Sunday, October 30, 2005

Inefficiency of Social Isolation

It's been called "Bowling Alone." Jerry Mander lamented it in "Four Arguments for the Elimination of Television." It's the social isolation that seems to be a side-effect of the highly stratified and specialized modern economy. But the point of this post is to demonstrate that this social isolation is a hidden inefficiency of the modern economy.

What do I mean by social isolation? We (in the "West," and especially in America) tend to drive by ourselves to work. We drive home by ourselves. We cook dinner for ourselves and our immediate family, and then often settle down for a night of watching television--ignoring even the interaction with those few family members actually in the room for us. When compared to the degree of communalism and social interaction in pre-historic tribes, we are highly socially isolated. In fact, the correlation between level of economic advancement and level of social isolation is so great as to strongly suggest causation.

What is the cost of this isolation? As a case study, let's take a look at a staple of our cultural identity: how we eat. In America, and in much (though certainly not all) of "the West," the ritual of dinner look something like this: get home from work, pull out some frozen or canned foods, and cook a quick dinner for a very small number, maybe one person, maybe an entire nuclear family of 4 or 5. It's a lot of work for a relatively small return, so we often give in to temptation and just order takeout, or drive to a nearby restaurant. Many of us eat out several times a week--if not every meal.

Have you ever cooked a meal for 12 people? Most of us have, usually for a special holiday meal--something that is much more complex than our standard fare. But how much more difficult is it to cook pasta for 12 than it is for 2? In my opinion, there is very little extra effort involved--that makes it a little less than 6 times as efficient to cook for 12 than for 2. If you double you effort and cook a meal from scratch--something that is potentially far cheaper and far healthier--you're still 3 times as efficient. But our social isolation doesn't give us the option of taking advantage of these efficiencies.

Both India and Italy are excellent examples of cultures where less social isolation facilitates cooking for larger groups, resulting in dining rituals that are in virtually every way superior: healthier, tastier, etc.

Cooking from scratch--something that is far more practical when cooking for larger groups--also facilitates greater incorporation of local or homegrown ingredients. Basically, it is far easier to foster a localized economy, and localized self-sufficiency, when cooking for larger groups. And the food economy is the cornerstone of localization and self-sufficiency. It may seem like an impractical suggestion: get 3 neighbors together and rotate cooking dinner. But imaging the gains in efficiency: for less effort you could eat better and healthier. And who knows, you might even find that, aside from being economically inefficient, social isolation isn't nearly as enjoyable as community.

Our dinner rituals are just one example of the hidden efficiency of localization, of "tribal" community. The same concepts work with health care, child care, etc.

Saturday, October 29, 2005

Maps of Time

I've just finished David Chritian's "Maps of Time: An Introduction to Big History." Fascinating book, it takes a very macro-view of everthing from the unfolding of the universe to the unfolding of modern human civilization. Perhaps the strength of the book lies in this removed perspective, for Christian is able to calmly discuss the similarities between the energy storage value of animals in pastoralism and humans in slavery in the same sentence. He provides an interesting framework for understanding networks of complexity--that of "centers of gravity" and "hubs." A center of gravity, in Christian's terms, is where the bulk of trade and population lie, but the more important hub is the concentrated location of many significant or long-distance connections. For example, even into the 19th century, India and China were still the "centers of gravity" of the world, but the significance, reach and concentration of linkages in a few Western European locales (London, Netherlands, etc.) made them the much more significant hubs. Here's a brief examle of Christain's analysis:

"At a local scale, and in the short run, complex entities seem to reverse the workings of the second law of thermodynamics by increasing order. But viewed within the larger environment from which they draw free energy, they clearly actually increase entropy by speeding up the transformation of free energy into unuseable forms of heat. Thus complexity is, in a sense, a cunning way for the second law of thermodynamics to work more efficiently towards its bleak goal of a universe without order." (509)

This take on the thermodynamics of civilizaiton seems to have some significance for collapse theory, specifically for the implications of collapse of a global-system. In our peer-polity world, the need to draw free energy from outside sources--whether third world labor or petroleum reserves--demands that the system eventually collapse when it reaches the limits of our "closed system" of Earth. Of course, we don't live in a closed system: we have a continual free-energy input in the form of solar energy. From the perspective of thermodynamics (and within a "human-historical" time-frame) any civilization that requires more free energy than the sun provides will eventually succumb to entropy: collapse.

