Good Sunday Morning,
Before the industrial age, almost everyone engaged in some form of activity that would contribute to the wealth of society. Farmers and farriers, miners and flour mill workers, shoemakers and fishermen, all combined their skill with a natural resource to create something that offered value to their families, neighbours and communities.
Then the industrial age made it easy to to redistribute that wealth. We pulled it out of the ground and out of the oceans with ever increasing efficiency, processed it in factories and shared it mostly through blue collar jobs. Henry Ford showed us how the economic benefits of primary production and resource extraction could ripple through society as a result of the multiplier effect. I remember an old coal miner coming into my computer store and peeling off 25 one hundred dollar bills. He could barely talk, for talking aggravated his black lungs and induced coughing fits, but he wanted to buy a better future for his daughter.
As the primary extraction and manufacturing process became more mechanized, moving our wealth through the service sector took up an increasingly large percentage of the economy. It created its own stratification ranging from the proverbial McJobs to ridiculously over compensated 'investment bankers". Today, since our comfort in old age is no longer secured by having large families but by having large bank accounts, we needed to find ways to accumulate personal wealth. So today the fastest growing profit sector is financial services.
But storing wealth is inherently treacherous, as anyone who has ever tried to preserve their garden's bounty for consumption during the long winter months knows all too well. It's why we transport fresh produce half way round the world so that we can be nourished by them year round. But something happened on the way to the ball game. We lost sight of the critical difference between wealth creation and wealth redistribution. At no time in history is it more important than it is now to wrap our collective minds around these concepts.
Our modern wealth is not just locked up in our pantry or root cellar, it's locked up in mysterious places like stock markets and real estate. David Korten calls these assets "phantom wealth" as their value is not determined by the ability to feed and shelter us but by their attractiveness to the next investor who will offer us more than we paid for it. It has distorted our perception of wealth, so that now we haggle over pennies when it comes to paying our farmers for food, the most precious commodity on the planet, and take it for granted that stock options and investment banks breed billionaires at an ever prolific rate.
Preserving our portfolio has so preoccupied our collective thinking that the services of managing, insuring and borrowing against these assets generates more than 40% of corporate profits in the U.S. And if you are not personally investing in the market, take note of this fact: U.S. asset managers are currently meeting the pension management needs of over 60 percent of the global retirement market. According to the World Bank, the value of stocks traded as a ratio of global GDP ballooned from 9% in 1980 to over 160% in 2015. Phantom wealth indeed.
So what keeps this phantom wealth from collapsing? It's many things but at the core lies the story of unlimited growth. As long as we believe that tomorrow we will consume more than today, this game of compounding assets is perpetuated. The problem is that we have built this perpetual growth model on the extraction of a finite energy source. And while there is enough ancient sunlight in the ground to fuel growth for decades to come, it is becoming increasingly clear to global investors that there is a good reason these carbon fuels are buried underground; their side effects are proving perilous to our civilization.
But it's not just investors who are seeing the writing on the wall. There are communities in Canada and the US who have already felt the brunt of a changing economy. These boarded up company houses still stand along the road that leads to the working class neighbourhood, down wind from the now non existent Sydney steel plant and coking operation. The restaurant where I sometimes joined Liberal and Tory insiders during the era of Allan J. MacEachen to discuss the future of coal and steel in their weekly round-table, is now a vacant patch of gravel. The video that's linked to the image takes you to a coal mining community in the US that has suffered a similar fate. It voted for Trump. If the experience of Industrial Cape Breton has taught us anything, it's that holding on to outdated industries past their best-before-date is not only expensive but destructive to our communities.
So why do we insist on repeating our mistakes with oil? A quote that Al Gore has shared perhaps summarizes our dilemma best: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" And if we think a salary has persuasive powers, just imagine what multimillion-dollar stock options can do to alter the perception (and morals) of perfectly rational human beings. “It’s all about the emotions." Carole Cadwalladr quoted in the Guardian "This is the big difference with what we did (to elect Trump president). They call it bio-psycho-social profiling. It takes your physical, mental and lifestyle attributes and works out how people work, how they react emotionally.”
