Wisdom for Our Generation, with Illustrations
Without honesty, reality withers and dies. -- Henry F. Senn
The Real Value of Money
Pile of Key Words
Air, Bobby Jindal, Butterflies Can't Read, CBS Sunday Morning, Carousel, CEOs, Coal , Currency, Economic Policy Institute, E. O. Wilson, Fresh water, gold standard, Government and Religion, Governor, Great American Paycheck Squeeze, If I Loved You, Land, Louisiana, Metals, Microsoft Tun Miniport Adapter, natural resources, Oregon Coast, Pesticides, Petroleum, Plastics, Solar energy, Topsoil, volcano monitoring
Currency in the US and other nations was once based on the gold standard. The idea was to back up the value of our coins and paper bills with something that was more tangible and dependable. In theory, a citizen could trade in his or her cash for an equivalent amount of gold. The gold standard was also intended to limit the Government’s ability to issue currency – no more gold no more cash.
The ins and outs of maintaining a gold standard turn out to be complex (http://www.econlib.org/library/Enc/GoldStandard.html), but the fundamental problem was that a gold standard required a stable Gold price. Unfortunately, gold is just one commodity (in truth a rare natural resource) of many that we put to use in our lives, and as such, is as subject to market forces as any. Gold, which in ancient times was mainly coveted for decoration and as a symbol of wealth, turns out to have many important physical properties that also make it highly coveted for industrial purposes. It is highly valued for high-end electronics for example, because it is an excellent conductor and is virtually corrosion free. This demand for practical application has firmly placed gold in the commodities market and away from being simply a treasure.
Today, we have mostly forgotten about the gold standard, and we use coins and bills only for the most trivial of transactions such as buying a cup of coffee. Instead, we keep a tabulation of dollar signs, mainly recorded on the hard drives of banking computers. Our paychecks are electronically deposited and the amounts of our dollars recorded at our bank go up. We make a purchase with a credit card and our dollars recorded by the bank go down while those at the bank of the credit card company go up, some of which are deducted once again and added to the bank account of the retailer where the purchase was made, and so-forth. We no longer have the physical reality of currency or gold to grasp onto.
All of these accountings obscure the most important of realities and that is that the bill or coin that we hand to a sales clerk, or the dollars signs that we tabulate within the electronic financial systems are in truth measures of the amount the raw, natural resources that we are allowed to extract from the earth for our personal consumption. Natural resources are defined here as land, material substances, or energy sources that come directly from the earth or the sun, and were there to use even before we became civilized. Gold is just one of many of these resources, and fresh water is another. If the family down the street has twice the income you do, it means they are allowed to consume natural resources at twice the rate that you do. This is reflected in the size of their house and lot, the size of their automobile, the schools they attend, the amount of human services they can purchase, and many other niceties that they have and you do not.
This is very important. Both the wealth of individuals and the wealth of nations depend on the amount of natural resources that they can command. The US has been a mighty nation in the last two centuries for only one reason. It was born on a continent whose abundant natural resources had yet to be exploited. As US citizens, we were fortunate that intelligent, democratic thinking individuals founded the nation, but if we had been under a monarchy for 200 years, our natural resources would still have made us a strong nation.
If we were to purchase a major item such as an automobile we are in essence using our dollar signs to lay claim to enough of the earth’s resources to build that automobile. Most of us, though, do not take time to consider this because multiple, complex, layers of financial transactions and product development mask our connections with these natural resources but, nevertheless, they are there, and they are the bottom line.
The figure below attempts to depict these connections, but such a diagram cannot begin to show the true complexity of our connections with the limited natural resources of the earth. It is most likely that a viewer will see many additional limks.
For doing a good job, our employer awards us with $-credits that are passed on to our bank, and we now feel that we have enough $s recorded at the bank to buy a new automobile. But the automobile has to be built.
