Dominoes

Posted on August 13, 2008 by Dave Pollard
credit
Last year I described thirteen economic, political and environmental crises that are long overdue, and which will almost certainly occur at some point in this century. These crises will be the result of our generation’s short-term thinking, greed, and mismanagement of the the economy, of power and of the Earth’s resources. Our actions, throughout the twentieth and early twenty-first century and to some extent even before, have been irresponsible, shortsighted, selfish and unsustainable. What’s worse, rather than accept responsibility for this behaviour, we have mortgaged the future to try to sustain our unsustainable lifestyle and actions just a little longer, in the misguided belief that technology or innovation will find some way to solve them, and allow rampant population growth and consumption growth to continue indefinitely.

The generations that will inherit the mess we have created over the next three generations should rightly be furious at us for doing so, but unlike the boomer generation, who rioted in the streets in the 1960s and swore to “never trust anyone over 30”, our successors have been sanguine, pragmatic, even timid about the challenges we have foisted upon them.

Recently, I was asked which of the thirteen interrelated looming crises I thought would be the first to occur, the first domino to fall, and when.

In answering this, I would offer a few caveats:

  • Prognosticators have a long track record of overestimating the rate of change in the near future and underestimating the change over the longer term. Unlike many of the experts in economics, ecology, technology and social trends, I think the next twenty years or so will be merely tumultuous — the real crises, the ones we are unlikely to be able to cope with, probably won’t occur until the 2030s. 
  • This doesn’t mean that we’re not going to have some earlier previews of the crises to come, and some short-term improvements in some areas that might give us false hope that the longer-term problems had been solved. For example, we’re going to have a series of serious recessions before 2030, I think, but the next Great Depression will not likely occur until after then, after we have had some temporary respite from the smaller downturns. And while Peak Oil is inevitably going to make the price of oil unaffordable for almost all endeavours we now take for granted, we will see spikes and retrenchments of oil prices in the interim, in response to short-term events, that may blind us to the inevitable long-term energy crisis that awaits us.
  • The longer-term crises that will prove to be our undoing are likely to be masked by short-term crises that will distract us from paying attention to them. The media will worsen this situation. Only in retrospect will we realize which of the burning issues of the day were the ones that were really important.

Because they’re interrelated, some of these crises will precipitate others, and our ability for forestall some of them will delay the occurrence of others. And the timing of some of them, like pandemics, is largely unpredictable — if they occur soon, they might cause some of these other crises to occur sooner than I’d expect, and if they occur later, they might delay the onset of others.

Having said that, here is my wild guess about when these crises will occur. I’d welcome your “second guesses”:

First Wave: Approximately 2010 to 2030

  • Consumer Credit Collapse: After a brief upturn in the housing market in the US particularly, housing prices will plunge again as the orgy of consumer spending that has occurred since 1990 (see charts above) comes to a sudden halt, after a whole series of bank collapses cause a severe tightening of credit. Since 1970, in real dollars, per-capita total assets have doubled, financed entirely by debt, so that net worth of 95% of the population has actually declined. The apparent wealth of bigger houses, second cars and expensive furnishings is all an illusion, and the tightening of credit will throw all these overpriced assets into the market at fire-sale prices, and bankruptcies will soar. Between 2002 and 2007, $1.2 trillion of credit card debt was shifted into mortgages. With home prices falling further, that debt will be called, and added onto the expected $3.0 trillion in other credit card debt, carrying double-digit average interest charges, will crush millions of consumers.
  • $US Collapse, US Debt Crisis and Trade Imbalance Crisis: Even the most optimistic economists have acknowledged that the US debt and trade deficit, each around $10 trillion and growing at an astronomical rate, cannot be sustained. The recent “small collapse” of the $US reflects this, but it is not enough to solve the problem. It simply cannot be repaid, even if interest rates are suppressed and the US economy keeps churning out more and more money to paper it over. Ultimately creditors (in Asia, and in the Mideast), realizing their receivables from and investments in the US are essentially worthless, will balk, and the dollar’s collapse will be sudden and total, just like all the overextended and mismanaged currencies that have preceded it.
  • Inflation and Interest Rate Spikes: The real rate of inflation in affluent nations has long been in excess of 10%, but government authorities have fudged the numbers to report low rates to justify low indexing of pensions and wages, artificially low interest rates on debt, and to enable them to blame consumers for their inability to make ends meet. Rates on loans and mortgages are already jumping even as governments keep pushing down the interest rates they pay to bondholders and charge to banks and corporate lenders. As commodity prices leap and credit tightens, and as the $US goes into freefall, we will start to see the hyperinflation that plagued mismanaged economies throughout previous centuries. These spikes will exacerbate the housing and credit collapse and bankruptcy rates, and slow international trade to a crawl.

