The Next Copernican rEvolution - Chapter 10 - Q&A: Climate Change, Debt Fiction, and the JPEG Implosion
This Really, Really Changes Everything — A Discussion with a Banker
“Beyond right and wrong, there is a field. I will meet you there” ~ Rumi
Q: Excuse me ma’am…I don’t want to bother you. Just wanted to say that I love your beautiful dress.
Zahira: Oh, namaste. Very kind of you to say so, ma’am.
Q: I’m guessing you are from India?
Zahira: Yes. But I live here in New York City now.
Q: Oh really? Can I ask what your name is?
Zahira: My name is Zahira.
Q: Zahira? What a beautiful name. Does it symbolize anything? …Oh, I’m sorry if I’m being too nosy.
Z: No, no it’s fine. In my country, Zahira means “shining” or “luminous”.
Q: Wow, nice. Maybe you can show me the light…I could use it. Sorry, just feeling like things are looking pretty bleak lately.
Z: If you are ready to see, I will be happy to show you. There is no reason for cynicism.
Q: Um, I was kidding. But what do you mean?
Z: I have some observations I could share with you…if you are interested.
Q: Well okay, but only because you seem so radiant. Why are you so happy? You’re not pregnant, are you? Ha ha.
Z: Oh no. Ha ha. I am happy…because exciting and positive times are ahead for humanity. We are on the threshold of global abundance and sustainability, where poverty will be a thing of the past.
Q: Sorry Zahira, but are you on a different planet? I mean last time I checked things aren’t looking so good. I believe in positive thinking and stuff, but come on. Look at our global economy. Look at climate change. Income inequality has never been higher. The greedy bankers own everything. Things are pretty messed up for everyone, unless you work down on Wall Street, of course.
Zahira: Well…I do indeed work on Wall Street.
Q: You’ve gotta be kidding me. You’re not a banker, are you?
Zahira: Yes, ma’am. I work for a large bank.
Q: And you are going to shed some light on why I should be optimistic? I’m sorry, but aren’t you part of the 1% that has caused all the problems in the first place? You know, for the rest of us 99%?
Zahira: My friend, I observe that this makes you uncomfortable. I sense you are feeling angry right now.
Q: You think? It just seems a little arrogant that you are going to be the optimistic one, a woman banker from India is going to show me the light.
Zahira: I understand that our world seems like a mess. There’s no wonder that so many people are angry right now. It’s a natural response when we feel that we live in a world that is unfair and unsafe, and yet we know in our hearts that it doesn’t have to be like this. But I would like to explain to you something that might help you see me differently afterwards. Would that be okay?
Q: Fine…go ahead.
Zahira: First off, I am a banker, but I’m not the stereotypical greedy bankster that you might perceive me as. I’m in the system for sure, but I also live and operate outside the system, which means I can see things that some can’t. And yes, I have to play the game just like everybody else to feed my family. But I can also see how the game is rigged. I can see that it will not be sufficient to just make better rules and laws to reign in the elites and greedy bankers. Or to enforce the laws better. Instead of fighting for changes to the rules of the game, we will need a whole new game. Right now poor people, middle-income people, and rich people try to make a way for themselves in this game according to the way the game works. Bankers do what the banking system has them do. And the same applies to everybody else. When all the different people act according to the rules of the game and the outcome is bad then it’s the game itself that’s the problem. In other words, it’s the system itself, our entire monetary system.
Q: Wow, well not sure what to say. But you got my attention. Go on…
Zahira: Well, you seem like a compassionate person who is probably concerned about climate change, right?
Q: Of course.
Zahira: You may be familiar with Naomi Klein who has written a popular book entitled, This Changes Everything: Capitalism versus the Climate1, in which she argues that we will have to radically change the nature of capitalism if we are to head off what, in her mind, is the most critical problem facing humanity, climate change. Klein understands that we need to stop unregulated capitalism and the energy companies and the infinite growth paradigm. She wrote in an article2, “the [climate deniers] may be in considerably less denial than a lot of professional environmentalists…that assure us that we can avert catastrophe by buying “green” products and creating clever markets in pollution.” She also acknowledges in the same article that, “The abundance of scientific research showing we have pushed nature beyond its limits does not just demand green products and market-based solutions; it demands a new civilizational paradigm”. As provocative as that is, I’m afraid it doesn’t go quite far enough…to our monetary system itself. If our money system is what’s been preventing us from solving climate change, as I suggest, then doesn’t that make money itself an even bigger problem than climate change? If you will allow me, I would like to analyze several interrelated factors that will really, really change everything, and radically change our civilizational paradigm far more than even the climate change activists are envisioning. The implosion of jobs, population and economic growth will undermine our entire money system itself.
