Famine and The Economies of Scale

4 11 2010

The bigger the spread, the more you can make. The more that you create, the cheaper you can sell it. The more there is, the better it is for everyone. These are the kind of business paradigms that are deceptively difficult to prove, but it hasn’t stopped many enterprises from basing their business models on it. Look at Henry Ford. By creating an assembly line model, his ability to build more cars grew exponentially. In turn, this meant that they could be sold cheaper, and more people could afford one. This allowed the Automobile industry to grow, and to fragment in order to satisfy every possible niche of the product. At face value, it would appear that there wasn’t a model that couldn’t benefit from this, but now we are seeing the folly of this plan, although it has taken 70 years.

In 1945, the Green Revolution subsidized peasants in developing countries to abandon what were looked at as medieval farming methods of small plots full of diverse indigenous crops. In its place the experts saw vast fields of single crops that were bred for very high yields. The fact these crops were not native to the area in question was easily solved by massive doses of pesticides and fertilizers. This system was already in place in the US prairies, and the early results were rocketing everyone’s profits, choices, and had even grown the sure-fire business success story – the addition of invented jobs in single use industries to cater to the growth in demand. As long as many more people were making money from one activity, everything in the Universe was as it should be. Well, two generations later things have changed for the worse – a nightmare scenario with many misunderstood effects.

Of course, we now know that the farming method best suited to long term sustainability is small operations with a rotation of crops and a system of fallowing where sections of growing land lay unused for a while. There isn’t much money to be made, but there is definitely a living that goes on as long as the farmer’s descendants want it. The ‘Frankenstein’ system we have now isn’t just not achieving this growth, it is actually destroying the ground conditions that are required to grow anything.

Pests have now grown resistant to the pesticides that have killed their natural foes. Many pests are growing larger, laying more eggs, and exploding future generations to numbers that have never been seen before. Moving en masse across borders, they now threaten entire countries’ harvests. Coupled with this is the destruction of natural soil that is on the verge of simply stopping producing the chemicals required to grow anything. As this happens across the Western World, we are looking at all the basic food groups we are used to seeing as simply ending.

Of course, we could simply ‘turn Asian’, and do what the rest of the World is doing and base our diets on Rice, but this isn’t going to happen. Combined with soil erosion, the brown Planthopper has decimated rice crops in Vietnam, China, and Malaysia already this decade, and is threatening to move into Thailand – the World’s largest rice producer. If the thought of South East Asian famine isn’t horrific enough for us in the West, think about the people that have learned about soil erosion in the past. Like the soil itself, they went away and never came back: Mayans, Greeks, Romans, and the inhabitants of Easter Island. This business model has to be sopped in farming, and people need a way to live as we change farming practices globally – Combine this with a warming planet, and we are in deep dirt.


Left or Right – Does it Matter anymore?

20 10 2010

During what is now known as the Golden Decade of the 1990’s (And didn’t life appear tough, even then?), we all had fun spending money that we didn’t have. As life appeared to be something that was too good to ever end – something that certain bankers took way too seriously – I always thought it strange that the U.S. voted in a right-wing government, when the rest of the World were falling over themselves to vote into power a more Social Democrat administration. Looking around the same World now, President Obama must feel very lonely. As everyone else in the G8 and beyond have entrusted fiscal Conservatives to hold on to what is left of their country’s Purse Strings, only the States have installed a Left wing government. Why this mismatch? Is America ahead of, or behind, the curve?

While the rest of the World appeared to ‘get it’ about having so much loose money slopping about in the global economy, and preferred governments to give some of it away to worthy causes like the elderly and the poor, the US went another way. Of course the Clinton’s second term in power was nothing about policy, and more to do with a heavily reported smear campaign based on morals. This four-year witch-hunt was enough to make Americans look at themselves a little more closely, and make the 2000 election almost too close to call. As this was closely followed by the soap opera of Florida’s hanging chads, and other misdirection tactics, a change in fiscal policy wasn’t really the main voting urge. But are voters really that prescient, and can we look at a planetary herd mentality, or is something else at play, here?

Over the decade 1995-2005, the Conservatives in any Western country were looking at their second Parliament in opposition, if not more. They tried to shift their own values to the left in order to capture the centre of the vote, and steal a march on the governing Socialists. In reply, Governments all over the World moved their rhetoric to their oppositions more usual ground to show that they understood disaffected voters that couldn’t stand to see their party’s shifting ground. By the time the global economic meltdown added another 8 years to our working lives, we all saw an Opposition Party that had been talking to our needs for years, and were also fiscally responsible enough to tell us how we were going to face the next decade of deprivation. We do, after all, need to be told what we have to do.