Second Wave: Approximately 2030 to 2050: Continuation/recurrence of the above crises plus:

  • Economic Collapse in China and India: These economies, overheated, dependent on sales to affluent nations that will no longer be able to afford their products, dependent on cheap energy, and facing unending environmental catastrophes because of exhaustion of the soil and pollution of the air and water, will crumble. Factories will be abandoned, riots will break out, civil order will break down, and famines and civil war will rage.
  • Severe Water Shortages: Water will become a scarce resource and economic activities dependent on it will become unaffordable and, with rationing, impossible to sustain. Irrigation in agriculture, tar sands development, and most mining operations will cease. Hydroelectric power plants will shut down. Human settlements in dry areas on all continents will be abandoned. The US may invade Canada to access fresh water.
  • Oil Shortages and Permanent Price Spikes: As new oil projects prove incapable of producing significantly more energy than they consume, realization of the end of the oil economy will finally dawn on us all. Oil prices of 5-10 times current levels will require a permanent and painful adjustment to economies and ways of life. Areas that are inhospitable without fossil fuel heat or cooling will be abandoned. So will suburbs and areas far from employment, as outlined in The Long Emergency. Large-scale re-localization of economies will occur, as long-distance transportation of goods and people becomes uneconomic. Industries dependent on oil, such as agriculture, plastics, textiles, paints, chemicals and pharmaceuticals will face massive restructuring. Economies dependent on foreign trade will be shredded.
  • Stock Market Crash and Global Depression: The combination of most or all of the above will bring about a crisis in capital markets, a huge shrinkage in consumer spending, and an unprecedented dislocation of people and industry, precipitating the second Great Depression. The last one ended with a massive government investment in war and social service spending. This time, governments will have no money to rescue the economy, so the depression could continue for decades, just as the boom of the last century endured for an unprecedented period.
  • Pandemics: The concentration of monoculture agriculture, the horrific overcrowding of farmed animals with almost no genetic diversity, and human overcrowding, combined with global warming and the destruction of tropical ecosystems will, together, inevitably unleash pandemics that will affect all species of life on Earth: humans, plant crops, forests, farmed and wild animals, birds and fish. The economic losses and economic disruption caused by these pandemics will be far more devastating than the simple loss of human life. Such pandemics will become more frequent as ecosystems become more crowded, less varied and more fragile. They could happen anytime.
  • Bioterrorism: As these crises start to occur with greater regularity and greater severity, a sense of desperation and hopelessness, already seen in some of the more overpopulated and desolated nations of the planet, will become more widespread. Bioterror is easy for desperate groups to perpetrate, and need no national sponsorship, and the spread of knowledge and new technologies will make it even easier. With so much of our population, food supply and infrastructure centralized, it will be impossible to prevent, and its success will encourage more of it.

Third Wave: Approximately 2050 to 2070: Continuation/recurrence and worsening of the above crises plus:

  • Conventional Civil & Regional Wars Escalating to Global Wars: In socially and environmentally stressed and overpopulated areas such as Pakistan/India (two nuclear powers), the Mideast, South America, Africa and Southeast Asia, already endemic local warfare and genocides will escalate and spread into regional wars, which, as resources become scarce and nuclear and biological weapons become more affordable, will engulf the whole planet. 
  • Climate Change Crises: Large-scale desertification, droughts, heatwaves, the death of the oceans, widespread, violent weather events and rising sea-levels caused by glacial and ice-cap melt and ocean current disruption will all wreak havoc on an already crisis-weary planet. Some projections suggest that, by the latter part of the century, as many as one billion people in low-lying coastal areas will be permanently displaced.
  • Food Crises, Famines and the Collapse of Industrial Agriculture: A combination of oil scarcity, water scarcity, diversion of cropland to fuel production, and desertification and other climate change disruption is likely to make the industrial agriculture model completely unsustainable. The switch to local, subsistent permaculture will be difficult and painful.
  • Large-Scale, Endemic Unemployment: Most of the planet has lost the capacity and knowledge of how to make a living for themselves. As larger corporations prove to be unsustainable and close their doors, the immediate effect will be large-scale chronic unemployment (already evident in many struggling nations). It will take generations for citizens to re-learn the long-lost skills of feeding, clothing and looking after themselves.
  • Infrastructure Collapse: For many years the global infrastructure of utilities, distribution, transportation networks and production has been neglected and underfunded. This neglect will worsed as the economy weakens, and large parts of the infrastructure previously maintained by either tax dollars or private consortia will crumble and fall into disuse, and will just be abandoned.
  • Endemic Chronic Disease: It was interesting to see that the gnomes of Davos identified the soaring rates of chronic diseases in affluent nations as one of the top ten global business risks this year. We will soon, I predict, discover that this is caused mostly by the toxins in our food, air, water and soil, and by the nutritional and micronutritional poverty of the modern industrial agriculture diet. Unfortunately, the damage has already been done, and the soaring rates of these debilitating chronic diseases will bankrupt health systems, cripple the workforce, and create an unbearable burden on the healthy.

Not a particularly bright picture, I admit, and more than any species can possibly hope to overcome. All civilizations end, and so will ours. It won’t be pleasant, or sudden, but this is how I see if unfolding, based on a combination of a lot of study of history, anthropology, economics and current events, and a bit of intuition. If you think I’m missing something from this list, or if you think my timing is off, or that something else will be the first domino to fall, please jump in. If you think that technology, or ingenuity, or leadership, or spirituality, or some great collective consciousness and global collaboration, is going to rescue us, there are lots of other sites with readers anxious for your reassurance, but I’ve heard it all, and I’m past such wishful thinking.

In the meantime, this world is still a wonderful place, and it needs our attention to the issues at hand, and to the creation of models of a better way to live for the survivors of the sorry mess we’ve (with the best of intentions) created. Let’s have fun, fill the world with love, conversation and community, do what we can to make things better, or at least no worse, and let the future unfold as it will. Fare forward, o brave fellow passengers on this lovely fragilelittle spaceship.
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8 Responses to Dominoes

  1. Brandon Watkins says:
    August 14, 2008 at 09:14

    Hi Dave,I’m completely with you on the consequences of our financial and environmental irresponsibility. I also agree with your time frame on environmental calamities. Where I disagree is in the timing of the financial crisis. I believe we’re close to a tipping point that will accelerate financial collapse and bring about a major Depression by 2020. Part of the reason is I feel that we’ve hit Peak on oil, and though we’ll plateau for a while prices will increase in the face of growing global demand. By the late 2010’s (e.g. 2017) it will be clear that cheap oil is gone. At that point we’ll stop flopping around like a fish on land, and flop right into the skillet. Any remaining financial stability will collapse. Global trade, already struggling at that point with fuel prices, will practically end. Smart individuals and companies that have re-localized will be in much better shape than anyone who has not. Those who can’t sustain themselves locally will be in horrible shape, and companies that still operate “globally” will die. If anything serious happens before then to disrupt oil – a terrorist attack on a major field, or Russia cutting off oil sales, etc. – we’ll spiral into this condition much more quickly.I try to argue for simplified, re-localization of business on my blog Simple Sustainability. We will all be better off when this hits if companies have re-established regional production and distribution of goods. Where they haven’t, I hope local cooperatives develop.

  2. EJ says:
    August 14, 2008 at 09:16

    Given a Shovel, Americans Dig Deeper Into DebtThis is a very interesting article with some great interactive graphshttp://www.nytimes.com/2008/07/20/business/20debt.html

  3. Chris Corrigan says:
    August 14, 2008 at 10:27

    Dave:I am constantly struck by the combination in your thinking of a context that cannot be influenced and small actions that can be. The end of this piece tells a little of the attitude that you choose to take in the face of these crises, and I think that would make a good post (I may have missed it). Planetary shifts are always beyond our scope of influence, and so then what is the personal orientation to these things? If I read you right you embody something of the same kind of attitude that I do: “I’m not an optimist, I’m a realist.” In other words, good bad or ugly, being undaunted, kind, helpful and creative seems to be a better way to deal with things that arming yourself to teeth and locking yourself away to await doomsday. Seems to me there is utility in using the remaining 100 years to practice the former as a way of countering the latter.