Q: Hmm. So are you saying that maybe this relentless battle between the 1% and the 99%, or the activists against the bankers and energy companies is missing the point, that maybe we need to change our focus?
Zahira: Yes, yes. Exactly. Here’s a good analogy. Think of a photographer who needs to change his focal point if he wants the perfect shot. He needs to point his camera somewhere else to find the truly captivating shot. And sometimes he has to change his vantage point, his perspective, to get a completely new and different photo. Speaking of photography, I have a new term, or acronym, to share with you. Photographers are familiar with an image file format called JPEG. But I will be creating here a new acronym for JPEG. But ironically, the current meaning of JPEG, as an image file type, is still somewhat appropriate. According to Webopedia, “JPEG is a lossy compression technique for color images. Although it can reduce files sizes to about 5% of their normal size, some detail is lost in the compression.” I will be discussing how it is inevitable that we will be experiencing a reduction, or compression, in our global economy on an unprecedented scale. But on the contrary, I am envisioning a resurgence of more detail and more clarity in human life, not less. It will only be “lossy” of the things that really don’t matter anyway. Instead, we will gain so much more focus on the things that truly matter to human happiness. Life itself will become more colorful, more vivid, more diverse…like a beautiful high definition photograph.
But what we have now, and what we’ve been experiencing more and more of under global capitalism is a homogenization of life and nature, which has been increasingly destroying diversity and decentralization in favor of monopolies and monocultures. Look at the consolidation of global companies that control our media, our food production, our health care, etc. Look at how the monocrop farming of corn and wheat have depleted our topsoils and our nutrition and our health. We have lost so much of the biodiversity in our human resources, our natural resources, our food, our plant life, and our animal life that we have not only lost much aesthetic beauty, but we have simultaneously increased our fragility, our susceptibility to global shocks that can ripple around the world in an instant. So capitalism and monetary exchange are inherently adverse to diversity and nature itself. And diversity is where we find anti- fragility and resilience to the so-called Black Swan events that are unforeseen and can set back human development. It is precisely because of today’s oversized, overly complex, and globally centralized monetary system that we have lost focus on what’s really going on now within our monetary system, which I will explain if you have a moment.
Q: Of course. But it sounds like it’s going to depress me instead of making me optimistic.
Zahira: It can do both, depending on how we interpret it, and what we decide to do with this knowledge. If we fight to hold on to our outdated notions it could be quite scary and painful, but if we can let go and flow with what’s coming it will be amazingly beautiful, like a rainbow after the storm.
So I will be talking about my own acronym for JPEG, which will now stand for jobs, population and economic growth.
Q: Well, I’m usually not very interested in economics…
Zahira: No problem, neither am I, even though I’m a banker, ha ha. That’s okay, you don’t have to be an economist or an expert. Even they don’t even see what’s coming. You probably have the advantage of a fresh perspective and therefore will be able to connect the dots better.
Q: Okay, fine. let’s go.
Zahira: Wonderful. I will discuss all of these JPEG factors but will do so within a framework of another factor, global debt. I call it the The Global Debt Fiction.
And then we will see how all of these relate to the issue of climate change. According to a 2015 report, the world is $199 Trillion in debt and it’s still growing.3 This is based on data through the second quarter of 2014. But according to recent estimates, total global debt in 2016 is as high as $230 trillion4. Do you have any idea how much a trillion is, let alone 200 trillion, or 230 trillion? I struggle to get my head around how big it is, but I do know that any economist would tell you that too much debt is not a good thing. It can lead to all kinds of nasty things like loan defaults, a pullback from creditors which stifles economic growth, thereby increasing economic risk to the global economy, or even triggering a collapse of the global economy.