Of course, the States voting block have come through so much more. Their last 2 administrations possible began with a possible Coup D’etat, an engineered terrorist attack that led to an unwanted war, and finished with the failure of an economic experiment that the rest of the World is paying for, while those responsible for it have actually been rewarded with voter money. No wonder they were in the mood for a drastic change. The question is, will they remain with their new bold choice, or will the Democrats (like the rest of the World’s Left wing parties), change their tune, and try to capture ‘the middle’. If the latter is true, there is no more Left and Right. Just vote the buggers out that are in power, and try the other guys – even if they are saying the same things.

Say Goodbye tothe Suburbs.

8 10 2010

Have you noticed that we are in the middle of another almighty shift in human movement? We all learned in school about the Industrial Revolution, and how it forced the end of the Agrarian way of life for Millions in the West. You got the vision of millions of people being herded in never ending bedraggled columns toward the ‘dark, satanic mills’ of the soot-covered cities. The City where I was born was like that. Prior to the 1850’s, it was a few canal locks on top of a hill whose only claim to fame was that the valleys to its west used to be a country hunting estate for Henry VIII.

Of course, once factories started to require freight, canals became the preferred method of transportation, and this small town became a city in a matter of months, apparently.Growing up, I knew I lived in an automobile manufacturing city close to Europe’s largest Freeway exchange, with a large ‘green belt’ around it, just a few miles outside the suburbs where my family moved to – an actual 20 minute bus ride from downtown, how exotic!

These days I live in a city that has shrugged off it’s Lumber past for the most part, and has become part of what the more modern thinkers amongst us describe as a global cyber-network, more attached to a city down the coast in a different country than it is to it’s own nation’s capital. Among the most exciting real estate developments in recent years has been the transformation of a run down warehouse district (A relic of the port city we always were, but that has now moved to a more easily managed part of town), into a hip, young, cyber-entrepreneur type of clichéd downtown ghetto: Restaurants and bars that are way too expensive for what they sell, a Starbucks every ninety feet – that kind of thing.

This major shift in the migration habits of the current generation is due to the Internet. Now, kids are learning how to navigate spaces much bigger than the direct world they will graduate into. They are then using this knowledge to run their own businesses from a laptop and a cell phone, so they don’t need space to make money. With post-boom generations becoming smaller, there is no pressure to marry and have their own children, so the entire edifice of satellite cities, bedroom communities and the daily commute will be over in the next decade. Our current view of 2-up, 2-down semis in the suburbs will be the same as we now look at 4 story, 5 bedroom, and 4 bath Victorian mansions. OK for some, but way over the needs of most of us. As oil prices go up, and the automobile becomes too expensive to run, what will happen to the suburbs?

Of course, if they become too expensive to run by their city councils, eventually they will be swallowed up by their nearest cities – the very ones that birthed them in the 70’s. Whole neighbourhoods will be bulldozed to cut down on costs, and to save them from criminal activity. Eventually, they will be returned to farmland to promote local produce manufacture in the new, warmer climate.

In other words, the entire suburb culture in the 2040’s, could well look very much like it did in the 1950’s: A One-Century experiment in growth for one generation that was shown to work, but with many flaws that greed alone couldn’t answer.

The Missing Superpower

7 09 2010

Considering the latest economic news from the US, one would think that it’s days as the Planet’s only Superpower has long gone. Over 9 Million people out of work, 1 in 10 residential properties either in foreclosure, or under water, so far in debt that it is only a mater of time until they are bankrupt, and a loss of respect from the rest of the World. But if we have become used to having one or two major powers that treat the World as their own marketplace, or a field where they can impose their own political ideas, where can we look for leadership? Surprisingly, the European Union isn’t that power. Why?

One would think that the Herculean tasks of pulling together 27 different countries into one economic union, and finding common ground among different countries, currencies, political ideas, languages, and small scale territorial wars, that the hard work was already done. Considering NATO is losing it’s standing as a global peace keeping force, and NAFTA is only working on paper, isn’t it a surprise that we don’t here more about The United States of Europe? The union has more money, and more people than the US, and a longer, more rounded history of waging war and making peace, but the area is still looked at as a collection of ‘states’, rather than one body outside of the everyday economic one.

Even though political and economic decisions are made in Brussels, it is still difficult for the U.S.’s current customers to find a way there, and sit down with someone to discuss trade and employment. Surprisingly, it is simply because there is always more than one person to talk to, not ‘The President’ that would give a cohesive picture of unity that The States already have.

