12.06.2014

Empowered Individuals Understand That Needs Rule and Wants Drool in the Real World


The prognostications about why oil prices fell so fast and where they're going are circling the picture above created by Charles Hugh Smith. The crystal ball gazing results converge because they all use the same underlying false assumptions about the nature of the long slow demand reduction for all commodities going forward in an even mildly deflationary situation like the real world one just outside their windows.

Words are slippery creatures. Demand for bread is called 'inelastic'. demand for Oreos is elastic. Then there's the who's wants vs. needs calculus. The rich will still be buying south seas islands when the middle class is putting the brakes on credit card debt and the working poor is only buying second hand tents. The formulaic price predictions by economists are wrong because they mis-read or dis-regard the elephant of debt as a crushing of inelastic demand. Not only is needless crap the most elastic of our demands but the extraction of raw materials, the shipping and manufacturing, the stores...everything needs every other part of extractive capitalism to keep going, all of it, all commodities, are falling in price, not just oil, because so many folks have reached the debt-gag threshold.

In the past academic supply - demand - price idealizations haven't recognized that the response to debt often isn't linear. Individuals, families even whole cultures will take on debt 'til they don't. Masked by booming Hummer sales in reaction to lower gas prices and what's sure to be the free-falling needlesscrap prices as elastic demand plummets, our 'experts' will conclude that aggregate demand is steady when in fact it's slip slidin away.

It's slip slidin in large part because, as Erik Lindberg explains, "...pumping gasoline is our most direct connection to the burning of fossil fuels, most [North] Americans overemphasize the significance of what sort of car we drive and many liberals might proudly point to their small economical cars or undersized SUVs. While the transportation sector is responsible for a lot of our emissions, the carbon footprint of any one individual has much more to do with his or her overall levels of consumption of all kinds—the travel (especially on airplanes), the hotels and restaurants, the size and number of homes, the computers and other electronics, the recreational equipment and gear, the food, the clothes, and all the other goods, services, and amenities that accompany an affluent life."

The often heard argument that i 'need' my car to get to work and feed my family can be true,  but it's still elastic because you can buy a small car or take the bus Gus. Food too, you need bread, you want Oreos. IMO, oil prices will stop falling and maybe rise slowly a tiny bit once the supply side war negotiates a cease-fire because demand for transportation fuels will stay level, folks in the wealthier northern climates will still wanna be warm and mild deflation fueled degrowth still leaves lots of real needs that a relocalized permaculture economy will be hard pressed to supply [at first].

Over time a relocalized, hand built, permaculture [patches on your knees] economy can achieve 'Victory Through Vegetables', can organically re-sequester the GHGs that are mostly avoided costs not paid by extractive capitalism. There is a better world ahead, don't be fooled by the Bankers and Billionaires Club's charlatans  the B@B bastards have no concern for you, your job, your children, the actual prices you pay, wealth equality, or the future, and everything to do with the simple fact that the stability of consumer capitalism absolutely depends on a people seeing themselves as consumers not empowered individuals who understand that needs rule and wants drool in the real world