End of the Euro

Today, the 15 June of 2022, will probably go to the books of the history as the day when the Euro started to die. The ECB announced that they cannot turn off the money-printing machine.

To understand the enormity of this statement, we need to look back to the history of the euro.

The euro as a currency is just 20 years old by now, but has suffered since it’s sixth birthday from one crisis after another. The financial crisis of 2009 was a heavy blow to the currency. Lots of money was printed to “rescue the euro”. The balance sheet of ECB almost doubled.
It got sick again in 2013 with the “Greek Crisis”, when the Eurogroup pressed for a sell-off of state assets and a freeze on ATMs on Cyprus.

ATMs were closed on Cyprus (photo Bicanski/Wikimedia)

The most serious ailment is an addiction that started on a very specific date.

Money printing = Quantitative Easing

On 22 January 2015, Mario Draghi announced the start of quantitative easing – a.k.a. money printing, on the order of 1-2 billion euro every day, with no explicit stopping date. They only presented a few stop conditions, e.g. never buying more than 33% of any country’s bonds.

Even on that very first press conference, one intelligent journalist asked if there was no risk for hyperinflation:
“And second of all, what would you say to those who are concerned that when the ECB is buying up bonds, electronically printing money, whatever one calls it, this is the first chapter in a story that leads inevitably towards hyperinflation. What’s your response to that?”

Draghi just looked in the rear view mirror and said that there will be no problem in the future, since there had been no problem in the past:

“I think the best way to answer to this is, have we seen lots of inflation since QE programmes started? Have we seen that? And now it’s been quite a few years since they started. … We did OMT. We did the LTROs. We did TLTROs. And somehow this runaway inflation hasn’t come yet.”

Ostensibly, the money printing (buying bonds at full price from governments and corporations) was intended to create “price stability” in the form of inflation around 2%. (I think this is just an arbitrary, possibly counterproductive target, but that is another story.)

Fast forward to June 2022.

Turning off the money printing machine

On 9 June 2022, the ECB governing council met for their monthly policy meeting, in the middle of the highest inflation since the 1980s. Official inflation is 8% (prices today compared with 12 months earlier). Quite a lot above the 2% target. They decided, as expected, to stop the money printing machine. No more additional free money to governments and companies. Everyone would be allowed to keep what they had received, but no additional money would be printed.

This had an immediate effect on the risk analysis of the most indebted governments, ie. Italy. (The public debt is now 150% of country GDP, since the rich don’t pay much taxes and the government spends like there is no tomorrow). The state bond interest rate spiked from 1% to 4% in a couple of days, and the government could head for default.

or not…

In a rush of frenzied action, ECB governing council came back together in an “ad hoc meeting” and decided to actually restart printing money.
This time on the pretense of avoiding “fragmentization” of the euro-zone, i.e. different interest rates for different government bonds.

Below is a full verbatim of the statement from this meeting. It is the least informative press release that I have ever read. Please judge for yourselves.

Essentially, the ECB governing council has started a money printing machine that they are unable to stop.

I can only see this end with hyperinflation.
It seems like 2023 will be like 1923.

I wish you all best of luck in the coming squeeze.

When will a bread cost 100 euro?

PS.
Please remember, that the main cause of the coming shrink is that we humans are living in overshoot of the planetary biocapacity and need to reduce over consumption to come back inside the boundaries. That is outside the power of any central bank, but I would prefer if they were more sincere and transparent.

---

ECB Press release

Statement after the ad hoc meeting of the ECB Governing Council

15 June 2022

Today the Governing Council met to exchange views on the current market situation. Since the gradual process of policy normalisation was initiated in December 2021, the Governing Council has pledged to act against resurgent fragmentation risks. The pandemic has left lasting vulnerabilities in the euro area economy which are indeed contributing to the uneven transmission of the normalisation of our monetary policy across jurisdictions.

Based on this assessment, the Governing Council decided that it will apply flexibility in reinvesting redemptions coming due in the PEPP portfolio, with a view to preserving the functioning of the monetary policy transmission mechanism, a precondition for the ECB to be able to deliver on its price stability mandate. In addition, the Governing Council decided to mandate the relevant Eurosystem Committees together with the ECB services to accelerate the completion of the design of a new anti-fragmentation instrument for consideration by the Governing Council.

Book review – Less is More by Jason Hickel

Executive summary

So far, the best book I read in 2022. Very much recommended. Why planned shrinking of the economy (degrowth) is necessary and some suggestions on how to make it happen.

Longer review

Since the 1970’s we are living in global “overshoot”, i.e. the human pressure on the planet is more than she can take. Therefore we make Earth less and less habitable every year.
This is insane and suicidal, since we destroy the joys of life for our childrens children and all generations to come.

Hickel explains that we do this due to Growth, which is a side effect of capitalism and our monetary system.

In the 1800s, when the current economic theories (capitalism, socialism) were formalized and accepted, the human footprint was a fraction of todays overload. In 1850, there were 15% of the current human population and the resource use was less than 5% of what do today. In those days, Earth seemed boundless. “Growth is good”, to paraphrase Gordon Gecko.

Hickel reviews the historical background of today’s economic system, tracing back to the peasant revolutions in England in the 1300s. After the Plague, the peasants organized uprisings and took power from the feudal lords and lived well for hundreds of years. Understandably, the lords were not happy and kept plotting to take back control. Hickel cites several lords who complained about the lazy subjects who only worked for themselves, and did not bring in lots of taxes to their courts. And their proposals to get the farmers to become more “productive” and taxable.
According to Hickel, this was the origin story of the Enclosure movement, which privatized (stole) the commons from the villages into the hands of the lords.
The Enclosures was a fight that the landed aristocracy won, and it generated a deluge of desitute peasants who flooded the towns in the form of cheap labour.
The background of the Enclosure movement was new to me, and the arguments were very similar to the push for privatization of public utilities in the 1990s (efficiency, better use of resources, competition will drive innovation etc.).
We know now that most of the privatizations made a handful of new owners very rich.

The design of the current monetary system (since Bretton Woods 1947) is based on an assumption of growth. Almost all money is created as interest-bearing debt, which means that there must be more money later to pay back the debt. In other words, the economy must grow. Hickel describes how well this worked in an expanding era, but how that same system today creates perverse incentives that destroy future prospects. Growth has become an obsession, just to be able to service debt.

The economic theories that were taught to the economists who are now in power are inconsistent with the current reality. The theories are wrong. Unfortunately, most economists are not prepared to reconsider, but keep doing what worked a century ago…

The second half of the book describe several possible systemic changes that could help us to shrink the economic activity in the rich world. He shows that it is possible, if we want, to shrink the economy in a way that makes life better for most of us.

Hickel talks about planned reduction of consumption, shorter work week, redesigned monetary system and much more. It is great to have alternatives to the current status quo. “There are numerous good alternatives (TANGO)” as I like to say, (instead of the Reagan-Thatcher slogan of “There is no alternative (TINA)”).

I guess that there are many possible paths to shrink our economic and ecological footprint, the proposals by Hickel is only one of many. By making proposals, he invites us all to imagine new and exciting possible futures within planetary limits.
He is whetting our apetite for imagination, which I think is the main takeaway of the book.

What kind of future would you like to have, if/when we decide to live within planetary boundaries? Hickel shows that it is possible, and maybe you have better ideas how to make it happen?

Book review – Sacred Economics

Eisenstein is a well known writer and philosopher in the transition movement towards a sustainable society. He writes beautifully and I listen to his podcast (A New and Ancient Story) where he interviews inspiring change makers. He is famous for popularizing the concept of the gift economy.

His most famous book is “Sacred Economics”, which came out in 2010, in the wake of the great financial crisis. Last week, I finally got around to read it. I got the updated 2020 edition, which feels fresh and updated to current events, including the financial and monetary response to the covid pandemic.

The book is divided into two parts, one part analyzing the current economic system and how it drives the ecological mess we are in, and a second part with his proposed solutions.

The first part is great. He describes how economics trumps ecology in the current political system and how our money is based on interest-laden debt which necessitates growth. He mingles big-picture patterns with everyday examples, to illustrate the current monetary system and he peels back to see upon which assumptions and values it was built. It is a joy to read, even though the topic is terrifying: How debt-based interest-growth money forces us to convert more and more of our lives and the living world into money and products.

The second part is weaker, but still worth reading. Here, Eisenstein proposes another monetary system, which would lose value over time, like scrip-currencies that have been used in crisis times in the past. He loosely describes that the new money would be based on the health of natural ecosystems, but he does not explain how. He also shares many examples of how to reduce the power of the market by doing things together in commons.
I think that the real value of the second part of the book is that it is thought-provoking, not that his proposals are “the one solution”. The book invites us all to imagine alternatives, which is the first phase of any revolution or reformation. The dominant powers claim that “There is no alternative” to capitalism, but this book invites us to one of many alternatives. (Another excellent book that invites our imagination even more explicitly is “The Dawn of Everything”, by Wengrow and Graeber.)

Eisenstein leads by example. The book is published under a Creative Commons license, and is free to read as e-book on his website. He trusts us all to share knowledge and resources to build a better world together, and to give a donation if we have gotten value from it.
I think it is brave of the publisher (North Atlantic Books, Berkeley) to allow the author to give away the same product as they are selling to make a living. I dream about sharing my next book for free as an e-book and with a price for a paper copy.

