Register

Peak Oil is You


Donate Bitcoins ;-) or Paypal :-)


Page added on October 22, 2017

Bookmark and Share

An ecological view of Trump’s trade war

Public Policy

Whether you regard President Donald Trump’s rejection of America’s trade agreements as a good thing or a bad thing, few people understand what canceling them would mean. From an ecological point of view, abruptly pulling out of trade agreements, agreements which have resulted in innumerable long-term investments and commitments, is the ecological equivalent of a reduction in scope.

A reduction of scope means that occupational niches which arise specifically to facilitate trade in shipping by land, sea and air, manufacturing for export, warehousing, finance, insurance, government employment (such as customs officials and coast guard forces) and other trade-related occupations, all are endangered when the scope of their activities is reduced as a result of new trade restrictions.

To understand what this means, we need to understand the flipside of scope reduction, scope enlargement. From an ecological perspective the increase in world trade over the last few centuries has in a manner of speaking allowed local populations to escape the tyranny of Liebig’s Law of the Minimum. In the mid-19th century, Justus von Liebig observed that plant growth was strictly governed by the least available of a plant’s necessary nutrients. Adding other essential nutrients simply wouldn’t overcome the limitation imposed by the least available one.

In the absence of trade, Liebig’s Law acts like a brake on a local community, preventing it from expanding beyond the carrying capacity afforded by its least available essential resources. In dry areas, it might be water. In others it might be arable land. In yet others farmland might be plentiful, but a lack of metal mines might prevent the widespread use of metal tools that could enhance agricultural and manufacturing productivity.

All of this can be overcome if, for example, dry areas rich in mineral deposits trade with agriculturally endowed areas that have plenty of water. In essence, the dry areas are importing water and fertile soil in the form of food in exchange for minerals needed to make metal tools. Something like this goes on today. Countries rich in oil but poor in farmland trade their oil for food to supplement inadequate supplies grown domestically.

This type of illustration will seem familiar as a standard explanation for the wisdom of trade. But Liebig’s Law does not cease to apply because we have global trade. It now applies to global carrying capacity rather than just local carrying capacity. Because this carrying capacity depends heavily on trade in finite energy sources, that is, fossil fuels, its stability cannot be guaranteed indefinitely. Without a substantial replacement of fossil fuels, which supply more than 80 percent of the world’s energy, the current system will collapse into a lower state of organization with far less carrying capacity.

Collapse or at least a partial collapse can also happen if the scope available for obtaining essential goods and services shrinks due to political or economic circumstances. During the Great Depression the decline of global trade was magnified by measures designed to protect domestic industries from foreign competition, mostly through import tariffs adopted by many countries. The effect was a reduction in scope that created even more unemployment through the destruction of occupational niches associated with trade.

We may now face something like this—though whether it becomes severe depends on how far the Trump administration proceeds in withdrawing America from the world trading system and whether other countries retaliate.

Regardless of the Trump administration’s trade policy choices, the ecological perspective allows us to see that almost all of the modern world’s trade-oriented occupational niches are temporary rather than permanent. In the short run, they depend on a general agreement among nations not to engage in trade wars that result in a reduction of scope, that is, nations forced to live on their own resources. This would, for example, be problematic for the American electronics industry that is heavily dependent on China which produces more than 80 percent of the world’s rare earth metals. Those metals are necessary for the production of computers, cellphones or other communications and computing devices. And, this is but one example in our highly interconnected world.

In the long run the limiting factor for trade-oriented occupations is energy because so much of our energy comes in the form of fossil fuels. Those fuels are central to every economy and are critical to sustaining the global logistics system. To assume that world trade at the scale it exists today can continue far into the future without a dramatic reshaping of the world’s energy system is a failure to understand that the laws of nature, in this case Liebig’s Law, cannot be overcome by optimistic pronouncements about our energy future.