Thursday, October 27, 2005

Modeling Iraq: Mutually-Exclusive Overlap







Thursday, October 20, 2005

The New Energy Mercantilism

In the past century of growing energy supplies, the non-zero-sum economics of globalization and free trade has spread to the farthest reaches of the earth. But the next century will be defined by finite and decreasing supplies of oil and gas--a reality that will transform our non-zero-sum world into a zero-sum game: The New Mercantilism.

Mercantilism is the economic strategy of zero-sum environments: in a zero-sum world, if you have something then I don't have it, so I need to try to take and wall off as large a share of the pie as possible. This strategy dominated European trade from the solidification of the territorial state after the Treaty of Utrecht, and was a motivating factor to the inward-focus of many historical East Asian powers. It reached its pinnacle during the European grab for African colonies between 1850 and 1939, and the vagaries of geography, timing and leadership that resulted in Germany and Italy being late to joining the race led to a century of conflict between those who have and those who want.

After a brief interlude of non-zero-sum potential, driven by seemingly endless energy reserves and the ideology of global free trade, we are quickly returning to a mercantilist world where finite energy supplies are fueling a new resource grab. All complex societies require energy surpluses to meet their structural need for growth; in the past this surplus was met with colonies, with their surplus of land and people, but today's economies depend on the high energy surplus of petroleum products to maintain growth. As a result of the slowdown and reversal of growing petroleum supplies, there is no longer plenty for everyone...the uneven geography of petroleum distribution will be the defining factor in the new century's "Race for Africa."

Some will say that a free, exchange-traded commodity like oil and gas is fundamentally incompatible with mercantilism. States can't control the supply of oil because it will always flow to the highest bidder. Well, that's a great theory as long as state's don't WANT to control the supply of oil and gas. But power--"laws" and the military force to back it up--rests with states, not exchanges. At the point in the Peak Oil supply decline where there is no longer enough oil for all states to maintain their current standards of economic wealth, let alone to keep growing that standard, then states will be forced to take a mercantilist approach to oil in order to remain viable institutions. The very legitimacy of a Nation-State rests with its ability to provide economic welfare and security to its citizens--welfare and security that are acutely dependent on oil.

But we don't have to wait to watch states implement a mercantilist oil strategy:

- BP, with US/EU aid has developed the Baku-Tbilisi-Ceyhan pipeline to direct Central Asian Oil flows to the West, while China has simultaneously formed the Shanghai Cooperation Council to makes sure that that very same oil flows East. The US forces currently present in Georgia (the Tbilisi link in the pipeline) aren't there on accident. They're "training" the Georgian military to fight terrorists, but are also serving the much more important factor of preventing Russia from leveraging its ties with North & South Ossettia to control Georgia.

- The EU has implicitly and explicitly stated that the value of Turkey in the EU is that it provides geographic access to the oil-rich 'Stans. Turkey is to the oil grab what Egypt and the Suez were to the British empire in India.

- China has unveiled its strategy of growing influence in countries where oil can be exported to them via dry-ground pipelines, in an unspoken recognition of the fact that US blue-water naval superiority will prevent them from effectively contesting ocean-transported oil supplies. Specifically, their interest in purchasing UNOCAL was for its significant reserves in SE Asia--with potential land-pipeline connectivity to China.

- Canada and Denmark recently got in a minor military scuffle over some frozen rocks in the newly-ice-free arctic as a result of their potential oil reserves.

- The US wars in Kuwait and Iraq--Res Ipsa Loquitur.