To conclude: It is completely free to read this book, so why not?

The trap of the eternal throne / Retirement plans for dictators

In November 1919, the first world war was coming to an end. The German army was falling apart and emperor Wilhelm II was looking for options. He chose to pack his bags and run off to the neutral neighboring country of the Netherlands.

Wilhelm spent the last twenty years of his life in a mansion in the small down of Doorn, mainly taking care of his rose garden. Instead of plotting for a revenge on the war scene, he stepped down and let the imperial ambitions of himself and his son fizzle out. (As we know, other people with other plans took over, but that is another story.) The belligerent warmonger turned into a rose lover and married again.

Ex-kaiser Wilhelm II in his rose garden in Doorn. No more wars for him.

I think it would be great for the world if we could invite more dictators to come and grow roses.

For most dictators, the future is threatening. They know that most ex-dictators are murdered or put in prison, which is not so alluring. Therefore, they do what they can to stay in power, often starting wars and conflicts with external parties to unite their nations.

Another problem for dictators is keeping in touch with reality. The longer a president sits on his throne, the less he (it is usually a man) will know of what is really happening in the world. As flies attracted to a cow-pie, yes-sayers and intriguers will flock around the great leader, telling him what he wants to hear. It is probably impossible to keep sane in such a delusional situation.

For this reason, most constitutions have mechanisms to remove presidents after a certain fixed time limit. The best autocratic system seems to be the Chinese Communist Party mechanism that was introduced by Deng Xiaoping, to limit the term of the leader to ten years. The ex-presidents have a safe and relaxed retirement in opulence, enjoyed by Jiang Zemin and Hu Jintao. Later this year, the current leader Xi reaches his 10 years on the throne, but he has unfortunately removed this law, so maybe he will walk into the trap of the eternal throne.

I would very much prefer that we invite president Xi Jinping to the Netherlands, to take over the mansion in Doorn, to grow roses and peonies, so that he does not have to start wars to maintain popular support.

I am sure there are other dictators in the world that we could invite as well, to reduce the war pressure in the world. Who would you like to invite?

ps. At the same time, we should also institute a max-term for the role of Prime Minister in the Netherlands. The current prime minister Mark Rutte has been on his throne for more than a decade, which is more than enough. Let him too grow roses.

Brave New Year

I have not been writing here during the crazy pandemic years, but I thought it would be good to share an observation. It is today the 20th anniversary of the Euro as a currency in daily use. “20 years of stability, experience we did not”, as Yoda might have said it.

As I wrote in January 2020, the dominant theme of the decade seems to be “disappointment”. I think that the last two years have not panned out as most people expected. For us in the asset-owning classes, it has been a bonanza of government money handouts and all-time-highs on the major stock exchanges. The rich get richer, as the main theme has been since the 1980s. However, most people have seen their purchasing power go down.

In the Netherlands, where I live, house prices have ballooned with +20% during the last year, up from an average of +8% per year the previous five years. (While political leaders claim that the inflation is around 1%)

One of the drivers behind the asset price explosion is the money printing by the central banks, see ECB balance sheet in the graph below: [1]

Explosion of money – money printing by European Central Bank. Most other central banks do the same…

From 2007, before the Financial Crisis until 2015, the balance sheet doubled. Then it doubled again in 2018, and again in 2021. We have 8 times more money in the base of the euro system. But since we don’t have 8 times more houses now, the house prices are increasing to arrive to a new equilibrium. Those who own the assets are fine, those who don’t will see their rents continue soaring.
(I wrote about this in 2017, and at the time I could not imagine that these shenanigans would continue for so long!)

This is a situation that is very similar to Weimar Germany in 1922, one hundred years ago. Money printing was used to solve temporary crises, and since it worked fine in the beginning it was continued. It all ended with a well-documented hyperinflation and a restart with a new currency, see e.g. the excellent book by Frederick Taylor [2].

The situation today is not so similar with another interesting crash – of the stock market 1929 [3]. At that time, it was mainly “investors” and speculators who took loans to gamble on the stock market. This time, it is mainly governments and corporations that borrow money, like in the Weimar case.

One good resource that explains the dynamics of different kinds of debt crises is the 2018 book by Ray Dalio [4]. It gives a fascinating account of several crashes throughout history with contemporary news items and explains the governing mood of the times. It is spooky to read, since we know the outcome.

What do you think the next crash will look like?

1923

Who provides the money/credit: investors, private persons, foreign investors

Who loans the money: Central bank

Where does the money go: Fill budget deficits (purchase gold for war reparations)

General media mood: Worry, civil unrest, demonstrations, communist uprisings

Crash: Strong inflation -> price controls -> market dysfunction -> hyperinflation -> useless currency

1929

Who provides the money/credit: Private persons, investors -> “10% call loans”

Who loans the money: hundreds of thousands of stock-market speculators

Where does the money go: Price increase of stock market

General media mood: Optimism and fantastic future!

Crash: Stock market dip -> call loans default -> Calling back credit -> more dip -> lots of people lose all their savings.

2022

Who provides the money/credit: Central Banks (in 10 years, 700% increase of balance sheets)

Who loans the money: Governments, 1000 large corporations, banks

Where does the money go: Budget deficits, price increase of real estate, stock market -> small group of owner class (the 1%)

General media mood: Crisis! Pandemic!

Crash: ??

Velocity and palm trees

Since you read until here, I would like to share another thought. I suspect that the trillions of euros that have been parked at various off-shore accounts will come back into the real economy this year. When inflation increases, the people who have stashed away their savings somewhere far away at 0% interest, will start to panic. When their savings are shrinking due to inflation, they will try to get their money back to purchase anything that stores value. Quickly. Transaction speed will go up. I suspect that real estate and other assets will balloon due to this phenomenon. What do you think? Is there any way to measure/monitor this?

Read more

1. ECB Balance Sheet, ECB official data, from https://www.ecb.europa.eu/press/pr/wfs/2021/html/ecb.fst211228.en.html and https://www.ecb.europa.eu/press/pr/wfs/2021/html/ecb.fst211228.en.html
2. “The Downfall of Money: Germany’s Hyperinflation and the Destruction of the Middle Class”, by Frederick Taylor, 2014, Bloomsbury publishing, London
3. “The Great Crash 1929”, John Kenneth Galbraith, 1955, Houghton Mifflin
4. “Principles For Navigating Big Debt Crises”, Ray Dalio, 2018, Bridgewater
5. House price statistics in the Netherlands,
   https://www.cbs.nl/nl-nl/nieuws/2021/51/prijsstijging-koopwoningen-ruim-20-procent-in-november

Disappointed!

“disappointed /dɪsəˈpɔɪntɪd/

adjective

sad or displeased because someone or something has failed to fulfil one’s hopes or expectations.”, Oxford Dictionary

This post is about disappointment, what I expect to be the dominant mood of the 2020s. I want to share my view of why this is the case, and look into what we can do about it.

Why are so many people disappointed?

… and why do I think more will be as time goes on?

There is a mismatch between the dominant story of our current culture and reality: “Everything is getting better, and with more technology we will all be better off.” vs. ecological destruction, economic disarray, social unrest.

The main cause for disappointment is too high expectations on what we “should” get, compared with the reality of the world that is currently cracking under the load of a reckless human-driven globalized machine. The second confounding cause is that the economic elites are using monetary policy and other tricks to concentrate wealth into their hands.

Over the globe, disappointment is today manifest in different forms, from Yellow Vests in France (protesting the abolition of wealth tax and increasing taxes on fuel) to the student strikes in Chile (protesting the increasing gap between the rich and the rest). Also the Youth climate movement Fridays-for-Future is driven by disappointment in how governments handle the climate crisis.
Disappointment is driven by both real problems and unrealistic expectations.

Real Problems

We live in a world which has some severe real problems:

• Running out of easy to harvest natural resources and energy – e.g. end of oil, minerals [Meadows]
• Too much load on the environment, best described by the Planetary Boundaries [Planetary Boundaries].
• Human health deterioration – despite being richer than ever, we are getting sicker by the day. “Peak Health”, when human health on the planet was best, was probably 1990. [Hulsegge]
• Economic trickery that shifts wealth from most people into the hands of very, very few. [Martenson]

Expectations

At the same time, the current globalized culture is infused in optimism. We have created inflated expectations of the future that is blinding us to the reality. Young people today are bombarded with advertisement and propaganda that tells them that they will enjoy a life of opportunity and luxury. Expensive cars are promoted as “intelligent” and international travel for vacation as bringing “unlimited peace”.

Advertisement for an expensive car.

Fly away. To find “Unlimited Peace” in a country waging civil war…

But even without the expectation of luxury and material abundance, we live in a culture that is glorifying technology and stands on a story of “progress”. I grew up completely convinced that everything was getting better, and it was consistent with my observations in the 1990s. Democracy was on the rise, pollution in Western Europe was going down. Everyone was a winner. Or so I thought, until I saw the destruction that we cause in Asia, by moving most of the destructive industry there. As a kid, I witnessed how the Ruhrgebiet was transformed from a dark gray industrial landscape into a green park. However, only when I was 35, I saw the hellscape of Ningbo, and experienced the smog in Beijing.