A new automobile is mostly made of steel, plastic and human labor. Steel for example, requires iron ore or scrape iron. If it is extracted from the earth as iron ore, coal and air (oxygen) are needed to heat and smelt the ore. In addition, the resulting iron needs to be reheated to turn it into steel and reshape it for the automobile. The smelting and melting of iron degrades the air by extracting oxygen from the atmosphere and turning it into carbon dioxide that is released into the atmosphere. Coal and iron ore have to be extracted from the earth and transported using fossil fuels, human labor, land and many other resources.
Plastics http://plastics.americanchemistry.com/ How-Plastics-Are-Made are made mostly from the natural resources petroleum, natural gas, and coal, but there is a whole host of other chemicals are involved to give various plastics their desired properties. Besides the extraction, refinement and transportation of the above fossil fuels, the effluents resulting from the production of plastics takes a huge toll on the purity of our air and water.
All through the process of building an automobile electric energy is needed. Electric energy also requires huge amounts of the fossil fuels petroleum, natural gas, or coal to be extracted from the earth, and burned, producing the attendant waste product carbon dioxide and many other pollutants. This is not to be taken lightly. To give a sense of the enormity of this fuel use for a hot summer day in the US, I want to quote the article “The Coal Paradox” in the March 2006 issue of National Geographic,
“The Gibson generating station (in Indiana) is running flat out….(It is) gulping 25 tons of coal each minute…(it is) pumping enough power for three million people…the grimy fuel (coal) it devours at the rate of 100-car trainloads per day.”
The process of building a car also requires human labor at every step. These humans also desire automobiles and all the other things that make their life more pleasant, but most of all they require shelter, fresh air, clean water, and food. Every human being requires food and this equates to the fact that every human needs an amount of fertile land on the surface of our small planet for growing his or her food. Now individuals may not own any land or are clueless of where their bread may come from, but that patch of land is still there. Growing cows, grain and other crops for people also requires topsoil, solar power, and water. I added bio-diversity to the bottom of the figure to indicate that diverting land, clean water, and clean air to human use reduces the opportunities for native flora and fauna to thrive. In essence, bio-diversity is consumed. Why do we need bio-diversity? It is because that is ultimately where our food and our life support systems come from. The bio-diversity on the earth is also infinitely beautiful and fascinating and our lives would severely degraded without it. It does not matter whether you believe that life on earth was created over billions of years of evolution or by God in seven days, it is still miraculous. Yet we are relentlessly destroying it. A quote from biologist Edward O. Wilson says it all.
“The one process now going on that will take millions of years to correct is the loss of genetic and species diversity by the destruction of natural habitats. This is the folly our descendants are least likely to forgive us.”
Let us examine the limitations of just a few of these resources:
Land: Fertile land is more precious than one might expect. Less than 30% of the earth’s surface is dry land, and much of this consists barren, rocky deserts, or steep, mountain slopes, or is just frozen wasteland. We compete for fertile land on many levels. We want living space. We need to grow food crops. We need forest products. We need a place to build a factory, and so on. If we have the money and decide to build a country home on five acres, we are taking five acres out of cultivation for food, forest products, and biodiversity. Again -- our ability to live on this earth is defined, not by the space our bodies take up but by the land required to collect our water and grow our food. Every time another person is added to the world’s population the amount of land available to meet each person's needs is reduced.
Solar energy: The amount of solar energy that can be obtained from any square foot of earth’s surface is constant but limited by the size, strength, and the distance of the sun. Seasonal variations and cloud cover further reduce its strength. We can convert this energy into electricity by using solar collectors or windmills, but there are always costs associated with mechanical inefficiencies, and the manufacturing and maintaining of such equipment. The most important application of solar power is to grow food crops. Only flora can convert solar energy to food that we can utilize, and convert carbon dioxide into the oxygen we need to breath. No matter how much fertilizer, pesticide and herbicide we pour on to a food crop, no matter how much we genetically modify a crop, the productivity of the crop is limited by the amount of solar energy it receives.