But here’s the interesting part, despite all of the badness associated with debt, we went ahead and did it anyway…created way more debt since 2008. One might argue that that’s exactly what our debt-based economic system does. If so, it sure does it well. So here we are now in 2016 talking about reducing the debt, or restructuring the debt, or kicking the can down the road to future generations, or issuing helicopter money. Actually, come to think of it, I don’t hear as many people talking about it much anymore. It’s almost as if the debt problem doesn’t exist or isn’t real.
But if we play along for a moment and assume that all this debt is a real thing, not just illusory, then let’s evaluate the different ways we might address it and how this might affect climate change. I believe there are four common ways that so-called experts talk about dealing with the debt problem: more growth, more austerity, restructure the debt, or debt jubilee. Let’s talk about each of these in relation to the JPEG implosion that I see coming. And please remember that they all cross over and influence each other.
1. More Growth
One of the most obvious ways to pay off the global debt is to create more economic growth around the planet, right? It’s like a business that needs more sales to pay off that loan it took to invest in growing the business. So a growing economy creates more jobs which create more purchasing power which creates more consumption, all to pay off the debt. But there are several reasons why growth is not coming back, as will be discussed.
2. More Austerity
Another typical way to tackle debt is to cut services and raise the taxes to the people, aka austerity. This has been the modus operandi in countries like Greece and Portugal and Spain for seven years now. In times of austerity, governments cut spending, which eliminates many basic services and can lead to crumbling infrastructures and harsh conditions for citizens. The funding cuts increase unemployment in the public and private sector. Meanwhile, tax increases reduce household disposable income, thus reducing spending and consumption. The official unemployment rate among the youth in countries such as Greece has been as high as 52%5, unofficially it’s closer to 70%. And austerity measures tend to anger citizens. There have been many anti-austerity protests over the last several years in many countries, but notably in Greece, in which people voted against austerity overwhelmingly, but to no avail. The Greek government has gone against the will of the people and has allowed the creditors to impose more and more austerity.
3. Debt Restructure
This approach can be a creative way of refinancing the debt or simply delaying payment of the debt. Either way, it is basically a method of “kicking the can down the road”, addressing a current debt crisis by postponing major decisions until a later, usually unspecified date. So when politicians end up “kicking the can down the road” they are either hoping that:
a) the problem will magically disappear.
b) they leave office before the problem has to be dealt with.
But the reality is, this approach merely pushes the problem onto future generations who will have to face the ramifications, or they themselves might attempt to kick the can down the road. Thus the problem never goes away but only grows. I think it is safe to say, given our ballooning debt numbers, this is the approach we have been taking for a long time now. And the problem is only growing worse, a problem that future generations will someday have to reconcile.
4. Debt Jubilee
This gets us to the fourth approach to dealing with global debt. When somebody at some time, perhaps now or with future generations, recognizes that debts are insurmountable and cannot possibly be paid then it results in an inevitable dissolution of the debt, or bankruptcy, because the money to pay the debt does not exist. Ultimately, it is a way of saying the debt that is due will be reduced to a lesser amount or wiped out altogether. In a recent LA Times article, Jubilee was described this way, “Ancient Babylonian kings had a special tool at their disposal when economic or social conditions turned dicey: They would declare a “debt jubilee” and instantly wipe out borrowers’ loans, allowing average people deep in hock to start over with a clean slate. It says something about the global economy in 2016 that the concept of a modern debt jubilee has been finding its way into some mainstream financial market discussions.”6
Indeed, some financial experts were suggesting recently that we are facing a wave of epic debt defaults and put forth the idea of a jubilee. The author says, “Debt jubilees have been going on for 5,000 years, as far back as the Sumerians. The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly.”7
Why We Can’t Grow Our Way Out of the Global Debt Problem
The JPEG Implosion
Jobs, populations, and economic growth are interrelated economic factors that are utterly at odds with our current global socio-economic system. Indeed, the lifeblood of capitalism is more and more people who need more and higher paying jobs, so they can earn and spend more and more money on more and more stuff, that capitalists will gladly manufacture more of to fulfill our greater and greater artificially-manufactured needs, which marketers have convinced us that we need more and more of to be more fulfilled. But what if jobs and population growth and economic growth are all imploding? Well, they are indeed.