Can Trumpism happen here in Canada? The prevailing wisdom seems to be no. Much is written about the preferential balloting of the conservative leadership convention and the inherent fairness and centrist tendencies of Canadians. But let's not forget there was a time when Trump was booed at the Conservative Political Action Conference which has, now that he is president, turned into a love-fest. Even though in a post Paris world, this clouded vision is being nurtured by a rapidly shrinking minority, they are pulling out all the stops to postpone the collapse of their empire. The big question we face as Canadians is this: For how long do we insist on being dependent on that plutocratic minority? We are witnessing a historic passing of the baton of global leadership on technology and climate from the United States to China. Do we really want to join the US in ceding that multi-trillion dollar market just to prolong the charade of big oil?
As we contemplate the answer to this critical question, it's perhaps good to remind ourselves again of the real power that is being unleashed by the technological convergence currently underway. Photosynthesis has been the primary source of energy for life on this planet for billions of years. But until now we have been relegated to a parasitic existence, relying on complex food chains that begin with this marvel of nature. Our reliance is so complete that all aspects of our civilization depend directly or indirectly on another organism's ability to harness energy directly from the sun. For thousands of years this has been the case. And now, in just a few short decades we will transition from this analog, relatively labour intensive, past to a technologically automated, digital future. Humans have developed the technology and scale to draw all our energy directly from the sun.
In India, Solar power is becoming increasingly cost-effective and rapidly scalable, writes Jake Schmidt for the NRDC. "In 2016 the country commissioned the largest solar plant in the world at 648 megawatts, and it was built in a mere eight months—that’s much quicker than the three to four years it takes to build a similar-size coal power plant. This month, an even bigger solar plant of 750 megawatts attracted record low bids of about $0.04/kWh, validating the government’s decision to cancel four coal power plants and effectively choose solar as the preferred energy source for meeting India’s rising energy demands." The same article points out that Chile’s auction just set the world’s lowest price for solar power at $0.03/kWh.
Unlike coal-fired power plants, once built, a solar array does not need miners to sacrifice their health, rail cars to transport the coal, or extensive support industries to provide endless inputs. It just sits there and produces a continuous stream of wealth in the form of energy. The elusive fallacy of trickle-down economics evaporates like a drop of dew in the afternoon sun. The digital revolution challenges us to find new mechanisms which actually work equitably. Ensuring that this new wealth is properly distributed and applied to the benefit of all will require a level of political engagement unprecedented in human history.
Elon Musk seems to understands this. At the World Government Summit in Dubai Musk told a crowd what Greens have championed for some time, that universal basic income is 'going to be necessary'. While the rise in automation could increase society's wealth, it will be generated by as much as 50% fewer workers. We need to find new ways of redistributing the wealth of our digital age. A recent entry into the NDP leadership race also supports the call for a guaranteed minimum income. Bernie Sanders has not faded into the background but instead continues to lead a revolution. German Greens have reached out to us in Canada to help build a united alternative to right wing, plutocratic populism. By shining our spotlight on positive developments and effective strategies to migrate sustainably and equitably into a digital future, we can offer what has become the rarest commodity of all: Hope.
We can unite in many ways to build that culture of hope, equality and sustainability. We can write letters to the editor in support of alternative thinking like the Guelph initiative to rescue Electoral Reform in time for our 150th birthday. We can share the latest articles on the energy revolution far and wide on social media, always including the cabinet, to make sure they are constantly exposed to an alternate view. And we can just gather with friends around food, drink and good conversation to lift each others spirits. That's in fact what we are doing here in Saanich-Gulf Islands on St. Patrick's day. If you live anywhere near the Saanich Peninsula, please join us for this fun event.
We are on the right side of history. If we unite our voices, we can help this country resist the perilous tendency of clinging to the past. Lets embrace the future with gusto together instead.
Have a fabulous week,