Despite the earnest efforts of people like Hans Rosling and Bill Gates to explain how certain things improve, there are also lots of things that are moving in the wrong direction in the world today [Rosling]. Young people sense this probably better than us old guys. I guess that is why depression is on the rise among younger generations. The younger the cohort, the earlier we get depressed. [Ilardi]

How should I handle my disappointment?

“God, grant me the serenity to accept the things I cannot change,
Courage to change the things I can,
And wisdom to know the difference.”, Reinhold Niebuhr

Of course I am disappointed. The world is not getting better every day, as I was told when I was at school. Even though I belong to a very small privileged elite who is collecting significant wealth from the destructive industrial system, I don’t support the wealth gap increase. I don’t want the biodiversity to get more and more impoverished. I don’t want multinational “food” companies to sell rubbish that makes people sick.

The ecological destruction that we are engaged in as a civilization is of course difficult to remedy as an individual, but each of us can make a difference. It is like democracy – even though one voice is small, there are ways to amplify one’s influence, e.g. by joining a political party or using your influence to build leverage.

The political idiocy of “Quantitative Easing” (printing money and handing it to the owning classes) that we allow central banks to pursue, is something that we need to resolve by political action.

In these global problems, each of us has to decide how much effort and courage to invest to pull the world in a “better” direction, and try to use the resources we have at our disposal to get maximum effect. My own actions are of course minuscule, but I hope that I effect some change by planting nut trees and by talking to people who work at the ECB and the central banks. (And by posting this kind of posts, to share my ideas and hopefully inspire someone else to also take action!)

The other lever I can pull is to adjust my expectations. I can tell myself that life is fine also if I turn the thermostat down and wear long johns instead of burning gas in the winter months. I can tell myself that another business trip to China to boost my ego is not worth it. I seek courage to sell our old car and live without one. I can choose to not go skiing and destroying yet another mountain ecosystem.

I am very inspired by people like David Holmgren, Chris McLeod, Wouter van Eck, Diana Wildschut and Patrik Andersson, who lead by example and show that life can be rich and fulfilling, without destroying the environment. They also generously share their experiences in writing and in dialogues. They help me to adjust my expectations to want what I get, instead of trying to get what I think I want… They inspired me to shift to part time work in the paid economy, and to use the freed up time to improve relationships, health and learn skills of resilience and ecology.

I think that the long term solution is to build a new global culture of “enough”, where we make peace with the ecological limits of our beautiful planet, and where we actively reduce wealth gaps. We can work together to build a world where we look at our real human needs and create structures and rituals that meet them [Rosenberg]. A world where we don’t accept advertisement that creates “wants” for consumption. A world where we don’t accept further concentration of wealth, but work for better sharing.

Conclusion

“The world has enough for everyone’s needs, but not everyone’s greed.”, Gandhi

Disappointment is a sane response to the current conundrum of ecological/ energy/economic/health crises inside a culture of “progress”. This will become even more visible in the coming decade, when several natural and social limits are stretching to a point of fracture.

I hope more people will recognize the reality behind the rupture and avoid the populists “simple” solutions to these challenging problems.

How do you handle your disappointment? What do you do to adjust your expectations and how do you decide on which change you want to work for?

What is triggering you most right now?

How can we build a culture of peace?

References

FootprintNetwork, 2012. Global footprint and earth biocapacity, http://www.footprintnetwork.org/en/index.php/newsletter/bv/humanity_now_demanding_1.4_earths: s.n.
Hulsegge, G., 2016. Cardiovascular risk factors over the life course (PhD Thesis). Utrecht: http://cdn.gld.nl/data/uploads/2016/04/56fe349cec7ed_proefschrift_Gerben_Hulsegge.pdf.
Holmgren, D., 2018, Retrosuburbia – a downshifters guide to a resilient future, Hepburn Australia.
Ilardi, S., 2013. Therapeutic Lifestyle Change, http://tlc.ku.edu/: Kentucky University.
Martenson, C., 2011. The Crash Course – The Unsustainable Future of Our Economy, Energy, and Environment. New York: Wiley.
Meadows, D., Randers, J. & Meadows, D. L., 1972. Limits to Growth. New York: Signet, Penguin.
Ratcliff, A. Oxfam Global Wealth Report 2019, https://www.oxfam.org/en/press-releases/billionaire-fortunes-grew-25-billion-day-last-year-poorest-saw-their-wealth-fall
Rees, W. E., Wackernagel, M. & Testemale, P., 1998. Our Ecological Footprint: Reducing Human Impact on the Earth. Gabriola Island: New Society Publishers.
Rockström, J. et al., 2009. Planetary Boundaries: Exploring the Safe Operating Space for Humanity. Ecology and Society, p. 14(2): 32.
Rosenberg, M., 1999. Nonviolent Communication: A Language of Compassion. 1st ed. Encinitas, CA, USA: Puddledancer Press.

Yellow vests and canalization of anger

There is always a lot of pain and frustration in the bottom 50% of all societies. During periods of systematic support to this group, as was in Europe and US during 1930-1990, the pain is tolerable. However, we are moving back into the inequality that was prevalent by early 1900 in Europe. At that time it was inheritance aristocracy, intermingled with monopolistic capitalists who were the 1%.
Today it is mainly owners of corporations and top-managers.
The symbol of the 1900 aristocracy was the cylinder tophat, the symbol of elite. Today it is an Audi Q7 or a Tesla.
Thomas Piketty wrote brilliantly about this in his classic “Capital in the 21st Century”, and his more recent research.

Return of inequality, even reported in the Economist! (https://www.economist.com/books-and-arts/2015/06/06/mind-the-gap)

The Yellow Vest/Gilet Jaune movement is a canalization of this frustration, through a specific narrative. Today, our society has this dominant mythology:

“Society improves through economic growth. More consumption (i.e. growth) solves all problems and improves the lives of everybody, especially those who work hard!”

The yellow vest movement has clearly identified the problem with the second part of the statement. The economic growth does not at all benefit everybody. The bottom 50% has got a lower or fixed purchase power since the 1990s, coupled with a steadily worsening health situation. When Macron removed the wealth tax last year and to add insult to injury also proclaimed to increase the fuel tax, that was the final drop. The protesters took to the street and chanted: “Macron demission” and “Trop de taxes“.

“Trop de taxes” – too much taxes

I see three problems with the narrative of the dominant mythology and the story of the Yellow Vests:

First of all, the cost of commuting to work is increasing with fuel tax, but that is possible to solve in different ways. The easiest way is to improve car fuel efficiency. The Yellow Vests should have attacked Renault headquarters for the malpractice of selling cars with terrible fuel efficiency. It is clearly possible to improve fuel efficiency with factor 10 if we want to, which would dramatically reduce the fuel cost for the people. (See e.g. Shell Ecomarathon) As an engineer I am ashamed of the terrible job we have done at improving the fuel efficiency of cars. We just added entertainment and comfort for three decades. (and I was part of this during my years working for the Delphi group)

Terrible development of fuel efficiency for 30 years, with a minor improvement at the end, thanks to the electric cars.

Secondly, the problem is not too much taxes, but that the wrong people carry the tax burden. Corporations and the wealthy pay less and less every year, shifting the burden to the bottom 75%.

Example from US – corporate profit tax is reducing dramatically. Same development in most of the World.

 

Thirdly, and maybe most importantly, the first part of the story is wrong. Economic growth is not necessary for society to improve. In the coming century, we will collectively be able to consume less resources than in the overflow bonanza of the last 100 years. We are running out of the same resources that have powered the phenomenal growth of comfort and luxury for the last century. This is not new, it was very well formulated in the landmark book “Limits to Growth” in 1973, but since 1980 all major politicians and industrial leaders have conveniently ignored this fact.

My suggestion is that we should follow the lead of George Monbiot and formulate a new narrative, that goes something like this:

“Corporations and the elite and the top 20% riches of the World population have squandered resources for the coming generations, and we need to stop this now. We (rich) must moderate our consumption. Now is the time to shift the tables. We will re-introduce fair taxation and change the society norms, including re-introducing restriction on rents. We will no longer be accept to be brainwashed by commercials every day.

We will eat locally grown vegetables and support each other, which will give us healthy and rich lives. We will live in smaller houses and use more bicycles. We will live great lives inside the planetary boundaries and enjoy the bounty of Nature together. Happily ever after.”

The yellow vests’ anger is well grounded, and I hope we can use the power of this anger to transform society into a better place for all of Nature, including us. One of the most inspiring examples I know is the “RetroSuburbia” movement, ignited by David Holmgren in Australia – I very much recommend to read his fantastic book on the topic! 

One of the downshifting families of the RetroSuburbia movement.What do you do to prepare for a low-impact future?

Factfulness and confirmation blindness

I just finished reading the blockbuster book by my hero Hans Rosling – “Factfulness”.
(If you have not been in awe of this phenomenal educator, check out his series of TED-talks, they are amazing!)

Beautiful book – easy read – however…

If you have read it, please let me know what you think. I am left with a strange feeling.

The main contribution

The one major contribution of the book is to further popularize “Dollar Street” and the four levels of human wealth/prosperity/development. This is a great tool to illustrate how life looks at different levels, and how many people are on each level.

