No Life Support to Capitalism

The End of History
The End Point And The End Game
By


Prologue:
With the rise of communist China, the advent of peak oil, and an unresolved and unprecedented economic crisis in the United States, it’s not hard to see that history is at turning point. Peak oil and a foundering economy are threatening challenges. But how should we perceive China? The majority of the world’s biggest multinationals have set up shop in China. The world’s capitalists have given China their blessing. So what’s to fear? Well, communists “openly declare that their ends can be attained only by the forcible overthrow of all existing social conditions. Let the ruling class tremble at a Communist revolution.” At the heart of Marxism is historical materialism. Here it is not ideas that determine history, but the inexorable push of economic determinism. So are we witnessing a revolution in China, a revolution in means? Do they intend to overthrow capitalism by beating us at our own game? Until they allow dissent, allow proponents of democracy to have their say, they should be perceived as such a threat.
And if so how do we meet that threat? For us, history is determined by our free will as we put forward the ideas that meet the challenges that a changing world presents. Yet up to this point we seem to be at loss. And neither Obama nor McCain, as they seek the White House, has presented a clear strategy either for economic recovery or ideological victory.
So, given the gravity of these issues it’s best that we consider the worst-case Marxist scenario and then consider the practical idealism that can resolve these challenges.

What does China want?
With the fall of the Soviet Union it was widely believed that we had witnessed the end of history; that is the end of the historical ideological war between democracy and Marxism—the contest that determines the ideal state for humanity. But with the rise of communist China, we are again faced with the historical question: who will be left standing when all is said and done?
This time around it looks like the final battle. And the news from the front isn’t good. Communism China, simply by opening its trade door to the world’s capitalists has pretty much captured the means of production along with the technology and the wealth and so the wherewithal to build up its military strength. Does this mean that Marxism is set to dominate the world? Not quite. It is not the rise of worldwide communism that China has in mind, but “socialism with Chinese characteristics.” It is China that has captured the means of production and it is China that seeks to dominate the world—to regain their past imperialistic glory and assume as what they see as their rightful role as rulers of the world. And they intend to do so not by military dominance, but by waging total economic war. A war we are on the verge of losing. And as we lose it, so goes the world. This is China’s end point and end game.
So, before they succeed, we have to get in the game. Not only do we need to implement the ideas that will pull our economy out of recession, we also need to forward the ideas that will win the ideological war. That is, we need an end point and end game of our own.
But first, it is necessary to put China’s end game in perspective. To do so, however, we have to view China not as an ideological threat, but as just another player in the global economy.
To begin we have to go back to 1976, the year the United States began running a continuous and mounting trade deficit. It began as Japan and Germany rebuilt their economies and emerged as formidable competitors, followed by the Asian tigers and then the Asian tyrannosaurus-rex—China. According to economists, however, this should not be a problem. America's trade deficit would be brought into balance as a weakening dollar gives the U.S. a competitive edge, regardless of their technological and low-wage comparative advantages and bring our current account into balance. In lay terms this would be called a teeter-totter global economy—an up and down game that keeps the global economy balanced.
The problem is some players are unwilling to play. Simply by buying dollars in the currency markets our competitors can keep their currencies competitive. Today, both China and Japan have both bought and stashed more than trillion dollars under their mattresses. Along with holding dollars in reserve they have also purchased U.S. Treasuries that in effect further prop up the dollar. To date China holds in excess of 400 billion dollars while Japan has purchased over 600 billion dollars in U.S. bonds. But it is China that has filled out the pegging trifecta as their central bank fixed the exchange rate for dollars.
Up to a point this is acceptable. If China had not done so their economy would have stagnated as its exchange rate rose to a level where it lost its competitive edge and the global economy would have lost a significant trading partner.
