By CoyotePrime (Reporter)
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 ”The Rule of the Downside”
by Bill Bonner

“Energy
is a good thing. But it is as obedient to the law of Declining Marginal
Utility as everything else. The point is obvious, but I’ll prove it
anyway. The real question on the table in this section is this: does it
also obey the Rule of The Downside? Do you ever reach the point where
further inputs of energy are actually negative…or even disastrous? Is
there such a thing as too much energy?

In anticipation of the discussion, here are four observations:

1. Energy cannot be divorced from how it is used
2. The more energy resources come under government control, the more unproductive the system becomes
3. Government is subject to the Rule of the Downside too
4. The debt-drenched economies of today’s developed countries are already on the Downside

After
1943, Germany’s investment of more energy in the war effort was not
only a waste — it was almost pure downside. Of Germany’s 5.5 million war
deaths, most came after the war was effectively lost. The payoff from
every ounce of strength, resources and energy devoted to the Wehrmacht
after the battles of Stalingrad, North Africa, and the defection of its
Italian ally, was needless death and destruction — leaving Germans
poorer and fewer than they had been before.

But what
about energy itself? Typically, it is the lack of energy, not the
surplus of it, that is blamed for disasters. Some military historians,
for example, claim that it was a lack of energy that crippled and
distorted the German war effort from the very beginning. Instead of
committing all his forces to the assault on Moscow, Hitler was forced to
divert a large part of his army to the South, where his armies would
seize and protect oil supplies in the Ukraine. Japanese military
historians also tend to give “too little” as an explanation for their
failures. At the Battle of Midway, for example, their ships literally
ran out of fuel. After the battle, the Japanese were doomed. Their
energy came from Indonesia. Without control of the Pacific they could
not protect their supply lines.

It is also typical for
archeologists and historians to blame the collapse of ancient
civilizations on too little, rather than too much. The Easter Island
civilization, for example, is thought to have perished because the
natives ran out of trees. They used the wood for energy. When it was
gone, they were out of luck. The trees are also credited with helping to
keep the environment in good working order. This analysis has been
leveled at Ancient Greek civilization too. The Greeks used up the wood
and brought in goats, which ate the young saplings. After a few hundred
years, the Greek islands were barren.

Should we call
this an ecological catastrophe or an energy shortage? Can energy be
separated from the civilization that uses it? If that society is short
on water, it must use more energy to quench its thirst. If it is short
on farmland, it must work harder (use more energy) to increase yields
per acre. If it is short on oil, it must devote more of its energy — as
Japan and Germany did in WWII — to getting it.

The
abundance or shortage of energy, in itself, is meaningless. The rich
deposits of uranium under their feet did the ancient Athabascan tribes
of Canada no more good than the huge lakes of oil under the feet of Arab
Bedouins. It is not so much the availability of energy that counts, but
what you can do with it.

In the case of the Classic
Maya, the civilization seems to have risen and fallen along with the
rainfall. Scientists studied stalagmites from a cave in Belize and were
able to track rainfall on an annual basis 1500 years ago. Comparing the
rainfall record to the traces left by the civilization they found that
building increased in the wetter periods and decreased when the climate
turned dryer. Between 1020 and 1110 a severe drought hit southern
Belize, finishing off what remained of the Classic Maya in the region.
Here too, on the surface, you would say that ‘too little’ water marked
the decline. But you could turn that around; the wetter years were
perhaps ‘too wet,’ since they encouraged growth that couldn’t be
sustained in the inevitable dry years.

Jeffrey Sachs,
director of the Earth Institute at Columbia, would argue that using too
much energy causes growth, which leads to an environmental
disaster…which becomes a disaster for the civilization. Many people
believe the world already uses too much fossil fuel, causing the heavens
to fill up with noxious ‘greenhouse gases’ and the polar ice caps to
melt. They think the downside of all this energy use will begin soon, or
maybe it already has. For the moment, however, ‘global warming’ or
‘global climate change’ is just an hypothesis which seems a lot more
alarming in the summer time than in the winter. For all we know, the
effect of human activity on the world’s climate will be an improvement.