On our current energy trajectory the human race is likely to be headed for a reduction in scope as fossil fuel resources ultimately decline and renewables fail to expand quickly enough in type and scale to address the mismatch between our desires and the supply of energy needed to maintain global networks of exchange.

According to the International Energy Agency, despite the rapid growth of renewables in recent years, combined geothermal, solar, wind, and tide/wave/ocean energy output provides less that 1.5 percent of total world energy. Hydroelectric power makes up another 2.5 percent but is growing quite slowly. Percentages for renewables would have to rise dramatically and soon if we are to avert the twin crises of climate change and fossil fuel depletion.

Ideas for changing our current trajectory abound. But they will not matter unless they are shown to be both technically and economically feasible and until they are widely deployed. A felicitous outcome is by no means assured within a time frame that avoids a reduction in scope and its attendant effects.

This piece draws heavily from William Catton’s book Overshoot, the relevant section of which has been reproduced here.

Resource Insights by Kurt Cobb



18 Comments on "An ecological view of Trump’s trade war"

  1. Anonymous on Sun, 22nd Oct 2017 1:00 pm 

    blabla wonkwonk (Peanuts on TV teacher sounds)

    This dude, Cobb, has been wrong, wrong, wrong on peak oil. And no analysis of it. What a wussie.

    Oh…and the article goes for about 3 or 4 paragraphs without even GETTING TO A POINT. I stopped reading after that.

  2. Boat on Sun, 22nd Oct 2017 3:16 pm 

    No new news, no new insight. Carrying capacity being reduced has to happen, my guess is depopulation by climate change, not running out of energy.

  3. Alice Friedemann on Sun, 22nd Oct 2017 3:59 pm 

    Anonymous, what are you talking about? Trade is important.

    One of Jared Diamond’s five reasons for why nations collapsed in the past was the end of important trading partners. The Bronze age nations(included Egyptians, Greeks, Eastern Mediterranean, Mesopotamia, Cyprus, Minoans, Mycenaeans, Trojans, Hittites, Babylonians, Assyrians, and Canaanites) all collapsed in 1177 B.C. because trade stopped because, pick one or all: drought, famine, internal rebellions, wars, invasions of the “Sea People’s”, earthquakes, and more. For details, see Cline, E. H. 2014. 1177 B.C.: The Year Civilization Collapsed: Turning Points in Ancient History. Princeton University Press.

    Evidence of supply chain failure can be seen after the fall of the Western Roman Empire. Pottery and ceramic goods vanish and aren’t replaced because of lack of wood and skills to make ceramics. Reading about pottery shards seems desperately boring, but that’s because in modern times we don’t realize that these goods were essential for the Roman lifestyle. AS far as supply chains go, I’m fascinated that every home had amazingly light, durable, ceramic vessels and roof tiles, even in the poorest, most remote areas at a time when roads were scarcer than today and much of what people was had was carried by donkeys over rough trails. Clay pots and casseroles were used to cook with, amphorae to store wine or olive oil for cooking and lighting lamps, dishes, bowls, mugs, jars, jugs, pestles, to store food and other storage, and transportation of goods. Fired clay (terracotta) was used architecturally as bricks, concrete, roof and floor tiles, statues, lamps, and decoration. Regions that still had forests made these products on an industrial scale, firing as many as 40,000 pieces at once in their large kilns.

    This may seem irrelevant now with our electric and gas kilns, plastic Tupperware, cardboard box, canned and other products, but it’s interesting to contemplate how past civilizations lived, since I’m convinced we’re returning to a wood and muscle energy society ourselves.

    It is amazing is that goods, after they reached land on sailing ships, were taken the rest of the way by donkeys, mules, and people into even remote hinterlands. Ancient supply chains failed when empires lost wars and important trading partners. In our fossil-fueled world, supply chains will decline and then fail as oil declines, which is inevitable given that the earth isn’t a giant gas tank, or refilled now and then by the Santa Claus God in the sky, who knows when you’ve been naughty or nice.