Job Elimination — A major problem with the notion that we can grow our way out of debt is that jobs are going away due to automation and robotics. This technological unemployment will reduce the purchasing power of millions of people around the world who will no longer have jobs. So how will they buy the stuff that’s necessary for the economic growth needed to pay off the debt? And how will governments keep their tax revenue growing when there will be fewer workers to pay employment taxes, and less sales tax being collected from the fewer people buying stuff? I could provide endless documentation about technological job displacement and why this time the jobs are not coming back. But without belaboring the point, do a quick Google News search when you get time. Just enter the words “jobs robots” and this should suffice in confirming that our entire labor-for-income paradigm is undergoing radical change.
Population Decline — Those who think that overpopulation is one of our biggest problems are correct, but not for the reasons they think. The common thought is that with our burgeoning populations around the world we are depleting our resources. That too, is correct. However, I argue that there is a direct correlation between our monetary system, overpopulation and resource depletion, which we will see is now becoming a huge problem for the survival of capitalism itself. Our global population has indeed increased exponentially over the centuries, and that was exactly what capitalism needed to grow since we have a growth-based monetary system. But I suggest that capitalism has not only needed population growth, it caused it. This direct relationship is becoming painfully obvious in the many countries that are experiencing population decreases (China, Germany, Italy, Japan, Russia and Spain, etc.) at the same time their elderly populations are increasing8. These countries are now trying to raise their low fertility levels by offering various tax incentives and free child-rearing services. In Japan, so few people are having sex and relationships that the government is offering free dating services.9
Q: No way. That’s sadly funny, ha ha!
Zahira: Yes, and according to a recent article by the Gatestone Institute, the decreasing populations across Europe, with Eastern European countries experiencing the greatest population loss, is having dramatic implications to business-as- usual. The article states, “Some businesses are no longer even interested in European markets. Kimberly-Clark, which makes Huggies diapers, has pulled out of most of Europe. The market is simply not cost-effective. Meanwhile, Procter & Gamble, which produces Pampers diapers, has been investing in the business of the future: diapers for old people.”10
Q: Oh my god!
Zahira: So what do you think this says about the direct correlation between population growth and capitalism? Which causes which? Governments would not be incentivising more childbirths if lower populations were not a direct hit to economic growth. For capitalism to work, economies have to grow, and that means more people are needed with jobs so they can buy stuff. Capitalism can’t function with decreasing populations, decreasing consumption, and therefore decreasing growth, let alone a steady-state economy. Look at how the world has struggled even with global GDP growth of 2.5% for the past several years. For governments to have the tax base to provide more services to meet the needs of their aging populations, they will need more and more young people working and paying taxes. So both governments and companies right now around the world need more people. In short, our growth-based monetary system needs and therefore causes population increases. Just watch the short documentary The Story of Stuff11 to see how our entire growth-based economic system demands more and more consumption by more and more people.
Q: Yes, I saw that. Mind blowing.
Zahira: So what happens when JPEG Implodes? We are entering what has been called late-stage capitalism, where everything gets inverted. Due to stagnating economies, or higher costs of living, or higher rates of education, especially for women, people are getting married later, or not at all, and having fewer babies. So populations are decreasing, which results in labor shortages for companies, which forces companies to either hire immigrants or invest in robotics and automation. And here’s the irony. As stated in an article by a demographer and former director of the United Nations Population Division, “Few of the decliners [countries with declining populations] are prepared to accept large-scale immigration, particularly from doubler countries, to address labor force shortages and population aging concerns. As is being increasingly reported, some decliners are erecting barriers, fences and walls to deter unauthorized immigration, while others remain resolutely averse to a sizeable foreign population taking hold within their borders.” 12
So what in the world is a company or country supposed to do if they have fewer people to do the jobs that need doing, and they don’t want immigrants? In an ironic twist, the result of this increasing xenophobic sentiment that’s currently occurring in many countries will result in more and faster automation of their workforce — meaning more robots. This will result in not only a further decrease of population, but also fewer jobs, less tax revenue, less consumption, and lower GDP. This is a positive feedback loop of the highest order. The whole game of capitalism starts to unravel. How will the fewer millennials around the world, who, by the way, right now are increasingly rejecting capitalism altogether13, and future generations of young people ever be able to contribute enough growth to ever pay off the global debt? They will not be able to.
