentally altered way of living required to vastly lower our footprints.

We will simply hope for the best.  To paraphrase what one forlorn environmentalist recently said, the battle for climate change is over and we lost.   All we can do now is duck and cover.

—–

So these are my guesses today on where we’re headed.  Even if these are taken as the rantings of crackpot, isn’t this kind of thinking that the top tier of leadership in Lexington ought to be doing?  Shouldn’t we at least put together some idea of what could happen in the future in order that we may be ready for it in the off chance it could happen?  The reason I suspect that we wont see that here is that our leaders can imagine no other world except the one in which they grew up.  Thus scenario planning is viewed a waste of time:  things will always be that way.  Another reason could be that glimpsing into a dimly light future is very scary, and really, who wants to be doom and gloom?  Looks bad on a person in our cult of optimism.

That said, what would be your breakdowns?

Advertisements

Leave a comment

Filed under Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s