  4. Boat on Sun, 22nd Oct 2017 5:06 pm 

    Robots will take away much of the financial advantage of cheap labor, lack of workplace safety and environmental exploitation. Fewer humans will be needed. Good for the educated, bad for the teeming billions on noneducated.

  5. onlooker on Sun, 22nd Oct 2017 5:27 pm 

    Trading, sharing of knowledge and Humanitarian assistance are examples of how the world is interconnected and really cannot afford not to be. We are a planet now full. Full of people. All of whom require certain products for their survival. To believe we can somehow go back to a previous time of isolation and strict borders is the height of folly. Even in terms of jobs, more and more people migrate to have a chance of gainful employment. Closing borders is tatamount to forsaking many many people. That is now the moral decision that more and more will need to be made. We cannot avoid now these decisions as Resources shortages become more acute relative to population. We are truly now in a race against time to prevent the premature death of millions and billions.

  6. Boat on Sun, 22nd Oct 2017 5:49 pm 

    onlooker,

    Infomation is digital and is shared easy enough.

    “To believe we can somehow go back to a previous time of isolation and strict borders is the height of folly”.

    Gonna take a lot of folly to correct the course of overpopulation. You know what sanctions are? Another form of border. As climate change gets worse expect new borders to flourish.

  7. onlooker on Sun, 22nd Oct 2017 6:02 pm 

    Well, Boat, like everything else, they’re is a digital divide. So, the Market has already bypassed in technology millions or should I say billions. But in the end technology is not critical. Food, water, medicine and shelter are. And the poor 3rd world is too overpopulated relative now to the sustenance of all its inhabitants. Countries like the Scandinavian ones, Canada, the US, Russia with lots of land relative to population may need to take in lots of people or then watch them perish.

  8. makati1 on Sun, 22nd Oct 2017 6:35 pm 

    Most “trade” today is just “stuff”, not necessities. Trade has always changed to suit conditions. Wars. Depressions. Embargoes. ALL have shifted trade. Jobs come and go. That is life.

    The slowing of trade is just another sign of the collapse. Trump may hurry it along, but he cannot slow the decline. As disposable energy continues to shrink, so will the things that depend on it. Get used to it.

  9. fmr-paultard on Sun, 22nd Oct 2017 7:13 pm 

    We’re to believe that phils will use 5000 mosin rifles to build ships and make microchips. In reality choosing Russia instead of us as trading partner means more killing of poor people and Aswang. And white meat as aphrodisiac is sufficient substitute for energy decline

  10. onlooker on Sun, 22nd Oct 2017 7:18 pm 

    Paultard, are you either a moron or insane. From your posts I cannot tell.

  11. fmr-paultard on Sun, 22nd Oct 2017 7:33 pm 

    Ontard you’re not fit to hold a candle for me. I solve problems that many are unable to comprehend.

    I informed der that cattle mutilation and green men are products of folksy brains.

    I hope he now can graduate from grade school of confusion and perhaps work on cold fusion. I can only hope

  12. fmr-paultard on Sun, 22nd Oct 2017 7:36 pm 

    Grade school of perpetual confusion

    Oh and he tried to confuse me saying the FBI investigated cattle mutilation. I said higher tards were having fun with field tards in the FBI. Nope doesn’t lend credence

  13. makati1 on Sun, 22nd Oct 2017 7:50 pm 

    onlooker, he is both, obviously. Not a bit of reality in his posts.

  14. fmr-paultard on Sun, 22nd Oct 2017 7:54 pm 

    Ontard you lack intellectual capacity to understand me. Suggest you call me a degenerate and get over with. We’re on the subject of trading and to abandon the most complex partner for a one trick pony akin to NK juche policy is a big misstep for phils

  15. Apneaman on Sun, 22nd Oct 2017 8:38 pm 

    Alice you are wasting your time responding to Anonymous who is also nony and papa smurf and a couple of other sock puppets. He’s a scum bag, piece of shit shill-troll. When oil tanked he ran away to shill rehab for six months then one day he was back and tried to pretend his absence and oil tanking never happened. Loser writ large.