  4. mattbg says:
    August 14, 2008 at 13:41

    Dave, I think you’re right on with idea about time schedules being overly pessimistic, but I think yours may have become slightly too optimistic. It’s a great list, though. I’ve reordered it a bit according to my own opinion. Of course, there’s no reason why anyone should believe me, is there? :)First Wave: Approximately 2010 to 2030Consumer Credit Collapse: (sooner than later)$US Collapse, US Debt Crisis and Trade Imbalance Crisis (first half of the period)Inflation and Interest Rate Spikes: The real rate of inflation in affluent nations has long been in excess of 10%, but government authorities have fudged the numbers to report low rates to justify low indexing of pensions and wages, artificially low interest rates on debt, and to enable them to blame consumers for their inability to make ends meet. Rates on loans and mortgages are already jumping even as governments keep pushing down the interest rates they pay to bondholders and charge to banks and corporate lenders. As commodity prices leap and credit tightens, and as the $US goes into freefall, we will start to see the hyperinflation that plagued mismanaged economies throughout previous centuries. These spikes will exacerbate the housing and credit collapse and bankruptcy rates, and slow international trade to a crawl.Economic Collapse in China and India: I don’t know how you separate this from the other economic difficulties aboveStock Market Crash and Global Depression: or this…Oil Shortages and Permanent Price Spikes: I think the current prices will wring out a lot of the potential efficiency improvements from the business-as-usual system and destroy the demand from the less ambitious competitors, so since peak oil is predicted to affect even the earlier part of this period, I think it belongs here.Second Wave: Approximately 2030 to 2050Severe Water Shortages: Water will become a scarce resource and economic activitiesdependent on it will become unaffordable and, with rationing, impossible to sustain. Irrigation in agriculture, tar sands development, and most mining operations will cease. Hydroelectric power plants will shut down. Human settlements in dry areas on all continents will be abandoned. The US may invade Canada to access fresh water.Pandemics: crop disease pandemics are more worrying to me, for the same reasons you mentionedBioterrorismInfrastructure Collapse: much of the current infrastructure was built in the 1960s with near-time end-of-life. Combined with municipal bankruptcies due to the other financial problems, I think it will occur sooner.+Climate Change Crises: Medium-scale desertification, droughts causing local famineFood Crises, Famines and the Collapse of Industrial Agriculture: relatively mild price spikes were enough to cause riots, suggesting people were already at the brink of starvation. People already starve to death in some undeveloped countries.Endemic Chronic DiseaseConventional Civil & Regional Wars Escalating to Global WarsThird Wave: Approximately 2050 to 2070Climate Change Crises: Large-scale desertification, droughts, heatwaves, the death of the oceans, widespread, violent weather events and rising sea-levels caused by glacial and ice-cap melt and ocean current disruption will all wreak havoc on an already crisis-weary planet. Some projections suggest that, by the latter part of the century, as many as one billion people in low-lying coastal areas will be permanently displaced.Large-Scale, Endemic Unemployment: Most of the planet has lost the capacity and knowledge of how to make a living for themselves. As larger corporations prove to be unsustainable and close their doors, the immediate effect will be large-scale chronic unemployment (already evident in many struggling nations). It will take generations for citizens to re-learn the long-lost skills of feeding, clothing and looking after themselves.

  5. mattbg says:
    August 14, 2008 at 13:43

    Sorry, I screwed up my comment (again)… please delete the previous one, if possible :)Dave, I think you’re right on with idea about time schedules being overly pessimistic, but I think yours may have become slightly too optimistic. It’s a great list, though. I’ve reordered it a bit according to my own opinion. Of course, there’s no reason why anyone should believe me, is there? :)First Wave: Approximately 2010 to 2030Consumer Credit Collapse: (sooner than later)$US Collapse, US Debt Crisis and Trade Imbalance Crisis (first half of the period)Inflation and Interest Rate SpikesEconomic Collapse in China and India: I don’t know how you separate this from the other economic difficulties aboveStock Market Crash and Global Depression: or this…Oil Shortages and Permanent Price Spikes: I think the current prices will wring out a lot of the potential efficiency improvements from the business-as-usual system and destroy the demand from the less ambitious competitors, so since peak oil is predicted to affect even the earlier part of this period, I think it belongs here.Second Wave: Approximately 2030 to 2050Severe Water ShortagesPandemics: crop disease pandemics are more worrying to me, for the same reasons you mentionedBioterrorismInfrastructure Collapse: much of the current infrastructure was built in the 1960s with near-time end-of-life. Combined with municipal bankruptcies due to the other financial problems, I think it will occur sooner.+Climate Change Crises: Medium-scale desertification, droughts causing local famineFood Crises, Famines and the Collapse of Industrial Agriculture: relatively mild price spikes were enough to cause riots, suggesting people were already at the brink of starvation. People already starve to death in some undeveloped countries.Endemic Chronic DiseaseConventional Civil & Regional Wars Escalating to Global WarsThird Wave: Approximately 2050 to 2070Climate Change CrisesLarge-Scale, Endemic Unemployment