In
a broad sense, you could say that all civilizations collapse because
they “run out of energy.” Not necessarily oil, wood or coal.
Civilizations — like families, businesses, and clubs — depend on the
energy of their constituent members. If those members are expansive,
innovative and aggressive in their use of the available fuel sources,
the organization will thrive. If not, it will decay. But the more
aggressive they are in using their energy…the faster it may give out.
“More” turns into “too much”…based on the circumstances…and declining
marginal utility gives way to the downside.

Where is
the exception? Not in the history books. Every organization comes…and
goes. Everyone prospers and grows when it uses its energy effectively.
Then, when its energy is wasted, dispersed and exhausted, it declines.
There is no record of an upside without a downside.

Civilizations
based on conquest inevitably decline when they meet their match…or just
run out of energy. Civilizations that expend their energy building huge
monuments have little energy left to defend themselves against invaders
or other challenges. But perhaps most often, civilizations die like
humans, from the inside out. They develop power structures, aka
government, with almost exclusive monopolies on the use of violence.
Then, elite groups get control of the government and use it to shift
more resources and energy to themselves. The rich get richer. That is
why government is fundamentally a reactionary institution; it is almost
always used to protect existing interests. Future interests don’t
vote…children don’t stab you in the back…and tomorrow’s industries don’t
make campaign contributions. In effect, government moves energy from
the future to the past…from what will be to what used to be…and finally,
to what will be no more.

You can casually pick up
almost any newspaper to see that this is so. In the November, 16, 2012
edition of The Wall Street Journal, for example, was a story with this
headline: “Export US Gas, Yes or No?” The headline would be a puzzle to
an American reader a century ago. He would say to himself that it was
none of his business. It was up to the gas companies to decide what they
would do with their product. But now it is a matter for the Department
of Energy, which is being lobbied by Dow Chemical, among others, to
prevent the gas companies from selling their output on the open market.

Why
would Dow take an interest in this? Because “Dow burns a lot of natural
gas in its plants,” the article explains. Dow wants cheap gas, in other
words. “The national interest is best served in keeping gas in an
abundant and competitively priced position,” argued an executive. Cheap
gas may or may not be in the national interest. But Dow knows where its
interests lie. And the politicians can look to see where theirs lie too.
Who made more campaign contributions? Dow and other big gas users? Or
the gas producers? The squeakiest wheel gets the grease. But the wheels
of the future are silent.

Joseph Tainter, in his
“Collapse of Complex Societies”, believes the decline in civilizations
can be traced to problem solving. Each challenge, he says, leads to a
solution, which involves greater complexity. Bureaucracies, hierarchies,
rules, and regulations are imposed. These things cost time, energy and
resources. Eventually, the cost is too great and the downside is
reached. In the Roman Empire, for example, agricultural output per
person dropped as population increased. The problem was addressed by a
policy of conquest. The Romans took resources — grain, slaves, gold —
from their neighbors. But this required a large army, which was an
expensive, energy-consuming enterprise. The return on investment
declined…and eventually went negative. The Empire collapsed. That was
not necessarily a bad thing. When the decline on energy investments is
negative, you are better off stopping the program. And archeological
evidence from bones and teeth suggest that many people were actually
better fed after the collapse of the empire.

As the
size and complexity of society grows, the governments that are most
competitive are those that draw on the most support (energy) of their
subject peoples. That is why the Roman policy of conquest was so
successful. They were able to turn the conquered peoples into supporters
of the regime, with most of the army eventually comprised of non-Roman
soldiers. The British Empire was good at this too. The empire began by
subduing the Scots, who became the backbone of the British Army. Today’s
American army, too, depends heavily on soldiers from the southern
states, who were conquered by Abraham Lincoln’s armies in the 1860s.

The
energy available to a society depends on many things, probably the
least important of which is beneath the ground. More important is the
organizational system and its stage of development. In an early stage,
the system tends to be robust and efficient — or ‘simple,’ in Tainter’s
terms. Later, additional complexity degrades returns on energy
investments. While this complexity may be described as a form of problem
solving, it is better understood as an attempt by elite groups to hold
onto their wealth and power.

But to fully understand
this, we need to back up and look at how government really works and how
it too is subject to the Rule of the Downside. That subject, we shall
undertake tomorrow…”

- http://dailyreckoning.com/the-rule-of-the-downside/

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