Topsoil: Topsoil lies on the land, and it is where the earth’s organic waste is turned back into food and support for the next generation of forests and food crops. Soil is created by a rich biota of small creatures that live on organic waste and convert back into usable nutrients. Given enough undisturbed time and land, topsoil is renewable but not within many life times. The topsoil that we use today with little regard was created over eons, and every time we disturb it for farming or other activities, we loose some to water and wind erosion, and incidental burial. Rivers and streams should run clear even in a flood, and if you see one that is muddy, you should know that it is carrying away topsoil loosened by farming or excavation. We are loosing topsoil much faster than it can ever renew itself and, as population increases, so will the rate of loss and degradation of our topsoil.
Fresh water: Freshwater is another surprisingly rare resource. The following quote is from http://www.grist.org/advice/ask/2005/01/31/umbra-freshwater/, “About 70 percent of the Earth's surface is constantly wet. Of all that water, only 2.5 percent, or 8.4 million cubic miles, is not salty. Quite a bit of the freshwater is rather stale, since it's been stuck for eons in glaciers, ice caps, and Siberia: 5.9 million cubic miles, to be exact. Still, more freshwater is too far from human settlement for our use. The accessible freshwater left over after all these caveats is less than 0.08 percent of the water on the planet.”
Fresh water is constantly being recycled through the cycle of evaporation and precipitation but as it flows to the lake or sea, it is severely degraded by a whole host of chemical wastes that we dump into our rivers and streams. As it reaches population centers, it is ruined for human consumption and aquatic life. It can be cleaned of human waste and bacteria through expensive, energy intensive processes, but there is no practical way to remove the chemical burden we leave it with.
For people who depend on groundwater the situation is worse. Groundwater is contaminated easily by chemical ground dumping and is refreshed only slowly. Groundwater contamination is essentially permanent.
All fresh water contamination ends up in our lakes, ocean and our fish.
Petroleum ( http://www.answers.com/topic/petroleum?cat=biz-fin ): There is only one reason our advanced society exists today and that the availability of cheap energy in the form of oil, a source of energy that in the past has literally flowed from the ground. Every material thing that we own and most of our food was grown, harvested, manufactured and delivered with the assistance of cheap oil. If the availability of oil were to be stopped suddenly, all of industrialized society would collapse into chaos. This sudden collapse is unlikely to happen, rather oil will run out over the next century and as it does, it will get more and more expensive. As its value rises, we better get prepared for a different sort of life style. THERE IS NO ESCAPE FROM THIS! After the petroleum deposits are emptied, petroleum will be gone forever from the destiny of mankind.
Every other source of energy will be more expensive because of the energy and materials it takes to produce them. Coal for example, is even more abundant than oil but, because it is a solid mass, it requires expensive hard rock mining, bulk shipment, and refinement to convert it to a usable energy source. Another alternate energy source, bio-fuels, will not only be more expensive, they will be an environmental disaster. These fuels will compete with bio-diversity for land, soil, and fresh water, and they also will also compete with our own food supply for these resources. Under a bio-fuel economy the dollars we pay for both food and fuel will go up. The wealthy man on the other side of town will still be able to fuel his auto but your food will be much more expensive.
Air: The air we breathe is a specific mix of gases that our body has evolved to utilize. Most important to us is oxygen. In the process of life, we breathe in oxygen and exhale carbon dioxide. If we still lived in a natural environment, the ratio between oxygen and carbon dioxide in the atmosphere is kept in the proper balance by the life processes of vegetation, which in the presence of solar energy, convert carbon dioxide into plant tissue and the oxygen we breath. Our industrial processes, however, are degrading our air in two main ways. They are adding numerous gases, depending on the process, that our bodies have no way to handle, and they are converting our oxygen into more and more carbon dioxide. In increased amounts, carbon dioxide is a poison and is a global insulator, trapping increasing amounts of solar heat. Carbon dioxide is increasing because we are burning, in a very short period of time (a couple of centuries) vast amounts of carbon stored in he earth over hundreds of millions of years in form of coal and petroleum. THERE IS NO ESCAPE FROM THIS!