Now, however, since it has become the factory to the world, they have been pressured to revaluate the yuan and have modestly relented. But, since China has become the factory to the world, the benefits are doubtful. If China were to pursue a crawling peg, a paced revaluation, it would raise the price of their exports with a concurrent rise in domestic unemployment. So for us, given the huge volume of imports from China, rising prices means rising inflation.
And for those in the U.S. who invested in China, it was necessary to exchange their dollars for the yuan. But now when the time comes to take their profits by converting the yuan back into dollars, they receive fewer dollars in return. And for those who are investing in China now, when they exchange dollars they get fewer yuan in return. This cannot good for China.
Of course China could dump dollars and cease the purchase of treasuries. But that cannot be good for us.
Yet despite efforts by our competitors the dollar continues to weaken. So given a weak dollar China sees no reason to further revaluate its currency—our exports are rising. The problem is our deficit is too big. Our imports vastly outweigh our exports. We are throwing tons of money out there and eventually a weakening dollar becomes a dollar that no one wants to hold.
Indeed, it’s remarkable we made it this far. What kept us in the game is that while our competitors shored up their economies by propping up our financial house (allowing us to remain a significant export market), we became a nation of rampant speculators and unrestrained shoppers. Hype in the stock markets over dot.com ventures led to a rapid expansion of paper wealth that fueled an economic boom as well as a boon in capital gains taxes that not only contributed significantly to budget surpluses, but had economists forecasting that they would continue far into the future and within ten years our national debt would be zero. It was the age of irrational exuberance. And when the bubble burst, budget surpluses evaporated, fell into deficit, and the economy itself, in 2001, slipped into recession.

Not so much in response, but for disparate reasons, the nation’s fiscal and monetary arsenal was pretty much deployed. Massive tax cuts (mostly for the wealthy) and massive pork barrel spending by a Republican Congress (trading principle for power) and a maximum cut in interest rates, by a sober Federal Reserve, to rock bottom quickly brought the economy out of recession. But rock bottom interest rates quickly led to a housing boom and a frenzy of speculation in the housing markets and a dramatic rise in home prices. This led to a windfall for homeowners who refinanced and cashed out on their inflated equity and went on a spending spree, remodeling their homes or moving up, buying SUVs, high end televisions or whatever their hearts desired. But eventually reality checked in as rising prices soared out of reach for prospective buyers and the bubble collapsed.
And what could have Greenspan done to avoid the bubble? Raise interest rates? Create a recession, and then what? He would be forced again to lower interest rates to rock bottom. So regardless of what the Fed did, it could not stop us from entering The Age of Turbulence.
So, again, the Fed is pushing interest rates to rock bottom at the same time providing greater liquidity to the financial markets while the President and Congress throws out a stimulus package of rebates for individuals and tax incentives for businesses. But given that America is an upside down nation facing a credit crunch, rising food and oil prices, and in the midst of a severely slumping housing market, they will not have a sustainable effect. Their effect is fleeting and soon we will be faced with what economists call a liquidity trap. As the Fed pushes interest rates to rock bottom and provide the banks with cash it just sets there, as recession forces consumers to cut back on spending and so firms cut back on production, investment and workers. As they do the opportunity for investments dim and venture capitalists cut back and sit on their hands and the economy slips deeper into recession.
Japan and China are our major competitors, and is it not to necessary to go further down list. The problem is that nations regardless of ideology seek, or attempt to seek their own self-interest, and in so doing play a dangerous zero-sum game. A game where economists have no viable answers, other than pursuing more trade agreements, as such politicians are at a lost. We are out of the game.
