Monday, July 14, 2008

Global Warming & Wealth

If you accept that wealth is embodied energy, then Global Warming is the crisis we have to have. Our problems are twofold.

One is that the source of this energy is currently limited. We are using up the fossils fuels and minerals. We are reaching the limits in farming and forestry. And we are not seriously value adding energy in wind, solar, tide or thermal. In short, the sources of energy is peaking and, with growing populations, our wealth will decline.

Our second problem is that along side the energy based wealth system, we have a huge corporate & financial wealth system that feeds off the energy based system.

This system already understands that it will need to forge new links into any new energy sources to survive, and it will fight hard to maintain the existing links and preserve the wealth flow it enjoys from the old fossil fuel and agribusiness energy sources now under threat

So back to Global Warming. There is little doubt that the climate is changing. The questions are whether human activity is responsible and whether we can do anything about it. It doesn’t matter. Unless we develop renewal energy sources, limit the use of fossil fuels, and conserve and rebuild the agricultural sources of energy, we are going to get less wealthy.

Government and corporations understand this. The extended debates over climate change and the small scale reponses in reducing fossil fuel use conceal a more serious issue. How to refocus our actitivies onto renewable energy based wealth creation without exposing the corporate and financial wealth system.

We need to be wary of two things. Global Warming will be pushed as a crisis requiring a personal moral response – tighten our belts, take your share of the punishment, it’s not governments fault, this is bigger than all or us!!! – while not much happens.

Worse still, Global Warming could be pushed as a crisis requiring draconian reponses, the partial suspension of democratic rights, the imposition of economic change, hugely costly projects which favour the corporate and financial wealth system.

There is no need for any of us to become less wealthy. But we must understand where real wealth comes from and invest in those sources, and reject the crisis politics that will try to insulation the non-energy based wealth processes from change.

On Sources of Wealth

Wealth is embodied energy. Traditionally we have taken solar energy in plants, animals, and fossil fuels, and gravitational energy in minerals, water and thermal heat, and turned it into products. We have “value added” and our wealth reflects the energy we transformed. We are wealthier than past generations, and this is seen in the captured energy in our schools, hospitals, transport systems, information systems, and other physical infrastructures.

We have invented processes to stablise energy, in basic banking, in ways to trade goods and extend the shelf-life of foods. We also gain wealth by transforming the energy in ourselves into services. This capture and transforming of energy has created wealth from the earliest primitive man to today’s modern global societies.

It explains our core belief that the environment is important, and our difficulty in understanding the financial markets, where money is a traded commodity and speculation is a non-energy transforming process.


Frugalnomics - What is it?

Frugal as in frugal, thrifty, not wasting resources, careful, sparing, costing little
...nomics as in economics, practical and political science of production, consumption and distribution of wealth.

Frugalnomics is an attempt to make some sense of the strange and mysterious things you read about in the business papers.