Various Metals: Iron, aluminum, copper, zinc and numerous other metallic elements that we use in uncountable ways are dug from the surface or from under the surface of the earth from very limited locations. Although iron and aluminum are relatively common, the discovery of a new, commercially valuable deposit of metal bearing ores is extremely rare.
In their natural state, metals are usually compounded with other elements, usually sulfur, and are useless in this form. To break these chemical bonds (smelting) and obtain pure metals, vast amounts of oxygen and energy (usually in the form of coal) are needed. In essence, during smelting, we are converting the earth’s oxygen supply into the poisonous greenhouse gases Carbon dioxide and Sulfur dioxide.
To some extent, metals can be recycled, but a large percentage of metal is corroded away and incidentally lost into the environment. This lost metal cannot be recovered because it is thoroughly spread around and is no longer concentrated. Everyone’s community should recycle metal even if it is not cost effective.
The earth’s natural resources all cost something because they are all limited by both their natural availability and the costs involved in preparing them for use. As the world’s population grows, the demand for these resources will also grow and consequently the so will their cost for us. THERE IS NO ESCAPE FROM THIS! As countries like China and India become more prosperous the competition for resources will become more intense and we will pay more for them, or do with less of them. As China prospers the US’s economy will fade, not because they work harder or because they are more talented, but because of the inherent limitations of the earths resources.
Everything we have, including our life, ultimately derives from the Earth’s natural resources. Whether we count our wealth in coins, a bank statement, stocks and bonds, or any other accounting, these numbers really measure the amount of the earth’s limited natural resources that we can obtain for our consumption. We are using up these resources at prodigious rates and as more of people are born and want to raise their standard of living the demand will only grow worse. In America all the comforts we see around us, our food, our health, our transportation, our homes, our jobs, our electronic gadgets, and much, much more has been propped up by cheap petroleum. Even the access of other resources depends on economic petroleum for digging and transportation. THIS IS NOT GOING TO LAST!
If humanity continues to squabble over trivialities such as religious beliefs and various unrealistic economic and political dogmas, and cannot bring itself to understand the simplest fact that the surface of the earth is limited, and consequently so are the available natural resources, it is headed for disaster. We can not shrug our shoulders at this and assume that God, science, industry, or Government will bale us out. More resources will not appear from nothing.
If humanity continues bring babies into this world at a rate that expands the world’s population, it is compounding the problem of limited resources. Sure we can put more land under cultivation and distribute food throughout the world better than we do, but this has all kinds of environmental consequences, and only puts off the inevitable. Sadly, religious beliefs play a disastrously negative role in any ability to limit population growth. Many religions encourage high birth rates with various dogmas, taboos and incantations, but the only real reason for this is that the hierarchy of these religions wants to be sure there is always a dependable supply of new members. In large portions of the world, the Catholic priesthood, for example, puts families and especially women into an untenable position. The Pope looks out from his pulpit and speaks to millions of devoted and desperately poor and he tells them that both abortion and birth control are banned. This is simply a means of overlooking reality in order to fatten the influence and coffers of an organized religion. It is a means of short-term gain at the expense of the future. Catholicism should not be singled out here. It is certainly not the only religion that keeps humanity on this self-centered, disastrous path.
There is also a political dimension to this. Nearly every politician claims he or she will do everything possible to stimulate economic growth. There is no consideration of the reality that growth is equivalent to increased consumption of natural resources, or even if there are enough resources available to a community to support such growth. Along with this, politicians and religious leaders always promote a growing population and its increased requirements for goods, services and resources. An increasing population always gives the impression of growth, making it easy for Government officials to claim economic growth during their administration or reign. Again, this is a just method of hiding from the ultimate reality for the sole purpose of appearance and political influence. People have to start asking their politicians if they truly believe that the world economy can grow without bound given that it is a reality that our planet is limited. Sure, the current world economy could get even bigger, but that just means that the inevitable will happen much sooner -- economic collapse.