That said, communist China is very much in the game; their end game is to win the zero-sum game. The backbone of Marxism is that capitalism has gone down a path that ultimately leads to its collapse. For the
“bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby the whole relations of society… The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere… All established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilized nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones… In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal interdependence of nations… The bourgeoisie, by the rapid improvement of production, by the immensely facilitated means of communication, draws all even the most barbarian nations into civilization… The cheap prices of its commodities are the heavy artillery with which batters down all Chinese walls, with which forces the barbarians’ intensely obstinate hatred of foreigners to capitulate… The bourgeoisie has subjected the country to the rule of towns. Has greatly increased the urban population…It is enough to mention the commercial crises that by their periodical return put on trial, each time more threateningly, the existence of the entire bourgeois society… In these crises there breaks out an epidemic that, in all earlier epochs, would seemed an absurdity—the epidemic of overproduction… society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation had cut off the supply of every means of subsistence, industry and commerce seem to be destroyed; and why? Because there is too much civilization, too much means of subsistence, to much industry, too much commerce… And here it becomes evident that the bourgeoisie is unfit to be the ruling class in society… It is unfit to rule, because it is incompetent to assure an existence to its slave within this slavery, because it cannot help letting him sink into such a state that it has to feed, instead of being fed by him.”
So said, worldwide unemployment reaches a critical mass, and capitalism collapses. As it does, the workers rise en masse, overthrow the existing order, take control of the means of production, and establish a “dictatorship of the proletariat” that oversees the shift from socialism to communism—where the dictatorial state having made an orderly transition from capitalism, it withers away and in its place rises a worker’s utopia (no one is clear about what this means).
The rise of the Soviet Union and Communist China can be simply seen as aberrations in Marxist theory. But given the collapse of the Soviet Union the experiment seem destined to the dustbin of history as the disparate republics were free to choose (no tanks were rolled out—the Soviet Union was allowed to collapse) and opted for free markets and democracy. In the end the Soviet Union succeeded only in creating a political climate where they and the free world cannot exist without constantly revolutionizing the means of destruction and exchange—ICBMs and nuclear weapons. So not only did we think we had witnessed the end of history but also the end of the arms race.
And now we look to communist China. In 1978, after the death Mao Zedong, China, led by Deng Xiaoping, abandoned central planning and opted to take the capitalist road, seemingly confirming our victory. But that road did not lead to democracy—the Chinese people were not free to choose. Even so, China’s success shocked and awed the world. But they are done.
What we see at work in China is “socialism with Chinese characteristics.” It was no longer the dictatorship of the proletariat, but a communist dictatorship that ruled over the foreign bourgeoisie. To do business in China, capitalists must turn over part of the production process, and if it involves the turnover of dual-use technology—no problem. Even as it further enables China to arm itself with nuclear weapons that are aimed at the Unites States. And never mind they pickpocket the rest of the technology, take it out the back door, down the street and build a state factory that duplicates the product. Never mind that intellectual-rights have gone out window and counterfeiting is prevalent. Never mind that China is waging a cyber war against the U.S.
Yet with all that Bush doesn’t want to offend our “banker.” Little is said a little is done and China goes on unchallenged.
What prevails is the hope that communist China will eventually turn to democracy as a rising middle class clamors for more freedoms. Technology is the force that drives history and any nation in its quest must by necessity allow free markets to flourish. And free markets, for the proper feedback, cannot flourish without democracy. Such was the thinking that allowed China to rise to power. Anyone that believes that today is wearing some serious rose-tinted glasses.
China’s end point hasn’t changed. Its end game has. Having captured the means of production they are in a position to accelerate the collapse of capitalism. And in the process they targeted the United States as the first domino. While we shipped them our manufacturing jobs, they gave us the trade finger (say unfair trade practices doesn’t quite cut it). So, together with our loss of jobs we are being pushed to the brink.
There is no real surprise here. But there is tremendous anxiety and an acute sense of danger. Seven straight months of job losses, a financial crisis highlighted by the failure of Indy Mac, a volatile, declining stock market, and deficits at all levels of government is threatening not recession, but depression. As such, we are faced with the very real prospect of economic collapse. Does this mean that Marx was right?