Considering that the Union has spent over half a century talking about (and for the most part succeeding at) bringing everyone together under one all encompassing political and economic system, why is it so difficult to take the one final step and put a parliament and a leader in pace to conduct business through. European nations have tried to bring the continent together before, and have failed: Napoleon and Hitler tried to bring a single old idea to countries, but it is Europe’s collection of differences have always fought against Tyranny, even if it was to bring democracy to those tyrannies. It appears that the thing keeping the Union together is the awareness of those differences among it’s membership. How can Europeans keep that passion about their own country, and transfer it to a Nation less Union? Even if they have gotten rid of many of the borders that split the continent up, they still require celebrating their differences.

Perhaps this is the next model of a Superpower. No longer one-country exporting their own ideals on everyone else, but a business-only loose union of nations working together to solve it’s own problems? Would such a model be any good to the rest of the world? Surely if a country ants to do business with this Super Market, they would have to run their own country a certain way? Perhaps the union will keep on growing outside of Europe: Romania and Turkey are next perhaps the Middle-East is next?

Perhaps it is not Europe that is missing, it is up to us to look at Super Powers as completely different than the model we have become used to.

Has the Chinese century started yet?

19 08 2010

Surprisingly quickly we have gone from looking at China as some evil purveyor of shoddy goods to the rest of the World, to anxiously regarding it as the economic saviour of the planets economies. Just a handful of years after Tiannamen Square and the global outcry as to its violent outcome, everyone is now counting on the country to save us all. How are they going to do it? By becoming history’s greatest export based economy? Because even though my economics education ended a few decades ago, I cannot help but wonder who is going to buy their stuff, when we don’t have the money to do so? In fact, all those years ago, my fellow students and I were bad mouthing another country for doing much the same thing – Japan. One of the favourite jokes going around at the time was that ‘The English may make the best lovers in the World (Well, it was our race!), but the Japanese made them better, faster, and cheaper.’

The more I think of these two nations and their economies, the more they become similar, too. Although the Japanese have a recent history of innovation and invention that appears to be missing in the Red Empire, I cannot help but think that this current Far Eastern global saviour is nothing more that the Japanese Miracle turned out to be – A bubble economy. Both inside and outside the country, the Chinese way of life is changing at almost head-spinning speed, and these changes will have an effect for all of us if we continue to spend our last few bucks on their exports.

As their economy grows, more workers are being turned from farmers to assembly line workers. As the communications revolution spreads, and cannot help but find it’s ways into the nooks and crannies of everyday Beijing life, more and more educated offspring will find out what is happening everywhere else, and demand more. There have already been protests concerning work being shipped offshore to Bangladesh, where labour is cheaper. In a world where being connected to anyone, anytime is becoming a more vital way of life, how long will it be before today’s children demand to be part of a global community, and want what everyone else has. In other words, exactly what happened to Japan: Twenty years isn’t a log time when you are looking at macro-economic trends, but that boom of the early nineties has turned into a stagnant economy for more than half of that time.

Every country prides itself on being able to honour their elderly by keeping them alive and fitter, longer. The Japanese have done this so well, that those over retirement age and collecting benefits forever are over a quarter of the country and growing. In the Western world, the aged are growing in number, and when you look at the US, combined with the loss of 8.5 million jobs over the last two years, and one in twenty residential properties being ether in foreclosure or underwater, we are close to saturation point already and the baby boom has only just started to cease sending taxes to their Government.

Is this the start to the Chinese Century? A race to the bottom of the lowest common denominator of price and value in manufacturing, and a rise in those taking from the economy instead of giving to it? Will they start to hide their money under the mattress instead of trusting banks, like we have? The danger of looking to them as an economic exporter is that we won’t be able to buy from them very soon, and they will have to make changes to their own exchange rates in order to look after their own – even as their own tax payers demand more freedoms.

What is your Nationality worth ?

28 07 2010

I can be minutes away from writing a blog, and still have no idea what it’s going to be about – then Serendipity runs you down like a truck, and it’s obvious. I wanted to comment on a piece that told of how many Canadians were buying US real estate, what with the sudden swing in financial fortunes within the two countries now leading to a point where the great mortgage bubble burst will lead to more US houses being owned by ‘foreigners’, and what that is going to do to the remainder of the economy. Then came Lord Black of Crossharbour.