World population in four levels of prosperity

(What Rosling forgets to mention is that the people on level 4 (where most of the blog readers are) is the major ecological destruction driver on this planet. If we all meet at level 3, we could all 7 billion people live rich lives sustainably. )

The prophet of progress

The core premise of the book is that the world is getting better in a number of measurable and surprising ways. Each of the 10 chapters shows one aspect of understanding data and distributions, which are quite illustrative. Throughout the book, there are numerous references to a survey that Rosling has conducted all over the world, where most people answer wrongly about the current state of the world.

I think this book has a deep ideological bias towards the “religion of progress”. It is a pamphlet to celebrate all improvements for civilization, especially in the last 200 years, while largely ignoring the price we pay for the advancements. This is deeply problematic for many reasons. It de-fangs the acute ecological problems that we face on a global scale, and lulls the readers into complacency.

Examples of problems with the book

The “knowledge survey” that is used throughout the book has a number of flaws, in my opinion. The multiple-choice-questions are of course simple to analyze, but have a strong bias to show the message that Rosling wants to show.

First of all the position-bias:
The correct choice in all the questions is the “best” of the three alternatives. Any and all mistakes are subsequently interpreted as “people have a bleak view of the world”. Imagine if the survey was repeated with the correct answer as the “worst” alternative – and how we could interpret the results as “people have a too rosy view of the world”.

Example question with “position bias”. The “best” answer is the correct one.

Secondly, some questions could have slightly changed wording which would remove the “improvement” message. E.g. “number of people” or “proportion of the population” in abject poverty. If we choose to measure the number of people suffering, there has been no improvement. However, Rosling chose to ask about the proportion of the population which has decreased, and touts this as an improvement. Is that really better or maybe worse? For the 700 million or so in deep poverty, I don’t think it helps to know that there is another billion middle class people in the world.

Thirdly, the specifics of the questions are sometimes slightly misleading. The only ecological question is about the “endangerness status” of three picture-perfect mammals : Giant Panda, Tiger and Black Rhino whose populations seem to stabilize. However, if he had chosen to ask about Pyrenean Ibex, Yangze dolphin and Hawaiian crow, the correct answer is that they all went extinct since 1996. The general decline of wildlife is real, but the specific animals of his questions are exceptional, unique successes of conservation. Therefore only experts would know the answer to the question, while a well informed audience would follow the general trend and answer this question ‘wrongly’.

Other perspectives on a factful worldview

There are lots of improvements for humanity in the last centuries, mainly thanks to the enormous energy input that comes from fossil fuels. This has allowed billions of people to survive and prosper. The energy surplus has enabled a billion or so to work on other things than food production, which is great for development of music, Internet and vaccines.

However, at the same time, we have been growing populations in maddening numbers, encouraged by the Catholic Church, Mao Zedong and the Stalin era medals for “Hero Mothers”.  We are increasing consumption of huge cars, long flights and enormous houses, encouraged by economists and advertisement, to drive “economic growth”. In the process, we are destroying ecology at an mind-boggling rate and we are depleting the stores of easily accessible fossil carbon resources. The future will look very different from the past.

The optimistic “humanity is always improving”-story therefore rings false in my ears.

Necessary facts to complement the story

I am sad that Rosling did not include the scientific model “Planetary Boundaries” (Rockstrom et al., 2009) in his book. It would convincingly show that we are reducing the natural wealth every year. Our ecological destruction is undermining our ability to have a civilization in the future.

Updated levels of the “Planetary Boundaries”, Science 2015.

It is a pity that Rosling chose to exclude the model of “ecological footprint” (W. Rees, 1996) from this factful book. Since 1975, humanity uses more resources than are replenished each year, effectively leaving a poorer planet behind to the next generation.
Those are important aspects of the status of the world, if we have the ambition to live with more factfulness.

I see the book of Rosling as part of a larger story of vocal cheerleaders of the religion of endless growth including Johan Norberg and Steven Pinker. I am not sure if this chorus is a part of wilful deception or a well-meant feel-good message?

What do you think?
Why is there such a need for shouting that “everything is fine” when it obviously is not?

I want to focus on sustainable economic contraction and reducing ecological destruction. How can we encourage modesty and cooperation?

Planetary Boundary 3 – Erosion

On a planetary scale we lose soil fertility, and this is a threat to our civilization.

What is a “Planetary Boundary” and why is it important? Link to the introduction article on this topic. The “Planetary Boundaries” is a model of global biophysical systems that support our life on the planet. For each system, quantitative models and indicator metrics have been developed to indicate the health of the system.

Updated levels of the “Planetary Boundaries”, Science 2015.

The third planetary boundary that our civilization has crossed into the catastrophe zone is Erosion, also known as “Land Use Change”. When forests are cut down and plowed to plant corn, the organic matter in the soil – the soil carbons – gas out as CO2 or is washed away with rains and wind, and finally disappear. The effect is that soils can hold less water and the consequence is flooding and slow desertification. We have lost incredible 133 billion tons organic matter in the agricultural soils since the dawn of agriculture. And there is not much left… (This kind of agriculture is therefore a kind of mining.)

Indicator

The indicator chosen is how much of the total ice-free land mass of the planet that is converted to farming (in %)

1. Pre-industrial value: <1 %
2. Current value:   13%
3. Safe zone boundary:  5%
4. Catastrophe boundary:  15%

We are therefore approaching the catastrophe zone for this biophysical system, and with the current speed of cutting forests, we will reach the catastrophe limit around 2050.

Effect

Erosion as a killer of civilization is a well documented companion throughout human history, usually accompanied with the spread of the plow.

Plowed grain culture of barley and wheat was developed in Egypt, on the fertile Nile flood plains, which got seasonal replenishment of fertility. That is in principle a sustainable system that could continue throughout the millennia.

However, as soon as the plow as used on other soils, where there was no replenishment, the soils would slowly lose fertility. With oxen-drawn plows, this was a slow process. We have mechanized with diesel-drawn megaplows, and increased the destruction of soil life by application of pesticides. What earlier took a century can now be accomplished in a decade!

Nebuchadnezzar’s palace in Babylon – home of the hanging gardens in those days. Now semi-desert. Photo BBC World.

 

Dunhuang, Gansu, China, was a very prosperous city on the Silk Road. 1500 years ago, it was the capital of the Western Liang country, and had more inhabitants than Rome. Actually more than any city in Europe. Now surrounded by desert.

 

Mechanism

The soil is turned upside down by the plow, which makes organic matter break down faster. This is advantageous for the farmer, since it kills weeds and makes plant-available compost.

Modern tilling. Image wikipedia.

However, there are three problematic effects:

1. Soil organisms die and release CO2: The disadvantage is that soil organisms like mycorhiza fungi also die when exposed to the UV rays of sunlight and gas off as CO2. The soil also loses the sponginess called “tilth”.

2. When the tilth is lost, and the mycorhiza fungi die, the soil organic matter is no longer held into the soil, but can wash away with rain drops that have direct access  due to the turned-over soil. This is why the Yellow River in China is yellow – the tilled Löss-plains release the fine organic matter and clay particles, which clog the river downstream.

You can see an example in this aerial photo of the city of Passau, where two rivers come together:

Passau, where the left river comes from an agricultural area, the right river from the forests. Image Wikipedia.

3.  Compaction blocking water flow:
There is compaction in the soil just beneath the reach of the plow, which blocks water percolation.

Compaction as a consequence of plowing (left). Image from Ontario Ministry of Agriculture.

Solutions

There are ways to grow food without killing the soil. The best way is to use trees and other perennial plants, and avoid pesticide applications.

Here is a beautiful video of a project that was done in Deng Xiaoping’s China in the 1990’s, Green Gold by John D. Liu.

Here is an amazing book by the American researcher J. Russel Smith, who proposed “Tree Crops” already in 1929!

Sweet chestnuts are an amazing tree crop. Healthy and delicious!

What can I do?

• Eat more from trees! Nuts, fruit and vegetables from trees help rebuild soils and stabilize the land. Choose walnuts instead of bacon, avocado instead of yoghurt. Chestnuts instead of potatoes.
• Eat less meat. Buy organic grass fed meat. If you can from a farmer you know.
• Join a political party and push for a transition to organic no-till farming. No-till means keeping the plow out of the ground.
• Plant a fruit-tree in your yard, in your park or on a nearby schoolyard.
• Get the book “The Carbon Farming Solution” by Eric Toensmeier with plenty of exciting tree crops!

Get your own copy of this excellent book at Chelseagreen,com or your favourite bookstore.

 

Planetary Boundary 2 – Eutrophication – Nitrates and Phosphates

What is a “Planetary Boundary” and why is it important? Link to the introduction article on this topic. The “Planetary Boundaries” is a model of global biophysical systems that support our life on the planet. For each system, quantitative models and indicator metrics have been developed to indicate the health of the system.

The second planetary boundary that our civilization has crossed into the catastrophe zone is Eutrophication, by polluting surface waters with nitrates and phosphates. The nitrates and phosphates come from fertilizers in agriculture, mainly from chemical-industrial agriculture (non-organic practices).

Indicators

The indicators chosen are:
Nitrates – how much synthetic fertilizer nitrates do we make per year (Haber-Bosch process) from nitrogen in the air – million tons/year.
Phosphates – how much phosphorus is rinsed out into the sea from human activities – million tons/year.