- China's increasing involvement in the affairs of select oil-rich countries: Venezuela/Panama (working to build heavy-crude refineries and coordinate for their shipment to China via the canal). Also in Sudan, Kenya, etc.

- Recent escalation of Japanese/Chinese conflict over economic exclusion zones around some remote, contested islands...yes, with offshore oil reserves.

The list goes on. My analysis says that by far the most likely explanation for these actions--taken as a whole--is initial jockeying for position in a future oil mercantilism. In my mind the most interesting question is not "are they planning for an oil mercantilism," but "how will countries begin to exert exclusionary claims to oil supplies?" What will be the first steps to exclude oil from an exchange traded system to a mercantilist system? What are the indicators to watch for? Perhaps the forerunner in this is Venezuela's Hugo Chavez, who is using his control over oil reserves to provide them at cut rates to choice nations in order to cultivate influence. State-owned oil, especially state-owned companies that are exploring internationally, will certainly play an important role--and China is THE leader in that regard, with South Korea just behind. I am watching for the following:

- Increases in state ownership or influence in international oil companies.
- Exclusionary oil transport projects--like the BTC pipeline
- Efforts to divide into regional blocs--such as the Shanghai Cooperation Council--and especially if these blocs apparently go out of their way to include oil-regions.
- Legislation that facilitates circumventing free-markets and exchange-trading of commodities, especially for "emergency response" or "economic recovery."
- Intervention (covert or overt, armed or otherwise) in states (like Iran and Venezuela) where the current regime is seen as a threat to oil supplies--or even to create a regime that will provide preferential status in oil supply.
- Changes in tariffs or import/export regulations of energy commodities, or citizenship ("licensure") requirements to purchase commodities contracts, not just to trade them on an exchange floor.

This is your indications & warnings matrix for the New Mercantilism. When this boulder finally hits the water, the ripples will cause heavy erosion on all shores...

Side notes: What country, like Italy and Germany in the "Race for Africa" are notably behind in positioning themselves for the "grab for oil?" India stands out in my mind...

Tuesday, October 18, 2005

Surface Tension









Sunday, October 16, 2005


It's economics 101: Economy of Place and Economy of Scale are the driving forces behind our global economy. But are there opposing economies to each of these fundamental forces? Hey, anything's possible. Imagine a world far, far away, before people knew about positrons...

Economy of place is the concept that some things are more efficiently done in certain places--to use the classic example, it would be just plain silly for to try to grow grapes for Port in dreary England when they grow so nicely in Portugal. Lumber is more ripe for the logging in Oregon than it is in Kansas. So what's the "anti-economy of place?" Well, that would be the Economies of Independence and Diversity.

Economy of scale is the concept that it is more efficient to do lots of one thing rather than trying to do a little of everything. You can specialize and stratify and apply all kinds of fun economic terminology, but bottom line is, if all you do all day is draw out wire into push-pins, you're going to get pretty good at it. But if you only had to draw out wire into a push-pin when you need a push-pin (can't remember the last time that happened to me), you will probably be very slow and inefficient in their manufacture. This is economy of scale--and it applies even better to things like microprocessors and flu vaccines than push pins. So what's the "anti-economy of scale?" That would be the Economies of Simplicity and Ontogeny.

Economy of Independence: There is a certain, undeniable efficiency of not depending on things beyond your control. If Lampedusa's primary economic product is capers, and if they depend on a strong market for capers to be able to purchase other fundamentals like food, clothing, shelter, etc., then they may reap the advantage of economy of scale, but they certainly also incur the disadvantage of diseconomy of dependence. Their prosperity--that is, the value of their economy of scale production--is dependent on the fickle demand for their one product. In addition, the diseconomy of dependence also demands that they incur increasing transaction costs for all the products that they must import...

Economy of Diversity: There is also a certain, undeniable efficiency found in diversity. No two environments are the same, no two sets of initial conditions are the same, and therefore there is no single solution to these diverse problems. While paying an architect to produce just one home design and then duplicating that design across endless tracts of land is efficient due to economy of scale, it is also inefficient due to failure to exploit economy of diversity. Every home site is slightly different, with different sun exposure, microclime, prevailing winds, views, etc. Not to mention that every occupant has different needs. The efficiency of designing each home to meet the exact demands of its site and occupant is an example of economy of diversity.

