(This is Part 11 of a series. Go back to Part 10.)
The ankle bone is connected to the calf bone is connected to the knee bone, etc. It's all connected. The different parts of the brain are wired together. The different parts of the biosphere affect one another. Events in geopolitics can affect the financial markets and vice-versa. Events in energy affect the economy, the financial markets and the climate.
A planet with a fever is causing various rivers and lakes around the world to reach a "crisis point," according to the World Wildlife Fund, including such major rivers as the Yangtse and Mekong in China, the Ganges in India, the Danube in Europe and the Rio Grande in North America. As another example, the huge Lake Chad in Africa has lost 80% of its water in just the last four decades. Underground aquifers, as mentioned previously, are falling around the world.
Desertification is spreading in many areas of the globe, including sub-Saharan Africa, northern China and the western U.S. The increasing preciousness of fresh water, in turn, affects choices among food crops, energy supplies and geopolitical/military considerations. All of that in turn affects financial markets and economies, which affect the climate and so on—an interconnected round robin.
As discussed previously, humanity is likely standing on a precipice in financial, economic, military and ecological terms as well as in others. For example, humanity is quite likely to witness the greatest financial implosion in its history. Also, military tensions are on the increase as "defense" budgets increase around the world and nations scramble for precious energy.
In terms of energy, it seems quite likely that humanity will experience an energy deficit for awhile as supplies of fossil fuels become scarcer and alternative energy technologies take time to ramp up. This "energy dip" and "financial/economic dip" and "fresh water dip" and "military dip" and so on all seem likely to happen within the next few years to decades—an array of confluences coming together.
And that's not even to mention the rising of a new intelligence on earth as our computer servants gradually become our masters, as discussed elsewhere. Yes, we humans seem in for some very interesting times. And while all this is likely to be constructive long-term, it is also likely to be highly stressful in the short-term.
How best to ameliorate this stress?
One obvious place to intervene is in the energy area, first, because technology is fostering a number of hopeful scenarios, and second, becasue energy deeply affects so many other areas. A real, honest-to-God sustainable solution to the energy challenge could be immensely uplifting to the human enterprise.
As The Economist magazine points out, there are basically three ways for governments to influence energy solutions (and thus indirectly, climate solutions):
Way #1 is to subsidise certain industries. This is generally not a good idea since politicians and bureaucrats are generally much poorer than markets in allocating resources. A classic example is the corn-ethanol frenzy/debacle now happening in the U.S., courtesy of giant subsidies from the federal government.
Way #2 is for the government to set standards for products/processes. Examples are fuel-economy standards for vehicles and the proposed requirements for utilities to derive a certain percentage of their power from renewable sources. This standards solution sometimes works, but it still means trusting politicians and bureaucrats to allocate resources well—a dubious proposition.
Way #3 is to put a price on the activities/products that are polluting the biosphere, for example a tax on all activities and/or products that are sending carbon into the atmosphere—a carbon tax. This would be by far the most difficult alternative politically, but if it could be enacted—perhaps by coupling it with eliminating the payroll tax, as Al Gore has suggested—it seems the smartest way to go, because it harnesses to the overall goal the power of markets to allocate resources efficiently.
In Way #3 the overall goal tends to be achieved in a way that is more natural and organic than otherwise, since the market itself is allocating
how the goal will be reached. In effect, it means that each consumer and each business and each government agency, as they go about their daily business, is automatically making decisions that contribute to the overall goal of lower carbon emissions. It's cool, but difficult politically.
Somewhat more easy politically, and related to the carbon tax though not as elegant, is a cap-and-trade system for carbon emissions. Europe set one up last year: A limit of so much overall carbon emission is set, and then allocations for that amount—shares of "emissions stock," in effect—are put into a central market where polluting industries, who must have these shares to pollute, can bid for them.
Though not quite as elegant as a carbon tax, a cap-and-trade system does capture the allocation power of markets. In practice, though, some combination of all of the three ways discussed above will likely be used in order to achieve greater efficiency and innovation in generating and consuming energy.
A positive, global, sustainable energy system would go a good way towards alleviating the stresses of potentially collapsing bubbles in the financial, ecological and geopolitical areas, not least by showcasing—instead of something negative to fight against—a common, worldwide, worthwhile goal to cooperate about and work towards.
(This is the end of Part 11. Go to Part 12.)
—jim sloman, 3.24.07
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