1. Pre-industrial value: Nitrates 0 million tons/year, Phosphates -1 million tons/year
2. Current value: Nitrates 121 million tons/year, Phosphates 15.8 million tons/year
3. Safe zone boundary: Nitrates 69 million tons/year, Phosphates 6.9 million tons/year
4. Catastrophe boundary: Nitrates 91 million tons/year, Phosphates 12.5 million tons/year

We are therefore deep into the catastrophe zone for both nitrates and phosphates. We need to cut these geochemical flows in half on a global scale, as soon as possible.

Effect

The effect of fertilizers in surface waters (rivers, lakes, shallow sea bays) is an increase of algae, which die off and fall to the bottom in great volumes. The composting of these algae consumes all the oxygen in the water and the bottom areas die off. The most famous one is along the coast of Louisiana, USA, and the size of the death zone is as big as New Jersey (half of The Netherlands) – 11,000 km2. There are now >400 documented dead zones in the world and the number and intensity is growing every year.

 

“Dead zones” in the world oceans 2013 (nasa.gov). This is driven by chemical-industrial agriculture.

When the lakes and oceans die, not only fish and whales die off, but also the oxygenation of the air we breathe goes away.

The “dead zone” outside Louisiana. 11,000 km2 of dead ocean.

 

Algal bloom in Lake Eire, the first step in creating a fully dead zone. (http://www.miseagrant.umich.edu/lessons/lessons/by-broad-concept/physical-science/dead-zones/)

Who shat in my water?

The largest source of phosphates and nitrates in surface waters is agricultural “run off”, and on the second place is untreated human domestic sewage. (Therefore, I focus today on the agricultural sources, and I will come back to the humanure problem/solution in another post.)

Synthetic fertilizers in chemical-industrial agriculture is driving the nutrient overload wherever grains are grown. Most of the maize/corn and soy beans in the world are fed to pigs, chicken and cattle, who concentrate these nutrients in their manure.

The manure ends up both in the ground water (especially nitrates), which is the leading source of groundwater contamination, but also in our rivers, lakes and oceans. Most of the nutrients in the oceans thus come from factory meat production.

Global use of synthetic fertilizers. We need to come back to below the level of 1980. (Source UN FAO / Our World in Data.)

In Netherlands, where I live, the situation is peculiar. The meat-and-dairy sector imports animal feed containing 100,000 ton phosphates per year, which is twice as much as the agricultural fields can take. Therefore this excess manure is an important local problem, as well as contributing to the global eutrophication.

Where do the nitrates and phosphates come from?

Nitrates are magicked from thin air. Norsk Hydro/Yara is the biggest global player who uses fossil methane gas to drive the chemical process of converting nitrogen (N2) gas from the atmosphere into ammonia (NH3). The process was invented by Fritz Haber 100 years ago and has been used with ever increasing volumes. (Synthetic nitrates are therefore a problem for CO2 emissions, fossil fuel depletion and eutrophication!)

In classic (organic) agriculture, leguminous plants like clover do this job. Every third year or so, the fields were in fallow, planted with clovers, lupines and other nitrogen fixing plants. (really plants in symbiosis with nitrogen fixing bacteria). This reduces the run-off immensely and is really part of the solution. However, the temptation to use synthetic fertilizers in strong – synthetic fertilizers increase the speed of production.

Phosphates comes almost exclusively from mined rock phosphates. Morocco, China and USA are the leading producers of phosphates, with 70% of the world production. The rocks often contains other elements like cadmium, which leads to pollution at the source, and sometimes to poisoning in the field.

Solutions

Since the largest chunk of nitrates and phosphates come as run-off from chemical-industrial farming, this is where we need to change. First of all we can drastically reduce the area in production by eating less meat.

Secondly, we should as a society stop (or dramatically reduce) using synthetic fertilizers. If we cut it to half, we are back in the safe zone of this planetary boundary.

The third stage is to produce healthy food in a circular way. Agriculture in balance with ecology to strengthen the soils – a.k.a. agro-ecology. There are innovative farmers who build rich soils using animals, trees, bushes and grasses. This has positive effects on other life support systems like biodiversity and the climate system. There is a whole new branch of agriculture called “Carbon Farming”, which produces food and at the same time captures CO2 into the soil and plants. Another advantage of these perennial systems is that they capture nutrient runoff so that it does not end up in the oceans!

 What can I do?

• Eat less meat. Buy organic meat. If you can from a farmer you know.
• Join a political party and push for a transition to organic farming.
• Support local agro-ecology projects. Find an organic nut grower, or join an agro-ecology interest group.
• Grow a garden or plant a fruit-tree in your yard.
• Get the book “The Carbon Farming Solution” by Eric Toensmeier

Get your own copy of this excellent book at Chelseagreen,com or your favourite bookstore.

 

Planetary Boundary 1 – Biodiversity Loss

What is a “Planetary Boundary” and why is it important? Link to the introduction article on this topic. The “Planetary Boundaries” is a model of global biophysical systems that support our life on the planet. For each system, quantitative models and indicator metrics have been developed to indicate the health of the system.

For the biodiversity support system, the choice was to measure this as the extinction rate:  How many species disappear every year? Specifically as “species lost per million of species per year“.
Looking into the fossil record, we can estimate the biodiversity loss over time, and look at what is a sustainable/recoverable extinction rate, leading back to the a stable equilibrium with new species forming.

The Earth always loses some species every year, and new ones are formed through cross-overs and mutations. However, when destruction outpaces species forming, we have a problem.

Santa Helena ear-wig. An example of a recently  extinct species.
Not all species that go extinct are cute like the Dodo.

For each Planetary Boundary, there is an indicator with four numerical values (in brackets the numbers for the biodiversity loss):

1. pre-industrial value of the indicator (loss of 1 species/million species/year)
2. current value (loss of > 100 species/million species/year)
3. safe zone value (try to stay inside this value – marked in green in the figure) (10 species/million species/year)
4. catastrophe value (if we pass this, we are doomed – marked in red in the figure) (100 species/million species/year)

The Five Extinctions in the past

Elizabeth Kolbert has written about the five prehistorical extinctions that we know, and what is going on today. Five times, during the time of advanced life on Earth, the planetary system has been put out of balance with enormous extinctions as a result.

The most famous one was when the large dinosaurs disappeared some 60 million years ago. Science suggests it was an immense asteroid impact in Yucatan, Mexico. Small mammals and birds survived, and we are one of the species who appeared in the aftermath. (Most species that have walked the face of the Earth, or swam in the Sea are extinct. Some in the five great extinctions, some in the dull periods in between. We humans will also go extinct. It typically takes a million years, and since we have been around for 100,000 years or so, we could have quite some time ahead.)

What is special this time is that it is not a volcano or an asteroid driving the extinction. The “natural disaster” is our civilization.
We are the Terminators. We humans drive species into extinction at the same rate as the Yucatan asteroid.

Terminator Actions

We kill our fellow Earth-species, one bite at a time.
A handful we really eat away at, like tigers, but most are collateral damage in the chemo-industrial agriculture. We cut the rich forests and plant corn. We strip the prairies, spray herbicides and plant soy.
We bulldoze the creeks and plant wheat.
Mainly as a feedstock for meat factories.

80% of all agricultural lands are used to produce animal feed. On average on the planet, we eat more than 40 kg meat per person per year. [1]
Most of the feed is produced with pesticides, in devastating monocultures. Most of the feed goes into confined concrete factories where thousands of animals lead a life of misery, until butchering and ending up in our Supermarkets. (Let’s leave the moral point of maltreating animals here. And we will come back to the effluent of meat factories in the installment of Planetary Boundaries of Eutrophication / nitrates and phosphates in the surface waters.)

Meat is a fantastic food product, but we kill ourselves and the planet in our barbaric pork-and-chicken-binge.

State of the Planet

We are losing biodiversity at a staggering rate, especially since the 1970’s and it is most likely completely unnecessary. In a small and intensely industry-agriculturalized country like The Netherlands, there is not much left. 85% of the “Mean Species Abundance” has been lost.

Mean Species Abundance – Netherlands is the green bottom curve… Source is the government agency for environmental monitoring http://www.pbl.nl

 

 

 

 

 

 

Categories of species that we lose. Some disappear much faster than others… ref IUCN 2015.

 

In our travels in Asia we have seen bountiful forests razed and replaced with corn. Forests that have developed for tens of thousands of years, with amazing diversity. Now there are only small pockets left, like this forest in Khao Yai, Thailand:

Khao Yai national park, Thailand. Here they looked at 1 km2 of the forest and found 1200 species of trees! (In Sweden there are <30.)

 

Solutions

Well, it is not really possible to get any extinct species back. Those who are gone are gone, despite the sci-fi stories of the Jurassic Parc. And the endangered species have very few individuals left, so the genetic robustness is far from ideal. We need to limit the damage and allow species to recover and recombine into new combinations, as has always happened.

Therefore, the first step is to reduce the area of growing annual grains for animal feed and plant trees. We need to recreate habitat. Lebensraum. To achieve this, we need to reduce meat consumption, since that is the dominant areal user.
We can go back to the situation of 2001, when average meat consumption was 15% less, as a starting point. In no time, we can rebuild vast areas of refuge (300 million hectares!). If we go down even further to a more healthy diet, we also have plenty of space for lots of healthy vegetable gardens everywhere!