  6. Jim Hanna says:
    August 14, 2008 at 22:17

    Sadly, I think you’ve got the dynamics of the system about right. As to timing, it’s likely to be driven by visitations of whatever black swans may occur.One factor not yet mentioned here, although implicit in several of those described, is the devolution of the nation state as the impotence of government bureaucracies to solve these problems becomes too obvious. John Robb, whom you’ve cited before, is a good resource for more detail on this.Thanks for articulating your understanding and playing it as it lays.

  7. Christopher vanDyck says:
    August 14, 2008 at 23:25

    I think everything you mention will occur to a certain degree… but I certainly don’t subscribe to your notion of one big calamity happening – which is made up of all the errors which people are making. Far from it, in fact. Yes, transient calamities strike. But those immediately spur people to address the situation, so that they protect themselves in the future. Unfortunately, people generally won’t listen to doomsayers before the calamity strikes.I was so fascinated to see the change in the usa cable news networks after Hurricane Katrina doused New Orleans a couple years ago. Immediately, the focus shifted off of the middle east; and from that month onwards, CNN started reporting on all the solutions which environmentalists have been talking about for years to the disasters which they had been forecasting. Since that august of 2005, usa research has intensified dramatically in the areas of alternative energies for transportation, alternative ways to generate electricity, and such things. In order for a country to change course, there needs to be a consensus which is raised on a national level.We’ll see a similar response in the usa to the current banking debacle… safeguards will be put in place to prevent future occurrences of the same kind of irresponsible banking.Generally, when calamity strikes, the ideas of folks who have predicted that calamity are listened to – and the precedents are followed which were set by other nations who have been more prudent.The two things that I’m most concerned about (as a person in the usa) are these:1) First, our national debt here – which you mention. The policies of folks in Washington DC seem to indicate that they have no intention of ever paying that money back – and it would be a horrendously difficult thing to do, anyway. And I definitely agree that the investors such as the government of China will eventually realize this irresponsible attitude – and they will start calling in that debt. This may lead to something like what happened in Argentina a few years ago. The usa should recover within a decade or two. Think about how Japan was decimated by the firebombing of cities during world war II, and look at how within a few decades it rose from the ashes to be a hub of new technology. Money problems are a far easier thing to solve. The usa isn’t going to be kept down very long by a default on it’s debts.There is also a larger usa federal money obligation domestically to the programs of medicare and social security (medicare being the larger concern). Because the government is between a rock and a hard place in regards to these social programs, I imagine it will find a solution in the precedent that Canada has set with your socialized medicine program up there – this will cut medical costs in the usa and reduce the medicare obligation by quite a bit. 2) My larger concern is the endless plod onwards in the destruction of ecosystems around the globe – leading to an even more hefty loss of biodiversity. This has been a particularly insidious thing, because the situation does not come into being because of any group’s explicit plan. There are no neoconservatives to yell at, when the effects of their misguided plans predictably wreak the chaos that they always do. Environmental degredation happens because people feel that to up the standard of living for humans, it would seem expedient to lower the standard of living for all the other creatures around us. Over the long term, of course it is not. However, I see a light at the end of the tunnel here. With the big push for alternative electricity generation and alternate kinds of transportation fuel (eg electricity and hydrogen)… it looks like our relationship to the other ecosystems will get a lot rosier. Don’t you see how the trends will play out here? Think about the symbolism of hydrogen. If hydrogen is a major industrial fuel, our attitudes about industry and technology will turn around 180º.Hydrogen is not a natural resource which can be mined or which will run out; it only comes into existence by our own efforts. And hydrogen burns to create clean pure water. What drives a town’s or country’s economy has a really profound influence on the zeitgeist of that group of people.

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