The purpose of this post is to understand the relationship between the economy, energy, and the environment. I later look into Chris Martenson’s theories and overall understanding of the current economic crisis.

So, what is an economy? An economy is basically the amount of wealth that a firm, industry, government etc. receive from their goods/service/resources. It determines our standard of living and quality of life.

What is an environment? Our environment is everything that surrounds us; it is also the conditions we live in, with every living and non-living species.

What do these two terms have in common? Our economy and environment need energy. What is energy exactly? Well of course we all know that energy is a force that accomplishes something. Our environment provides us with physical energy to live our everyday lives. As humans, we generate energy to help keep our economy alive. Economies supply ‘energy’ in different forms to us and our environment.

For example, if we set the word energy in terms of an economy, energy, for an industry that produces solar panels, would be the amount of money spent on producing the actual panel. The amount of electricity produced would be the amount of energy the solar panel gives off. Economists always think in terms of growth and constant production and expansion. This widely influences our view on production of any resource. There is always a fixed cost for producing any good. So in basic terms, a producer needs to give up some of their production in order to produce more. If we set the word energy in terms of an environment, we can see how unsustainable some of the world’s production is. In order to produce barrels of oil, it requires oil to operate the machinery. In the long run, it is quite obvious that this is inefficient resource extraction. The aspect of energy is common sense, but we rarely take a look at it on the other side of production.

Image 1: of Chris Martenson[i]

Chris Martenson has received both a PhD and a post-doctoral program in neurotoxicology at Duke University, and an MBA in Finance at Cornell. His theories are not biased, and he takes a look at both sides of situations. Martenson is a reliable source because he gathers his data himself and. He has spent a large portion of his time researching and gathering statistics to develop his theory of a “Crash Course”.[i]

Martenson defines a ‘Crash course’ as a lens that he looks through at the world. This lens that he looks through shows him the troubling events that are occurring worldwide. Martenson assumes that modeling what we think is about to happen, based on what just happened, is the wrong way to approach the global economic crisis. He assumes there are going to be a lot of disruptive changes to the economy and environment if we don’t act soon. Since we are expected to only have a few ‘minutes’ left, we need to act soon. The importance of our decisions today are magnified in every move the global economy makes. This is where the economy and environment get tricky.

In Martenson’s presentation he makes the point that barely any of the resources we use today are being produced at a linear rate. Instead, Ex. environmental cases: forest’s loss fisheries exploited water use species extinction, are all experiencing exponential growth. Martenson is right when he says we live in a world that is dominated and nominated by exponential growth. This is because markets globally try their best to expand and develop. This has become a norm to both society and economists to want more. The demand for the latest technology, the newest and most efficient products and machinery will continue to increase. One question one might ask is, why has the average person been so demanding for growth?

 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 1: Exponential Growth of Resource Depletion (ii)

“There’s a physical cap on top of the population and expansion of humans.” This is a reasonable point that Martenson states about human population. It does make sense for the earth to have a maximum amount of geography for humans to live on. However, does this mean our rates will discontinue? If we don’t act soon, population levels and resource production will suddenly decrease.

  Figure 2: Graph of Population and predicted population with cap (ii)“All money is loaned into existence.” There is always more debt than there is money. This is quite an interesting point that is often ignored but is completely true. Ever since the beginning of trade, a good/service (money) needs to be exchanged in order for another good/service to be given back. But over time, a person may be unable to exchange a good/service so they go in debt. A statistic that Martenson presented was that the US has 52 trillion dollars’ worth of total net liabilities and 14 trillion of debt. Total net liabilities are just payments that need to be paid. For example, pensions, entitlement programs, or other liabilities. This just goes to show how the US is physically incapable of paying off their debt. This is the case for several countries worldwide.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Figure 3: Graph of debts of selected countries (ii)

Martenson connects the economy and environment with ‘energy’ in a triangular form. He mentions how economists only think in terms of perpetual growth. When he speaks of environment, he is strictly speaking about the resources. In most extraction of resources, the energy used to produce it is more than the amount of energy produced. He analyzes the concept of energy by saying, the economy would be nothing without energy. For example, petroleum/oil needs oil (energy) to produce itself. He wishes for a better tomorrow, and that this large dilemma is solved by serious action as soon as possible. Martenson makes a valid point when he says there are no previous occurrences that can guide us through this and assist us with solving this large debt. We aim for a sustainable planet which allows every resource, the population, food, industrial output, and pollution to become stable. I believe that investing in exploration discovery is of mutual benefit to the world and economy. Martenson says how creative and innovative investments will provide economical solutions. The only question is, what are the investments heading for?

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 4: Graphs of two possible outcomes of specific factors[iii]

Martenson states that the old solution for the future used to be more energy and resources each year to improve reliable economic growth. He believes that the new solution for our future should contain less energy and resources each year. This is going to be incredibly hard to do for many reasons. There are always going to be other undiscovered plots of new or existing resources on this planet; thus not expanding would be a difficult process.


Figure 5:  Graph of past and predicted Oil usage and preservation (ii)

Another barrier to this solution would be the lack of experience to this paradigm. Martenson believes that economic shrinkage is the only extreme solution to the global economic crisis. Nevertheless, a decrease in the economic development would definitely tell society to weigh what we invest in and don’t invest in. We need a well-functioning economy that can cope with this economic shrinkage because it is the most dominant factor of modern day civilizations. This will preserve our standard of living and provide many more opportunities. We as humans are going to need time and patience to shift to a declining economy. But maybe we don’t need the new IPhone 5, or the new 3D television. What if the world were to just stop growing and just produce the same things we have now? If Martenson’s theoretical solutions commit, we are expected to have quite a stable global economy in the near future.

 

Sources Used

[i] Image 1: http://www.thesurvivalpodcast.com/images/chrism.jpg

[ii] Martenson, Chris. “UK Crash Course.” YouTube. Web. 21 Nov. 2011. http://www.youtube.com/watch?v=msTW7D_rSm4.

[iii] Grekinis, D. “Human Population”. Anatolia / ACT On-line Courses. Web. 21 Nov. 2011. <http://moodle.act.edu/moodle/file.php/101/LECTURES/Ch_8_Human_Population_fall_11.pdf&gt;

 
 
 
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