Infinite Growth on a Planet of Finite Resources — The two previous arguments — job loss and population loss — in themselves should make the case against being able to grow enough to pay off the debt. But just for the sake of argument, let’s assume for a moment that we could achieve enough growth to pay off the debt. Well, it’s impossible to have infinite growth on a planet of finite resources. Can you imagine the rate of consumption that would be needed to grow the global economy enough to pay off $199 trillion in debt, let alone the more current estimate of $230 trillion? We just added $30 trillion of debt in two years. We just keep adding debt faster and faster, yet we are already in overshoot in terms of our consumption of resources. According to the Global Footprint Network, “Today humanity uses the equivalent of 1.6 planets to provide the resources we use and absorb our waste. This means it now takes the Earth one year and six months to regenerate what we use in a year.”14 And if the rest of the world were to live and consume like the United States we would need 4.8 planets to keep up with the demand.15 It’s simply impossible.
And even if it were possible to have that much growth, even so-called green growth, can you imagine the impact it would have to our carbon footprint and our atmosphere?
Why We Can’t Jubilee Our Way Out of the Global Debt Problem
While the anthropologist David Graeber proposes the notion of a global debt jubilee in his book, Debt — The First Five Thousand Years, it may not be the panacea that some serious advocates think it is.
In an article responding to Graeber’s proposal, author Jeffery Atik wrote, “But there is something morally ambivalent about a Jubilee no matter how much one might long for one. Time extends beyond the Jubilee — and the post-Jubilee accretion of new debt is accepted as a human inevitability; in Leviticus, the Jubilee happens every 49 or 50 years. A Jubilee is, at best, an accommodation with debt — it is not the destruction of debt…We moderns are too facile for Jubilees — our lenders would either discount the prospect (that is, charge us more interest to counteract any relief a Jubilee would provide) or would devise an “offshore” avoidance. The Jubilee works as a mirage, driving us forward in false hope.”16
But this author is thinking only in terms of wiping away the debt and then rebooting the whole money game over again. It has already been noted that throughout the history of money and debt — the last 5,000 years — jubilees have been utilized time and time again to reset things. Even the subtitle of Graeber’s book, “The First Five Thousand Years”, implies that this game with money and debt will continue into the future, ad infinitum. What if we were to title a new book like this, “Debt and Money, A Five Thousand Year History”? This would imply that we are done with this perpetual cycle of disillusionment. You see, every time we reset our debt and start up the whole money and ownership game again, the same corrupting forces are unleashed right away — greed, hoarding, competition, profit- seeking, corruption, warfare, etc. The very fact that we have to keep doing a jubilee over and over again suggests the inherent flaws in the system. Isn’t that the definition of insanity, according to Einstein, doing the same thing over and over again expecting different results?
If we can wipe the slate clean and start from scratch, AND we have abundant resources and technological know-how, do we even need to reboot a monetary system that was created to ration scarcity? Many smart thinkers around the globe are postulating that we are entering a post-scarcity era. It is true. And this means that we simply don’t need money to ration resources any longer. So let’s indeed celebrate a jubilee, but this time a permanent one. This time let’s wipe the slate clean and end the 5,000-year-old cycle of debt and money, and the 10,000-year-old cycle of imaginary ownership of land and resources.
Q: Wow, that would be awesome.