The second step is to stop using agricultural pesticides. Go organic. Last week an article in Science came out that showed that neonicotinoid insecticides are present in 75% of all honey that was sampled from all over the world. The “precision agriculture” with minimal impact is a myth. The pesticides break down slowly and spread through our waters and kill/weaken wherever they come.

My proposal is that we handle chemical industrial agriculture as an “Asbestos-problem”. We in society made a mistake in the 1960’s and we should solve it together. We need to put some tax money in a pot and help farmers to switch over, and strengthen the legal limits.

Toxic maize seeds, grown in the middle of our village Soest, in the Netherlands. The seeds are coated with “Mesurol” which kills earth worms and other soil life. It also makes birds sick so that they leave the seeds in the fields.

The third stage is to produce healthy food in a circular way. Agriculture in balance with ecology to strengthen the soils – a.k.a. agro-ecology. There are innovative farmers who build rich soils using animals, trees, bushes and grasses. They develop new ways to cycle nutrients, where our participation as eaters is just one step of the nutrient dance.
(We are also a kind of earth worms.)

What can I do?

• Eat less meat. Buy organic meat. If you can from a farmer you trust.
• Join a political party and drive policy for a transition to organic farming and creation of wildlife refuges.
• Support local agro-ecology projects. Find an organic nut grower, or join an agro-ecology interest group.
• Grow a garden. (Simplest starting micro-garden: Get some compost and get started right away. Put a handful of garlic cloves in the dirt, and you will have plenty of delicious garlic greens to eat as soon as spring comes.)
• Plant some trees. Try a vegetable tree like the “lettuce tree“!

Xavier San Giorgi, designer and planter of Food Forests. Here we plant hazelnut trees in Houten, Netherlands. Read more on http://foodforestry-development.nl/

Birkenhof Community Supported Agriculture (CSA) vegetable garden in Soest. We are members of this organic garden. Delicious and eco-friendly. Try to find something like this in your neighbourhood.

 

 

 

China is cracking

[ This is a post based on insights from a visit to China earlier this week. I love China, and it breaks my heart to see the poorly-addressed problems. Next week I will post a new item on the Planetary Boundaries.  ]

After two decades of fantastic economic development and hiding of problems, this part of the party is coming to an end. Salaries are dropping and inflation is soaring, leading to net-salary-decreases for those who have jobs, and disaster for those on the side. I visited China earlier this week, and my friends are worried about the future.

The single-party system rules with opaque power and the legal system is often a farce. In the last twenty or so years, people have accepted mis-management and mis-allocation of resources, as long as they have been on the winning team. Most people have had real salary increases of 3-6 percent per year as long as they can remember. Most young professionals earn more than their parents, and the promise was that this would go on forever.
Of course, smart people have been noticing that a lot of the “growth” has come from extreme sacrifices of ecology, justice, health and equality. Sooner or later, someone has to pick up the bill.

Empty, half-built housing block in Shanghai. It looks the same today as in 2012.

One of the most insightful analysts is Peter Navarro, and his excellent but strangely named book “The Coming China Wars” describe eight mega-problems that the Chinese government has chosen to hide instead of to solve. His prediction in 2006 was that the hidden problems of piracy, drugs, pollution, oil, Chinese imperialism, water supply, social unrest and demographics would lead to international conflicts and wars.
(I think it is useful to note that all European countries and the US also suffer from a similar affliction; ignoring structural problems around energy/oil, ecology and money printing. More about that another time. )

In the past decades, local province governments in China have been printing money to support “local businesses” like Geely Motors, Huawei etc, to grow and go global. Indirect subsidies have helped Chinese players to kill international competition in many areas. Local province governments have printed money for real estate development, driving the house market into the skies. During 2016 alone, the house prices increased with 27% in Shanghai [2]. Vegetables and other food items increased by 6%. This is great for those who own lots of property. [5]

One of many “ghost towns” in China, photo Tim Franco. Clearly not the best use of land, energy and natural resources.

However, the same development is on collision course with the reality of those who depend on a salary to live (i.e. most people). Typical white collar salaries for those who stayed in a job increased with 3%, but the new hires got much less. In total, overall white collar salaries dropped with 4% in the last 12 months [1].

House price increase in Shanghai – price increase compared to one year earlier. End of 2016 it was 30%! Illustration from GlobalPropertyGuide.com

 

This is in stark contrast to the previous years, when salaries have been increasing, almost on par with the price hikes in real estate. Now the trends are definitely diverging and many people lose faith in the system. The cracks cannot be hidden any longer.

Therefore, more and more people are protesting the legitimacy of the single-party state [3], even at the peril of their own work and safety. The worst crack downs are right now in the Xinjiang province, but protests are everywhere (but not every day).

Beijing city center protest, earlier this year. Photo from GlobalRiskIndex.com.

I hope that the next step from the government is to increase transparency to improve their legitimacy. If I could have a one-on-one session with President Xi, I would encourage him to strengthen the legal system and encourage independent media. Talk about the immense challenges that the country is facing and invite more people from all over the world to participate in developing solutions. I would urge him to develop agro-ecological solutions and promote frugal hedonism instead of consumerism. (I would encourage all world leaders to do the same, actually…)

Ecological food production from trees – this is the future! Here I taste the Chinese “spring fragrance tree”, also called “onion-tree”, at an agro-ecological test site.

However, the developments in China are rather in the reverse direction. During the last years, lots of semi-independent media have been shut down and international connections (VPNs) have been blocked [4]. This week, Xi Jinping even started to read an allegorical fairytale on the morning China State Radio, in an eerie echo of Chairman Mao.

Let’s do what we can to help our Chinese friends in these difficult times.

 

[1] White collar salary drop http://zhaopin.investorroom.com/2017-07-17-China-White-collar-Average-Salary-Declined-in-the-Second-Quarter-of-2017

[2] China house price history https://www.globalpropertyguide.com/Asia/China/Price-History

[3] Social Unrest in China http://globalriskinsights.com/2017/07/social-unrest-china-threat-regime-legitimacy-economy/

[4] Decline of Independent Journalism in China http://thediplomat.com/2016/01/the-decline-of-independent-journalism-in-china/

[5] Money printing creates ghost cities https://qz.com/98045/chinas-ghost-cities-epitomize-the-problem-with-printing-money-paul-krugman-style/

Planetary Boundaries – heading for a crash

Ten years ago, the Johan Rockström assembled the world’s leading researcher on biophysical systems to map out the Earth systems that are necessary for our civilization. One well known system that is fundamental to our way of life is the ozone layer. With a thinner ozone layer, radiation levels make life much less interesting, and at a certain point disastrous. The result was the concept of the Planetary Boundaries, which was published in the top scientific journal Nature in 2009.

I only got to know about this in 2014, and it has had a major impact on my world view, and guided much of my life since. It was shocking to learn that we threaten our civilization in numerous ways, of which climate change is only one, and that all indicators but one are getting worse every year. In this post, I will try to explain the concept and the conclusions I draw regarding my own life and some speculations for the future.

The Planetary Boundaries is a model of global biophysical systems that support our life on the planet. For each system, quantitative models and indicator metrics have been developed to indicate the health of the system.
For each system, these indicators have four numerical values:

1. pre-industrial value of the indicator
2. current value
3. safe zone value (try to stay inside this value – marked in green in the figure below)
4. catastrophe value (if we pass this, we are doomed – marked in red in the figure)

For some systems, we do not yet have quantitative models, e.g. pesticide/toxic substance use (called “novel entities”) is so complex that we maybe never will have enough knowledge to know how much we can “safely” spray of every chemical. The un-quantified systems are marked with gray in the diagram below.

The most common illustration of the model is a pie-diagram, showing all eleven biophysical systems in one picture:

Updated levels of the “Planetary Boundaries”, Science 2015.

 

Positive example – Ozone layer

Let’s look at the positive example of the ozone layer.
This global system is measured in an obscure metric called “global average of ozone concentration in Dobson Units” and the pre-industrial value was 290 DU. The safe zone is when we reduce the ozone concentration a little bit, but not below 276 DU.
Today we are on 285 DU, so we are in a safe zone, and it is slowly improving. (read more on NASA’s page on this).

Predicted recovery of the ozone layer. Image NASA.

The ozone depletion problem was caused by certain molecules (chlorinated organic compounds) that leaked into the atmosphere, mainly freons in cooling agents and spray-can gases. Fortunately, this was identified on time, and we got together to fix the root cause. The 1987 Montreal protocol banning the use of these chemicals was a huge success and 197 countries worked together to solve the problem. Civilization survived.

The ozone layer story is interesting from many perspectives.
First of all, it shows that it is difficult to address slow systems with large storage/stock.
We are 30 years later, and it is only now starting to improve. The first 20 years after the agreement, the ozone layer was still depleting, due to all the chlorine that was already emitted to the atmosphere. (It will likely take until 2075, almost one hundred years after the Montreal Protocol until the ozone layer is back on pre-industrial levels.)

Another interesting point is that it was a minor part of the economy (cooling agents) that was threatening our civilization in a way that was identified almost by mistake (by Paul Crutzen, who later got the Nobel Prize for his work on atmospheric chemistry).
It was therefore relatively cheap to switch this part of the economy to an alternative technology. That is in stark contrast to the conundrum of fossil fuels as a base for our energy production.

