Sunday, February 28, 2010

Survival Alternatives

NOTE: This article was originally published – in part – on Associated Content (2/6/10) and is expanded in the version below.

In our economy, people are paid for “added value” -- creating new things, improving existing things, or keeping existing things from deteriorating. They are rewarded most for providing value that few others can provide, but which more people want (maximizing the ratio of demand to supply that determines prices), thus making it more attractive to create new things than to repair existing things. As the potential for making new things declines due to diminishing resources, increasing prices will be unable to be lowered by increasing supply, so demand will need to drop.

One indicator of demand is per capita disposable income, and 2008 saw the U.S. income grow at a lower rate than the cost of living for the first time since World War II. This decline in the income growth rate has been in progress since about 1980, so it is clearly the result of a systemic problem that cannot be totally blamed on the misdeeds of a few in recent years (although the particular timing can be). My own projections of available natural resources show a clear linear correlation with both income and cost of living (becoming strongest in the 1990s when the U.S. adopted rapidly globalizing trade policies) implicating limited resources as the main culprit.

If resources were not an issue, a simplistic way to deal with reduced demand would be to make more income disposable. This approach is promoted by pro-business interests who seek to decrease taxes. Besides the fact that only a limited amount of income can be recouped in this way (currently about 12%), it threatens to sabotage the entire economic system. This is because taxes support government that builds and maintains infrastructure that enables resources to be efficiently extracted, moved, and processed.

The most direct way to deal with the problem is to increase availability of resources.

A simple approach is to decrease regulation, giving businesses more latitude to find and exploit the resources we currently depend on. This is supported by the same interests who want to decrease taxes, and leads to a similar outcome because regulation (when done right) reduces inherent negative consequences of such behavior, such as conflict, theft, health risks, and over-exploitation.

Alternatively, we can find and use different resources (“substitution”). These resources can be nonrenewable, such as nuclear power and “clean” coal. They can be renewable, such the various types of “green” resources (such as solar energy, wind power, and biofuel) whose use is growing rapidly but is still practically insignificant in terms of total consumption. Or they can be reusable, modeled on life’s highly efficient use and reuse of mass and energy, and exemplified by the growing permaculture movement.

Using other nonrenewable resources can briefly extend the amount of time before depletion and waste effects pose a similar threat as fossil-based resources do now. The renewable approach can be used much longer with fewer negative effects, but it will take much more time to make universally available since it requires creating a new economy, complete with different physical and social (including legal) infrastructure. The reusable approach can be physically implemented quickly, but it stands to meet the most resistance to adoption since it depends on a radically different kind of demand that is based on efficiency and responsibility rather than waste and narcissism.

Fiction as Simulation

NOTE: This entry is part of a handout given at a related presentation to the Boulder Writers Meetup on 2/27/10.

Stories are means by which people can share experiences through the creation of representative memories, and they have at least two uses: education and entertainment. Education provides a basis for appreciating and changing our physical reality, while entertainment is a way to modify our experience without appreciably changing physical reality. Arguably, the most enduring stories both educate and entertain, enabling us to alter the world so it provides the experiences we want.

Physical and social scientists use abstractions such as mathematics to explain how parts of the world work and what we can observe. These abstractions are embodied in theories, which include things that we may not currently be able to observe, and suggest ways reality can change (or might have changed) along with details about the results.

The process of exploring the different versions of reality embodied by a theory is called “simulation.” Simulation can take many forms; in engineering and science, for example, simulations often use computers to generate numbers and graphs. When simulation is encoded in stories, the result is fiction.

Fictional stories, of course, often share experiences that reside purely in an author's mind. These experiences define an imaginary reality that, if fully developed, has its own consistent elements and rules which can be used to create other experiences, much as a theory is used to predict observations. Whether the author draws on personal knowledge or on the predictions of a theory, the outcome is still a work of fiction, but the latter will have an educational component that can yield benefits far beyond the initial exposure to the story.

The author could alternatively choose a theory that itself is fictional, but the process of creating a fictional story using simulation would still be the same. It begins with defining "initial conditions" such as the setting, characters, and rules that govern behavior in the story's artificial "environment" (the theoretical structure that determines observations). The simulation then occurs, with the author acting as a reporter of what unfolds afterwards and focusing on specific characteristics of interest, which requires selecting one or more points of view and using an understanding of the audience to effectively communicate what happens.

Tuesday, February 2, 2010

Economic Survival

Last weekend I attended a talk by prominent author, journalist, and local talk show host David Sirota, who discussed the state of journalism in Colorado and the nation. At the time, I was in the midst of some serious planning about my financial and professional future, and had been toying with the possibility of expanding my creative writing to include journalism, possibly even as a new career.

Sirota advanced his opinion that journalism will be forced to become more and more local, since national reporting is becoming both expensive and easily available from centralized sources. I wasn’t too surprised to learn that success in journalism, like any business, depends on increasing demand and providing an exclusive supply to meet that demand. This is aided by making oneself identifiably unique (branding) and having a large and reliable readership (a platform) that your work can be marketed to. Surviving by writing is difficult, a lesson I learned a few years ago when evaluating the economic viability of different types (this led me to make a living at technical writing while writing my own content on the side).

I couldn’t resist economic modeling of my own situation to determine the limits that needed to be placed on both my professional options and my family’s expenses. Of course, I had to also generalize it. The result was a bit of a shock: To be able to survive at a fixed level to the age of 90 with a projected 3% inflation rate and no increase in income over one’s working life (from age 18 to 65), an individual must have an income nearly 5.2 times annual expenses. For someone spending $40,000 per year at the beginning, that corresponds to an after-tax income of $206K or more than $99 per hour (with a 20% tax rate, that corresponds to a wage of $248K and $119 per hour).

Those who can’t command six-figure salaries have the option of investing in stocks to make up the difference, but now growth in consumption is past its peak, and the rates of return people have counted on will (on average) only shrink as the depletion of resources becomes more obvious. This leaves the vast majority with the choice to either increase debt to meet their expenses or to reduce their expenses; at 3% per year, both options are unsustainable and lead quickly to poverty. Our government is, in fits and starts, attempting to keep this unfolding disaster in check by trying to spur growth, which has the potential to merely exacerbate the problem as resources decline more quickly.

There is a fierce, and now very personal urgency to finding and implementing an alternative to our current economic paradigm, since I find myself among those who are unlikely to make the gains it demands in order to even survive.