Now that Conrad Black may have found the legal loophole to escape US justice, it appears that he wants to come back to Canada – a strange decision, considering that he gave up his Canadian citizenship in order to get his ‘gong’ from the Queen. As a British passport holder that has been living here for over 20 years, I say: “Screw Him”. We weren’t good enough then, we shouldn’t be good enough, now (One reason that I have never given up my British passport – I may have to crawl back with my tail between my legs someday). Of course, he is also a convicted felon, so our laws don’t allow him to visit – even if it is just to sell his Toronto mansion, in order to pick up a short-sale foreclosed deal in Phoenix!

But, then I began questioning what is a passport, anyway? In the modern world, where we are all connected in some way to the rest of the planet, does it really matter anymore? Here are some weird facts and the usual personal conclusions.

Three Million Canadians now live outside the country. In fact Canadians make up 10% of Hong Kong’s population. 40% of Canadians donate to charities based outside the country, and in survey after survey, Canadians rate global issues as the most important to them: Global Warming, and International Social Justice, and 20% send money overseas monthly for their elderly relatives. Does this mean that we have become a ‘flag of convenience’ for all and sundry? Perhaps we are the most forward thinking country. We embrace World travel and a global education through experience. We know that we are no longer off the leash from our families elsewhere in the World with the Internet and cell phones giving us no excuse not to keep in touch.

Of course the major difference between us and other countries is the fact that we are part of the mosaic, not the melting pot. Canada wants us to remain both who we were, and who we are – or vice versa. If immigrants move here for escape, they soon settle down, have children and stay. Even if their children move away when they are older, Mom and Dad usually remain here instead of going back to the old country. Perhaps the argument that Immigrants are welcome both here, and in other countries makes us part of who we are: Unless, of course, you decide to give up your citizenship. That should be irreversible – So long Conrad, and thanks for the newspapers.

A Fishy Story

14 07 2010

A surprise night out last Friday, with my darling, led to a sudden moment of realisation. I had better eat some fish. This isn’t exactly an earth-shattering decision for me. My darling doesn’t like the stuff, so hasn’t added too many fish recipes to her mental cookery book. This means that whenever we pay someone else to cook something, I am drawn to the ocean-based life forms, because I haven’t seen anything like that on a plate for a while. This time, though, my thoughts were a little darker. I suddenly thought that I should eat it because it could only be a matter of months before it will be too expensive to eat, and in a few years, there won’t be any fish on the menu anywhere.

I have been living up here since the Canadians fished the Grand Banks empty of Cod, so this nightmare scenario has been around for almost a generation, now, but this is way different, friends: This is no fish, anywhere, to eat. Basically the lessons we learned back in the early nineties haven’t been learned and – in the best traditions of our destructive genus – we have grown the killing to cover the earth. My thanks to Oceana for the following facts and figures:

Since the late 1980’s, the worldwide catch of fish has been declining. This is the first time that this has ever happened – and they mean ever. The stocks of ‘big’ fish like Sharks, Marlin, and Tuna are 90% lower than 50 years ago. That’s basically the time that Beatlemania hit. Not only Cod have been fished to the verge of extinction, one third of the planet’s fisheries have now collapsed from over fishing. We could lose the other two thirds within a matter of decades if current trends continue. This is more than less Pumpkin Salmon on our restaurant plates. We all know that this is another case of food security, economic survival, and planetary health.

In an attempt to find anything that is still swimming down there, we are now dredging the ocean floor to get whatever can still flop on the deck. These bottom trawls are using nets that could cover the mainland US in size, when added together for a year of plunder. They are damaging rock outcrops and coral where the smaller fish grow up to be the large ones the fishermen are looking for. These nets catch everything, whether it is wanted or not, so ‘by catch’ results are full of birds, turtles, mammals and fish not fit to eat that are tossed back dead, or dying.

So how are we facing the situation of turning the World’s seas into deserts? We are subsiding the fishing industry to allow this to continue, to the tune of about $20 Billion worldwide. That’s you and me hurrying the process along. Considering the entire global catch is worth about $80 Billion, this is a quarter of the amount the industry makes! As a business model, this ranks alongside the Bank Bailout.

Have we reached the end? No – it’s the end of the beginning, but it’s time we collared our decision makers and told then that we have to stop. It’s too late to alter what the industry is doing, so before we rape another sector of the global food chain, and force millions of workers in the industry to go hungry, it’s time for the politicians to get involved and stop this.

This is more than our beer battered fish and chips on the odd occasion – it is another step toward our global extinction, and taking our entire planet with us.