Is there any hope for mankind and womankind? Not much. It is unlikely that large masses of people will ever be educated to the point where they understand the economic threat of declining natural resources, and are willing to limit birth rates and overall consumption of resources. Even so-called educated people who should know better conveniently overlook this in their relentless pursuit of economic strength. For their own convenience, and at the expense of their children and grandchildren, they do not recognize that economic success is simply a measure of the access they are granted to the earth’s limited natural resources. Eventually humanity will be brought into balance with the limitations of what our humble planet can provide through starvation, disease, and warfare, and eventual social collapse. THERE IS NO ESCAPE FROM THIS!
Henry F. Senn, December 2007
Best Love Song, Ever!
Roadside Salesman, Oregon Coast, July 2007
He's selling something but I do not know what exactly.
The Government is not a vehicle for forcing your view of religion down other people’s throats. Pursuit of this course will ultimately make both you and me the victim of Government thought control.
To rely on Government enforcement of your religious values also suggests that the tenants of your religion are so weak that they cannot stand on their own.
The proper role of Government in the matter of religion is to stay the hell out of it.
Letter to Louisiana Governor Bobby Jindal in regards to his GOP response to President Barack Obama's address to a joint session of Congress
Dear Governor Jindal
It is certainly your privilege and duty to question the expenditures in Obama’s stimulus package, but one statement stood out for me as it did others. It was your statement singling out “…something called “volcano monitoring” as example wasteful spending. Your choice of words suggests that you did not even know what it is. This is curious coming from the Governor of Louisiana whose responsibility includes New Orleans, a wonderful city that is hugely dependent on accurate forecasting of Hurricanes. For the millions of people who live at the base of Mount Rainer, Mount Vesuvius, and other active volcanoes, volcano monitoring is no joke.
I think your statement reflects something Republicans need to avoid in the future, a tendency to belittle science for political gain, and worse, to ignore science when it gets in the way of inflexible dogma. Sometimes science has gone down the wrong path, but not in the long run. Every comfort that we enjoy in our modern society reflect the ultimate successes of science.
This temptation of the Republicans to ridicule science for political gain is something they may have adapted from William Proxmire, a Democrat, who’s Golden Fleece Awards won him much political fame. The problem was that he often cited the titles of research papers that sounded silly to the ears of the scientifically naive. An example I can remember is “The Sex Life of the Tsetse Fly.” The title certainly evokes the idea of a hapless research assistant taking notes as he watches the insects cavort, but it turns out that the sleeping sickness spread to African cattle by this insect has a huge economic consequence, and understanding the life cycle of this pest has led to eradication strategies.
The Republican Party will ultimately benefit from taking science seriously and supporting it, and so will the country.
Henry F. Senn, March 2009
The Great American Paycheck Squeeze
The following quote is extracted from a segment on the February 28, 2010 CBS Sunday Morning show titled "The Great American Paycheck Squeeze - Over Last Two Decades, as U.S. Workers Became More Productive, a Third of All Income Growth Went to Top .01%".It is currently posted at http://www.cbsnews.com/stories/2010/02/28/sunday/main6252373.shtml?tag=contentBody;featuredPost-PE. Sunday Morning is a long running show fathered by the late Charles Kuralt (of "On the Road" fame) and is almost universally a feel good show about people doing good things in art, commerce, and with each other, in other words people who are making the world a little better place to live rather than worse. In a similar fashion this piece starts out talking about the SAS Corporation, a business analytics software and services company honored by Fortune magazine as the best American company to work for in 2009. After spending a fair amount of time on SAS and its employee benefits the discussion becomes rather pointed for Sunday Morning piece follows:
"The reality is, for more and more Americans in these recessionary times, SAS might as well be Disney World. The fact is, most workers feel overworked, under-appreciated and - most of all - under-paid.