  16. makati1 on Sun, 22nd Oct 2017 10:00 pm 

    More on trade”…

    “The food industry has become so globalized that much of the U.S. public doesn’t even know where its food comes from, much less whether it is safe. …
    A majority of Americans say they would not buy a food product from China. But a lot of our food comes from China. …
    We [Americans] eat on average 2,000 pounds of food per person per year. That’s a big number. Almost 400 pounds of that comes from outside the U.S. one way or another. And because of these multiple points of distribution where a grower in China sends it to a broker in China, who sells it to a broker in Europe, who then sends it to the U.S., there’s absolutely no way to know where that came from. …
    Seventy-some-odd percent of the ingredients that go into supplements and vitamins are sourced in China or India.”

    http://www.marketwatch.com/story/the-trouble-with-the-us-food-supply-2016-11-21

    Americans have no idea what they are eating or where it comes from. If there is a trade war, they will find out.

  17. DerHundistlos on Sun, 22nd Oct 2017 10:42 pm 

    @ paul the retard

    You are a degenerate. Does this help? Since, according to you, your intellectual gravitas is unappreciated, why waste your time with us mere mortals-LOL?

    By the way, how’s your campaign to encourage women to kill going?

    Please enlighten us to the incomprehensible problems your brilliance has solved?

  18. Davy on Mon, 23rd Oct 2017 5:05 am 

    “The Global “Bubble Arms Race” Has Ushered In The Age Of Government Strongmen”
    http://tinyurl.com/y98vje2s

    “Credit growth accelerated into the communist party congress. Chinese Total Social Financing (total non-governmental Credit) expanded a stronger-than-expected $277 billion during September. Year-to-date Total Social Financing growth of $2.375 TN is running 16.3% above last year’s record pace. Lending was led by booming demand for household real estate purchases. Total Chinese Credit could surpass $4.0 TN in 2017, easily outdoing U.S. Credit growth at the height of our mortgage finance bubble. Despite all the talk about excessive debt levels and the need for deleveraging, Chinese officials have yet to get their arms around a historic credit bubble.”

    “Bubbles are always about a redistribution and destruction of wealth. Its unparalleled global scope makes the current Bubble is so concerning. Xi now owns the Chinese Bubble, and there would appear little prospect that he’ll ever be willing to take responsibility for the damage wrought. Fingers will be pointed directly at foreigners, foremost the U.S. and Japan. I believe the global government finance Bubble – history’s greatest financial boom – will conclude this long Credit cycle going back to the conclusion of WWII. As the “granddaddy of Bubbles,” it is fitting that things turn really crazy during an exceptionally prolonged “Terminal Phase.” We’re at the point where no one is willing to risk bursting the Bubble, certainly not timid central bankers. There’s so much at stake. Importantly, from the global Bubble perspective, a faltering Bubble would risk surrendering power on the global stage. Xi certainly doesn’t seem willing to see a faltering China retreat from global ascendency. The same can be said for Shinzo Abe in Japan. Here at home, making America great again gets no easier with a bursting Bubble. And while there’s no President of Europe, Mario Draghi has assumed the role of defender of European resurgence with an interminable windfall of free “money. It’s all quite unsettling. Global finance has run completely amok. This has been unfolding for so long now that few are concerned. Most revel in asset inflation drunkenness. Instead of safeguarding sound finance and stable money – the bedrock of civil societies and peaceful global relationships – governments and central banks around the world are harboring Bubble excesses like never before. This ensures catastrophic consequences when Bubbles burst. It has reached the point where these Bubbles have become part and parcel to global power, with countries not willing to risk being left behind. It’s as if it has become An Arms Race in Bubbles.”

Leave a Reply

Your email address will not be published. Required fields are marked *