Zahira: Yes, it would be. And that is the stark choice we will need to make…whether we want Paradise or Oblivion.17
Climate Change and the Perfect Storm — The Malady is the Cure
The point is this, and the good news is this…the perfect storm is coming. Diminishing jobs, decreasing population growth and slowing economic growth are a perfect storm of dark, threatening clouds of destruction for our monetary system. But for our planet, for our resources, for climate change, for species loss, for human wellbeing, for all of our life support systems the JPEG implosion is a perfect double rainbow of good news. For all the people out there who care for our planet, who care about climate change, who fear for our human predicament, I say to you…do not fret the coming storm. It is indeed a perfect storm that will wreak havoc on capitalism. But the malady is the cure. And this really, really does change everything. The collapse of capitalism and money and debt and markets is exactly what the planet needs, what humanity needs, and what the animals and the plants need. This is the solution, the only solution that can radically reduce climate change, heal our planet, set us free of bull-shit jobs that shackle us to wage slavery and liberate our true human goodness. What seems like a malady of our cancerous paradigm of money and capitalism is exactly that. And it will hurt badly if we cling to our current systems. But if we can let go, if we can see from a fresh new perspective, this coming onslaught is the cure to all that has been ailing us for many millennia. If we can transcend our fear, we will see that the coming malady is the cure. The future is going to be bright and sunny as we squint open our eyes to see anew the orbit of the planets.
Q: So you mean money really doesn’t make the world go round?
Zahira: No my friend. Soon we will begin to see how our world really revolves…and evolves…so much more beautifully without money and debt. We will discover, or rediscover ways of being and relating to each other that worked well for hundreds of thousands of years. New, or perhaps ancient, relationships amongst humans will be possible, particularly how we get along and organize ourselves. But this time it will be with our high technology in alignment with nature. That’s what we will talk about next time. We will see how ten thousand years of violent force is giving way to positive new forms of power and human relationships beyond money and ownership.
Q: Thanks, Zahira. And you are right. You are unlike any banker I’ve ever met. I can imagine new possibilities…beyond blame. I can imagine and feel the more beautiful world that is coming. Thank you.
Zahira: Aww, you are welcome. And that reminds me of the lovely Arundhati Roy quote, “Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing.”
Indeed she is. Namaste my friend.
»Next Chapter - Chapter 11: A Fuller View on the History of Ownership and Power
Chapter Index
Footnotes:
Naomi Klein, THIS CHANGES EVERYTHING: THE BOOK - https://thischangeseverything.org/book/
Naomi Klein, “Capitalism vs. The Climate”. The Nation, http://www.thenation.com/article/164497/capitalism-vs-climate
The World Is $199 Trillion in Debt, and Growing - http://247wallst.com/banking-finance/2015/02/09/the-world-is-199-trillion-in-debt-and-growing/
$230 trillion in global debt - http://www.valuewalk.com/2016/08/230-trillion-in-global-debt/
Greece Youth Unemployment Rate 1998-2016 - http://www.tradingeconomics.com/greece/youth-unemployment-rate
Another financial crisis? Soaring global debt since 2008 raises risk as world economy sputters - http://www.latimes.com/business/la-fi-investing-quarterly-debt-20160710-snap-story.html
World faces wave of epic debt defaults, fears central bank veteran - http://www.telegraph.co.uk/finance/financetopics/davos/12108569/World-faces-wave-of-epic-debt-defaults-fears-central-bank-veteran.html
Population Growth Extremes: Doublers and Decliners - http://www.ipsnews.net/2016/09/population-growth-extremes-doublers-and-decliners/
Analysis: More Countries Want More Babies - http://www.ipsnews.net/2015/11/analysis-more-countries-want-more-babies/
Europe: The Substitution of a Population - https://www.gatestoneinstitute.org/8761/europe-population-substitution
Story of Stuff (2007, OFFICIAL Version) -
Europe: The Substitution of a Population - https://www.gatestoneinstitute.org/8761/europe-population-substitution
A majority of millennials now reject capitalism, poll shows - https://www.washingtonpost.com/news/wonk/wp/2016/04/26/a-majority-of-millennials-now-reject-capitalism-poll-shows/
World Footprint - Do we fit on the planet? - http://www.footprintnetwork.org/en/index.php/GFN/page/world_footprint/
Guess What? We Have Already Used Up All Of Earth's Resources For 2016 - http://www.dogonews.com/2016/9/20/guess-what-we-have-already-used-up-all-of-earths-resources-for-2016
The Cliff and the Jubilee: On David Graeber's 'Debt' - https://lareviewofbooks.org/article/the-cliff-and-the-jubilee-on-david-graebers-debt/#!
Paradise or Oblivion - The Venus Project -