If so, China has played the game well. Looking over the horizon there is no would-be president that even dares to put a foot on the yellow brick road. They too do not want to offend our “ banker”. Better to focus on NAFTA, North Korea, Iraq, Iran, Al Qaeda, and illegal aliens—anything but saying these are Marxists whose intentions are to “overthrow the existing order.” As such, it seems like we have pretty much surrendered.
That said China, in their quest, was never going to risk a nuclear war. China’s threat to invade Taiwan and its threat to launch a nuclear first strike against the United States if it came to Taiwan’s defense was more of an act of deception. Taiwan too joined the race to the bottom and invested heavily in China while approximately one million Taiwanese moved to China to live and work. So at home, Taiwan is paying the price, unemployment is becoming an issue. As such they have already been conquered.
So China was never going to risk war, was never going to risk the means of production. Their end game is total economic war. “To subdue the enemy without fighting ” is The Art of War. It is the “acme of skill.” And while its author, Sun Tzu, lived in 6th century B.C. imperialist China, his ideas are alive today. And their skill is still paramount. Fools still rush in—or are they fellow travelers or just anti-America? It’s hard to tell.
Even so, rumor has it that after the Munich games, China will deploy their financial nuclear option, regardless of our surrender, under the guise it only makes financial sense to dump their reserves of dollars and sell off their Treasury holdings—with a weakening dollar and a weakening economy, the U.S. is no place to invest. Is this an act of unrestricted warfare? The free world would be fools not to see it as such. And as such they will have to choose sides. Given China’s record on human rights and its role in Darfur, their imperialistic ambitions and the fact that democracies are somewhat waking up to the Chinese economic threat, it is not going to be a hard choice—albeit, the nuclear threat is just an option. Given the state of our economy, China may forego its nuclear option and keep its hands clean. So they lose trillions of dollars, it was a good investment since they will suffer no casualties. Or they could continue to revaluate the yuan and drive up inflation in the United States tipping our crisis- riddled economy over the edge.
The problem is even if the free nations of the world unite and work together to shore up the dollar and their respective financial houses, we still remain a nation at risk. What will stop the recession? So what will stop the dollar from falling off the global economic table as we fall deeper in debt without any likelihood of meeting our financial obligations? What then happens when the dollar is no longer accepted in the world’s oil markets? Without a sound economy, a sound dollar, without imported oil, unable to fund our military/industrial complex we become a nation just struggling to survive. When that day comes China will be free to dominate the world.

As the U.S. economy falls deeper into a depression, the price of raw resources will plummet in the world's commodity markets, notably oil—and those exporting nations will lose significant revenues. To maintain their economies, they are going to have to sell more for less. And as they do, they will have little choice, they will have to turn to China for trade—who will demand long-term contracts. But in the not so long term, China’s voracious consumption, its need to build so-called modern cities for the remaining four hundred million or so Chinese living in rural poverty, who as they put away their bicycles and buy cars, will draw down their oil reserves to the point where they must save the remaining oil for themselves. Then what? In a post-American world China is free to do whatever it wants—take whatever it needs from those who cannot defend themselves. This is where their military might comes into play.
So Russia, riding China’s coattails, what do you think about that? China is going to use up your resources and then kick you to the curb. And that goes for Iran too. And how about Bin Laden, what does he think happens as a godless ideology dominates the world (mess with them and they will mess with Mecca—turn yourself in or else)? China is at war with the world. And they are close to achieving their end point--the end of history: the final battle for the survival of the fittest.
Even so, this is risky business. Having gone down the capitalist road, they too may have gone down a road of no return. With the fall of the United States, Japan, Germany, India, and other industrial economies immediately go into decline and China can’t help but follow. Its end game ultimately threatens their economy.
While the irony for capitalism is that it provided the shovel that will bury us, the irony for China is that its reserve army of unemployed becomes so large that they will rise up and attempt to overthrow the existing order. But revolution, in Marxist theory, is no longer possible (unless the dogs of war cut their leashes and join the revolution). In Marx’s day it was muskets and cannons that revolutionaries faced—today, as we know, it is at least tanks and machine guns. Well, we know how that plays out. So, in the end, if they do rule the world they will be a country that continues to live in fear of their Orwellian masters.