 

The chilling story: Biodiversity loss, phosphate and nitrate eutrophication, erosion, climate change

Five of the biophysical systems have already passed the safe boundary, and they have done it during my lifetime. Three of those are already in the catastrophe area. If we continue like this we know that civilization is toast. The only thing we don’t know is exactly when.

Peculiar and worrying is that the top three catastrophic failure areas are not much discussed in the media:

• Biodiversity loss
• Nitrate eutrophication – nutrient overload in surface waters
• Posphate eutrophication – nutrient overload in surface waters

The other two systems that are on the way to become lethal are:

• Climate change
• Erosion (‘Land Use Change’)

Out of these, only climate change is discussed in the daily news.

I will come back to each of these five systems in future posts, to detail out a bit more about what it means and what I think we should do about it.

What do I care? Après nous le deluge?

I really want to leave a better world behind, or at least as good as I came into it. It is my main moral imperative – I pick up my own trash and I don’t destroy for future generations.

However, now I realize that this is not really the case.

I found the terminator and he is me. The way I live, is wrecking the planet in so many ways. I am a driver of biodiversity loss, of eutrophication and climate change. I only realized this when I already had lived 40 years in a grossly destructive lifestyle with intercontinental travels and a Volkswagen diesel car.
It hurts every time I start the engine.

Most of the biophysical systems were in okay shape when I was born, but have been deteriorating ever since. Most are getting worse every year. Still we don’t talk much about this.

I didn’t even know. I lived in the bliss of ignorance.

How come I did not see it?

I am not sure why I did not realize this before.
I guess that part of it is the brainwash of our culture; encouraging consumption as self-expression and the blind faith in technology and growth. (More about the technofanatsy religion of my youth in another post…)

Another reason is that we have moved the problem out of sight. Here in Western Europe, many environmental indicators have improved in the last thirty years. The Ruhr Gebiet is clean and green, compared to the grayish smokestacks of my youth. The polluting factories that produce all our stuffs have moved to Asia.
Our of sight, out of mind…

A third factor is that only a fringe of society is talking about these problems, while the main stream is focused on jobs, cars, growth and this year’s budget deficit. Even though I briefly was a member of Greenpeace, I never really understood the magnitude and urgency of the problem. Technology would fix it, right? Just around the corner is a breakthrough that will make everything perfect…

Slow awakening

I am slowly facing my own consumerist addiction. (“My name is Göran and I have a problem.”)

More and more I can look at my own behaviour and acknowledge the destructive habits I have. Slowly I learn to make other choices, even though I still have a long way to go.

A fantastic realization is surfacing; that it is possible to live a good life in balance with Nature. The myth of stuff is not true. I meet more and more inspiring people working in tune with the soil, producing healthy food in regenerative systems.  Fantastic pioneers like Wouter van Eck, who is living off a beautiful agroecological system in Groesbeek (a.k.a. Voedselbos Ketelbroek).
Even in Sweden, there is a growing movement of back-to-the-landers like David Jonstad. And in our town Soest, Joop and Corrine Wantenaar use their diverse smallholding to improve the health of their land. They improve the state of the planetary boundaries, by working in tune with ecology.

Inspiration to take the next step, and the next one after that.

Wouter van Eck on his “Food Forest”, with guest John D. Liu, 2016.

Farmer Joop in our town, the first (and until today the only) organic farmer here.

 

 

Klarien Klingen and Janneke Steenmans, inspiring young Dutch agroecological farmers.

The worlds biggest swindle?

Today I walked by the ECB building in Frankfurt-am-Main.
Behind the glass facade, something remarkable is going on.
They are printing money like crazy. 2 billion euro every day.
Not paper money (usually used by criminals), but real shiny electronic euros.

ECB main office in Frankfurt-am-Main (foto http://www.EurActive.com)

Corporations across Europe get to borrow this money at a below-inflation interest rate, and can purchase other companies and make all kinds of “investments” and show great profits. No wonder the stock markets are going well, and a small group of people get very rich.

I do not get to borrow money on these terms. Do you?

Therefore, this scheme gives a very large advantage to a very small group of people.

Why do we let this happen?

To put things into perspective, this scheme has been going on since May 2015, almost 30 months x 60 billion euro = 1800 billion euro.
This is as much money as existed in the euro scheme before they started with this “QE” program. (And twice as many euros as there were in 2006.)
The euro has doubled in numbers, but the underlying economy is essentially the same.
Therefore, in my simple logic, a euro is only worth half as much now compared to two years ago.
(We only see it in the domains where the richest compete – luxury apartments, fine cars, stocks, art is exploding.)

Eurosystem balance sheet. Corporate loans are the top part (purple). This graph does not include all of 2017. Today the purple part alone is 2400 billion euro. (graph from ecb.eu)

Imagine that we are a group of people in a village, each of which owns one gold coin.  We can barter in our town and after some time, we know how much stuff is worth. Suddenly one of the persons has as many gold coins as all the others together. He could then proceed to buy everything in the village, or the prices will go up to prevent this from happening.

My guess is that the corporations will use the money to buy all assets they can (shares, land, bonds), which drives up the price for everybody, and a small group of individuals will get super rich. Slowlythe prices will go up for all kinds of assets in due time. On the time-scale of pensions, half the value is now gone.

That is, if they stop the printing and just let the outstanding loans roll over indefinitely. However, there is no sign even for that. Last week Mario Draghi was telling the press that “the market needs support” and the printing continues at full speed.

Reduction of value during 30 years, we can do it in 30 months! (photo https://en.wikipedia.org/wiki/Roman_currency)

It is eerily similar to the devaluation of the Roman silver dinars during the fall of the empire. Emperors put year-on-year more tin in the coins, until the coins were just silver coated lumps after thirty years. But in a time of enterprise server stacks – we can do it in a matter of months.

Do I miss something here?

Why do we let this happen?

Culture and Conflicts Training

Conflict management based on values and norms is one of my passions. In the last few years, I have had the privilege to lead training workshops at some of the Masters programmes at Chalmers University of Technology. Last week, I was back at Chalmers, working with students from the whole world, talking about assumptions, values and norms, see presentation attached to this post.

In most places where I have worked in the past, the limiting factor for success has been communication skills and ability to identify and handle conflicts. These are topics that most Engineers are afraid to talk about, especially when we come to feelings, needs and personal values. Fortunately, there are initiatives to include this in the curriculum, and these workshops are an example of that.

Students playing the “Barnga” card game to illustrate norm conflicts. Anger and confusion and finally laughter are part of the mix.

Another group, in the middle of the resolution of the “Barnga” card game.

I often use the “Barnga” card game as an experience exercise to feel inside how norm conflicts play out. It is a brilliantly designed game by Thiagi, and you can get a copy on Amazon here.

The MSc programs are much more international now compared to when I went to Chalmers University in the last century, which is really a big advantage for the students who realize the value of this. The international students generally have more work experience and often in multiple countries. It is a gold mine of experiences that the rest of the group can learn from.

Here is the presentation material that I used in the workshop:

Workshop Values and International Collaboration – 2017-08-29 – version 1.1

If you are interested in more anecdotes about culture and conflicts, check out my book “Deliver”.

The Seductive Power of Secrets

In one of my first meetings when I was setting up my department in China I had a revealing experience – a glimpse of the political power play that underlies office operations here.
We were three colleagues around the table, H, department head of another department inside the R&D center, S., one of my engineers, and me. One of the topics was an analysis activity that H.s team would start doing. Some of my colleagues in Europe had been doing that for some time and I had some documents describing the process. I said that I would email the documents after the meeting.

Our secret (photo by Amanda Smith)

After the meeting S. comes to me and says carefully: “Don’t send the files.”
Seeing my surprise, he continues; “It is better for us if we keep this secret. Information that only we have makes us stronger. Their department started before we started, so they have some advantage. Our department will have more foreigners, so that is our advantage. Share only a little bit at a time.”

Being Swedish and brought up in a religious faith in transparency and sharing, I almost exploded, but managed to count to ten before responding.
-“Well S. – thank you very much for sharing your thoughts. Please always do. However, this time I decided to do it differently.” Then I told him why I thought it wise to share the material and also to keep my promise. Later we could outsource some of the less interesting jobs to that team because we trained them.

I am convinced that collaboration has more “upside” than “downside” – more advantages than disadvantages. On the long run, you gain more by sharing than by hiding. It is possible everywhere to build a culture of trust to enable openness and teamwork. However, in China, most of the education system is built on competition and there is no advantage of help anyone else ever. I guess that explains why it is unusual and unfamiliar to share.

 

Three years later, S. is a champion of sharing. He has had the opportunity to feel the strength of teamwork. He has experienced the benefits of being open and has transformed into a role model for the junior engineers in the team. Of course there is always some politicking and positioning in any office, but I have never seen it so clear as in China. It has helped me to be more aware of the games played elsewhere, so I smell it easier these days. And now I know that it is possible to push it aside and search for sustainable synergies.

My wise brother Hugo says that hiding information is a left-over thinking from the “Stuff-society” of scarcity. If I give you one of my things, I have less and you have more. It is a zero-sum game. Classic win-lose thinking.