"We're living through one of the worst times for wage growth ever," said Larry Mishel, an economist with the Economic Policy Institute, a non-partisan, non-profit Washington think tank. "From 2002 to 2007, the hourly compensation of a typical college graduate or a typical high school graduate went up zero - didn't grow at all."
Mishel says for most American workers, wages have been under assault for nearly 40 years.
"If you're in manufacturing, there's pressure from overseas," he said. "We've weakened the ability to have and keep a union, we've introduced privatization, we have a much lower minimum wage, in many industries, we've deregulated them."
And the current recession isn't helping.
"We've seen the steepest and longest rise in unemployment since the Great Depression," Mishel said. "This has a tremendous downward pressure on wages. Employers have all the leverage; they don't have to give you more money to get you accept a job.
"In a Great Recession, you don't have songs that say, 'Take this job and shove it!'" Mishel said.
He points to the fact that from the 1940s until around 1970, as workers became more productive, their salaries grew accordingly. But around 1970, things changed, and for the next four decades, as productivity skyrocketed 70%, hourly wages hardly budged, rising a mere four percent.
So, where did all that extra money go? Mishel points to the very top.
"Between 1989 and 2007, before the Great Recession, of all the income growth that was generated, the bottom 90 percent [of Americans] got only 15 percent of it. The upper one percent got 55 percent. And the upper tenth of the upper one percent, the one out of 1,000 households, got about a third of all the income growth."
"Hang on, hang on - over 18 years, a third of all income growth went to one tenth of one percent?" Axelrod (Axelrod is the CBS correspondend) asked.
"Absolutely," Misehal said.
(Economic Policy Institute)
In other words, the middle class was getting a raw deal.
"We know that CEOs in large companies make 270 times that of a typical worker," Mishel said. "It used to be around 20 times, 30 times, back in the '60s and '70s (TAKE NOTE!!).
"Now the fact is, you don't have to pay someone that much to get out of bed and go to work and be productive."
"I call this the 'gloom and doomers,'" said Georgetown University economist Stephen Rose, who thinks the myth of a middle class squeeze is exactly that, a myth.
"That would imply an economy that we just don't have. The malls wouldn't be filled. The people wouldn't be rushing to spend $14 to go to 'Avatar.' They wouldn't have all the wiis, all of the iPods, the iPhones, etcetera, etcetera."
Rose uses a different set of numbers. He points out that the median income of American workers has been rising steadily, from about $49,000 dollars in 1970 to $62,000 in 2008.
"If you ask people, 'How do you compare to your parents?' about 50 to 60 percent say better," Rose said. "Thirty percent say about the same. And only about 15 percent say worse. So Americans think they're living better. The evidence seems to be overwhelmingly clear they're living better. And so I think it's a tall stretch to argue that 60 to 80 percent of Americans haven't moved forward over the last three decades."
Larry Mishel believes those numbers are misleading.
"It's really a low threshold to say families are a little better off than 30 years ago, when the pie grew by 70%," Mishel said. "They should be far better off.""
It is important to notice what is happening here. These CEOs and those in bed with them make a lot more money but do not produce anything. They are essentially skimming off the the top of our economy to make themselves super wealthy. They serve on each other's boards and support each others motives and salaries. They do not care about the employees. They would fire them all in a second if would make their current company's earnings look better in the morning. They do not care what product their company makes or what the quality is as long as they can sell it. They do not care about this country. If it is profitable, their next factory will be built oversees. Most likely their third or fourth personal mansion will be built in a another country, and their yacht will be built by a foreign ship builder. A hundred people in the company could do the same job they do if they would demonstrate the right stuff which mainly consists of having no principles that include the greater good..
Henry F. Senn, February 2010
Lawn Pesticides and Animals