Economy of Simplicity: Economy of place and scale create massive information processing burdens--that is, the burden to coordinate the production of specialized elements (economy of scale) and distant elements (economy of place). The larger the hierarchal organization, the greater the percentage of its effort that must be dedicated to internal information process, command and control, etc. While small localized production faces diseconomies of place and scale, it also reaps economy of simplicity: One guy going out to check his chickens doesn't have to allocate much of his time to HR concerns, vision statements, planning meetings, etc. He just goes out and checks his chickens. So while his time may be less efficiently spent, he spends nearly 100% of his time on that task. In a major corporation, let's say Tyson, a significant portion of their cumulative time is spent on tasks other than their direct production of chickens.

Economy of Ontogeny: Finally, while spending your entire life attaching button B to sleve hole A may be amazingly efficient from the perspective of economy of scale, it isn't exactly fulfilling. It might even make you go insane. This isn't just whining--our genetic ontogeny creates certain inflexible limits on the tolerances of human activity. These limits are murky and far-reaching, but one pretty clear example is that a person who gets to make an entire shirt will enjoy better mental health than someone who just attaches button B--and from a purely economic standpoint, that superior mental health makes them a more efficient, more reliable, longer lasting human asset. It may seem like an insensitive analysis, but the point is actually quite humane: keeping people happy will also make them more economically efficient. So even if it comes at the cost of economy of scale, economy of ontogeny may be worth the cost...

The bottom line here is that there are very real diseconomies intractible to the "standard" economies of scale and place. I certainly don't have hard numbers to prove that one outweighs the other, but it is at least a starting point to recognize that there is a coutner-weight--something that is normally ignored. It's great to buy organic produce and socially responsible mutual funds, but until "normal" economists are convinced that it actually makes more sense to be less hierarchal--with less narrowminded focus on economy of place and scale--it will be difficult to affect any real change in our economy of hierarchy...

Friday, October 07, 2005

The War is Lost

Today US forces destroyed 8 bridges in Iraq with precision-guided bombs. Why? As John Robb point out, the US military is concerned about the increasing apparent coordinated action by the Iraqi insurgency, so the US is cutting lines of communication--in this case bridges. This is an essential part of defeating a hierarchal opponent--interdict their lines of supply and command & control. Unfortunately, it will have no impact on the largely rhizomatic, networked, independent factions of the Iraqi insurgency. It will, however, disrupt the hierarchal operations of the US military, as they depend on the very bridges that they are destroying.

The internal coordination of the iraqi insurgency is an EMERGENT phenomenon--their non-hierarchal makup fundamentally precludes hierarchal, centralized direction and supply of their activity. America's tactical blindness is due to a lack of understanding of the differences in information processing between hierarchy and rhizome. Hierarchy processes information mechanically, it is machine intelligence, much like a computer; there is centralized direction of resources, and information flows in two directions via fixed channels. Rhizome, however, is emergent intelligence, much like the human brain. There is no (or little) conscious coordination between the various nodes in the insurgency, just like there are no controlling neurons in our brain, and yet the human brain and the iraqi insurgency are capable of information processing feats that are beyond the abilities of the most capable computer.

This is why the destruction of 8 bridges will have no impact on a rhizome insurgency. if you open up the human brain and kill 8 critical neurons, it will have no substantial impact on the ability of the brain to produce emergent information processing. Conversely, if you open up a computer, and destroy 8 critical transistors in your Pentium 4, the computer will be severely damaged, possible rendered non-functional. The fact that the US decided to destroy some of the very links that it depends on is evidence that they neither understand their enemy or themselves.

Sun Tzu said:


America is desparate to respond, but cannot do so effectively because it does not understand the structural makeup of the major actors. It has lost.