Today, we live in the information/knowledge/idea society. If I give you one some knowledge, I still have the same as I had, but you have more. There is a net gain for us as a system. Sharing is neutral-win, with a large chance of reciprocity, that next time you will share back, to a win-neutral situation. All together this is win-win.

Brexit – the people have spoken. And that is good.

I believe in democracy. Democracy (as in representative parlaments and direct-vote referenda) is a slow but resilient way to balance interests in society. The key success factor of the system is transparency, so that consequences are visible and understandable afterwards.

Therefore, whenever a stupid decision is taken, and the consequences lead to worse conditions for enough people, there is always a possibility for people to change their minds and vote for something else.

One example is people usually get fed up with a certain party in power, and after a few terms decide to ask someone else to run the show. [example of US presidents, who alternate parties every 8-12 years since 1945 ].

In democratic societies today, we have a challenge when it comes to the quality of the feedback. The truth is often less exciting than gossip and rumors. Powerful interests push their own stories to move the popular opinion. There are less and less journalists and more and more lobbyists.
We need publicly funded institutions who can deliver unbiased and understandable information for the general public and especially for schools.

Let’s work together to improve the information quality and understandability. We need people like Hans Rosling, who can transform difficult datasets into enjoyable and understandable infographics. In Holland, where I now live, there is e.g. an excellent “Compendium for the Environment”.

Let’s see what the British citizens vote next time around. If the EU exists by then. Otherwise, let’s build something better.

(Remember that the British citizens voted to join the EU in 1975.)

Lean and Sustainability

I love Lean thinking because it is a key tool for sustainability.
Reducing waste, doing more with less, focussing on value and Values, improving communication and collaboration, learning from observation and continuously improving our methods and increasing our knowledge. [1]

All of this is what we need to do on a broader scale in society.
The principles and the tools from the “lean toolbox” can be used in all parts of the greater community. Of course, every tool and technology can be used for multiple purposes. The tool itself has no moral a-priori goodness/badness. (A hammer can be used to build a house or to kill a neighbour.) The choice is ours how to use the tools – which is why we have to start with values.

The most convincing view on sustainability that I have encountered is called “Permaculture”. It is a philosophy based on the three core ethics: Earth Care, People Care and Fair Share. There is a lot written on the topic, my favourite is a book by one of the founders of the Permaculture movement, David Holmgren [1].

Permaculture ethics (Earth care, people care, fair share), surrounded by the 12 principles. [1]

In short, the objective of permaculture is to build a society that can continue forever, preferably increasing natural and spiritual wealth over time. This is no small feat, considering how much of current civilization is built on destructive patterns and non-sustainable resource extraction.
There are technological hurdles, but also sociological and psychological challenges to move in this direction.

I believe that Lean methods can help us verbalize what we value and start moving in that direction. We can map the value stream in what we are doing and find ways of strengthening the value-adding activities.
Lean methods help us to identify practices and processes that are destructive and the lean methods help us to reduce the waste.

Maybe you wonder: “but who is the Customer, who is so central in Lean thinking?”
(The “customer” as an agent is used a lot in Lean methods to quantify what is the important output or value of a process.[3])
I believe that the customer is you.

It is you who have to feel deep in your heart what you want that your life should deliver.
I endorse the permaculture ethics of Earth Care (leave the environment better than when you came), People Care (help people grow and flourish) and Fair Share (share the surplus, don’t hoard), as guiding values. Does this activity improve the state of the Earth? Does it improve the connectedness and knowledge of the People? Does it distribute the accumulated wealth?

Viewing society and corporations through this lens helps us to develop products that improve the world. We can use all our creativity to invent new ways of working together to grow people instead of using them up as “human resources”. We can develop new profit sharing mechanisms that allow companies and organizations to flourish for longer and longer.

Let’s lean the world and build a sustainable civilization.

Goran

Published on 18 August 2014 – Overshoot Day [6].
Until today we have used up all resources that can be sustainably produced during 2014. Every day from now until the end of the year we are using up resources that leave the Earth a poorer place than when we came.
A sad, sad situation for Earth Care.

ps.
Of course it is hard. We have a car, even though we often go by bike to work. I burn plenty of gas to heat our house, even though I would like to grow the wood instead. I have conflict minerals in my mobile phone.
However, by looking at solutions and using lean tools, we can work together to find better solutions, one breath at a time. I do not know any better way. Do you?

pps.
Isn’t it ironic that the lean methodologies were developed by the world’s largest car maker Toyota?

Read more:
[1] Lean Thinking & The Machine that Changed the World – Womack and Jones
[2] Permaculture – Principles and Pathways beyond Sustainability, David Holmgren
[3] The Toyota Way – Jeffrey Liker
[4] Sepp Holzer’s Permaculture – Sepp Holzer
[5] Gaia’s Garden – Toby Hemenway
[6] Overshoot Day – link

Lake Baikal – a Unesco Natural Heritage.

Efficiency vs. Fairness – an interesting dilemma

Sometimes, there is a tension between the values of fairness vs. efficiency. It is a common theme in Dilbert, where well-intentioned company policy leads to something ridiculous in a particular situation. We all encounter it from time to time, when we struggle to strike the right balance between same-for-all and right-for-this-situation.

This is an aspect of the cultural dimension that Fons Trompenaars calls “Universalism/Particularism” (or What is more important, rules or relationships/the specifics of the situation?). I believe that each individual’s work culture to a large extent is based on the relative importance of values.

Some people value the rule and the principle of fairness more – and are willing to accept a negative outcome for some specific cases. Other people truly value the individual particular situation more – therefore they feel that rules are there to guide but not to stifle judgement and wisdom.

On a train ride this week, we hit into this dilemma when we took the 263 train (Beijing->Ulaan Baatar).  The 16 wagon train was almost empty. According to our wagon attendant, less than 30 passengers. This is supposedly typical for this season. The train is full in July, but the rest of the year there are plenty of empty berths. The lowest occupancy was last year in December when they drove once the whole way from Beijing to UB with only five passengers. More tourists do go the other way, but even in that direction it is quite empty in the train. Sometimes more personnel than passengers. This time, we were five passengers in our whole wagon.

Our wagon attendant explained that:  “The agreement between the governments mandated that they would always drive 15 sleeper wagons and one restaurant wagon, twice per week in the winter and three times in the summer. And since it is an international agreement – it is important to be fair and honor the agreement.”

Lifting the wagons to change the boogies.

We spent 4 hours to change boogies (wheelsets) on all 15 sleeping wagons at the border crossing between China and Mongolia. We could have used one or two wagons, and be finished in 30 minutes.

The reason for changing wheelsets is due to the rail gauge – the distance between the two rails. The railway connection between Ulaan Baatar was built in 1956, during a time when the Soviet Union had a strong presence in Mongolia. Therefore, the train tracks in Mongolia follow the Russian standard, which is wider than the Chinese standard. It was impressive and weird to see the wagons lifted up and the boogies rolled away to be replaced with a slightly different width. This boogie dance went on for hours, in the middle of the night – and we were waiting for our passports to be back from the Chinese border police. It was indeed a relief when the adjustments were completed, the passports retrieved and we could glide away into the Mongolian night to cross the Gobi Desert.

  It is an amazing waste of time and energy to do this boogie-changing. Especially for all the wagons that are almost empty. I was crying deep inside my passionate Lean-heart to see all these people doing useless work with excellent execution. There are so many important value-adding jobs out there!

Do you encounter dilemma’s of fairness vs efficiency in your job?

How do you deal with the dilemma of fairness vs efficiency in your organization?

What legends do you have about heroes in the past who broke corporate guidelines to do the right thing?

Deliver to Spec – an ethical dilemma

A few years back, I worked in an American multinational corporation in the automotive electronics business. We developed embedded software for cars, as a consultancy for the OEMs (Volvo, Saab, Jaguar,…). In this explosion of electrification, it was a playground to put processors in
every piece of plastic possible.

All the embedded computers create immense problems with reliability.

I ran into an ethical dilemma for consultants – the balance between delivering what was agreed vs. what they need. My company’s interest was to deliver quickly according to the agreed specification, and then sell extra-hours. I felt the pressure to implement features that were in some way faulty, so that we could close the fix-price project and then start charging for additional work. Nobody would admit this, but it was something that made me quite uncomfortable. We were taking advantage of the car-makers lack of competence in computers and software, to ensure short-term profits on our side.

The project managers inside the consultancy were heroes when they closed projects fast – and would be celebrated for their efficacy. Even when the software was crap.

It is a genuine conflict of interests, where one company has a long-term need for robustness and a great product, and the other company does not have to care. I found this corrosive for the morale, and a typical example of win-lose relationship. On the long term, everybody loses.

I think that this problem has many facets. An important one was how success was measured inside the consultancy company. Even though top management was talking about long-term partnerships and quality and integrity, that was not what was celebrated. That was not measured.
And you get what you measure, as Deming used to say [1].

There is a lot of good thinking needed to find new ways of running businesses to encourage mutual long-term benefits. How can you make your customers more successful – and – at the same time make a sustainable profit?

How do you build long term win-win relationships with your customers?

[1] W. Edwards Deming – “Out of the Crisis”

Scott Adams (c) – shares how it feels to deliver rubbish.