Of course China intends on applying the Marxist end point maxim: “From each according to his ability, to each according to his needs.” Some work and some don’t? Whatever, how this works out this is a moot question. The game is not over. Here is where it gets risky.
Bush’s invasion of Iraq was about oil. But it only makes sense (it wasn’t going be our oil, but oil that would go onto the global market) if it was about keeping China out. They were in the midst of a securing a long-term oil contract with Hussein—no more Saddam, no more pending deal, no foothold in the Middle East. But today China again is pursuing the same deal. And while it’s not a done deal, yet you have wonder is China influencing Iraqi politicians (not a hard sell given America’s economic vulnerability) to push America out? And once out, they renegotiate all oil contracts in favor of China? The recent move by Iraq to accept no-bid service contracts for existing fields from western oil companies may well be an act of deception.
No matter, however it plays out, oil is the life-blood of all industrial nations. The ideological struggle between China and the U.S. takes a back seat to the battle for peak oil—a war that could bring on the end of all history. It’s time to get in the game.
Practical Idealism
So what is our end point? The ideological war began with the industrial revolution and it will end when it comes to an end—so whither the industrial revolution? Here’s the vision: The lights out factory. Lights out because there are no workers. It is robots with the smarts, dexterity, tactile reflex, and the eye-hand coordination (O.K, some lights) that will assemble (and disassemble for recycling) the components already pretty much produced by automation. Now picture a factory where robots shift from assembling toasters to assembling computers. Here, potentially all brands of consumer goods (here meant to mean the basic necessities) can be produced and assembled in one factory (scaled to meet if not local then regional needs)—here we have the ultimate in productivity and efficiency. So as these factories rise throughout the world, the industrial revolution comes to a peaceful end.
Of course the problem is that slaves are much cheaper than robots. But once the race to the bottom flattens out, hits the bottom of the barrel, there will be a race to the top, a race for full automation where market forces dictate that these factories in order to compete must eliminate middlemen and transportation costs and move closer to the consumer, consumers who live in the cities of the world.
On the other hand, Marxists argue that automated factories are the precursor to the collapse of capitalism. And indeed our economic prospects do not look good. Right now the free market, driven by self-interest continues to produce more unemployment. That has to end before our economy collapses.
We must quickly shift from an economy that is unsustainable to one that is. And in doing so we have to put aside the issues and vitriol (at all levels) that divide us and focus on the challenges that are threatening us all. It’s time for a change. It’s time to realize what empowers our marketplace—and so our democracy—is a collective-free-market-will where self-interest rightly understood is that it is in all our best interest to insure the integrity of whole. So there is no point in bemoaning what got us into this mess. The point is we have to shape up and stand together to meet the challenge.
And as we make these key moves, we pull our economy out of recession and away from the specter of collapse—it’s what economists (forget Marx) call creative destruction—in other words, out with the old and in with the new. The lights in the global economy are dimming and we have to get ahead of the curve. We have to get our heads out of the short-term box and start thinking about how we become more self-reliant and more creative while keeping the global economy on track. This is our end game.
But before we go there we have to understand the crisis that threatens us all. Total economic war means not only a run on the dollar, our banks and stock markets, but also a run on our supermarkets.
The skyrocketing in oil prices is impacting food prices (compounded by the absurdity of trading food for fuel). And while high prices trickles down from the head of the food chain, the conventional farms, to the consumer, rising fuel prices can crush the tail of distribution. Our supermarkets are replenished every day. What happens if truckers are priced out of the market and our stores are not restocked for a couple of days? Actually, this is a cart before the horse question. Rising oil prices is reducing the purchasing power of consumers, demand destruction that is driving our economy deeper into recession.
Here’s where we get cut to the bone. What happens when rising unemployment pushes our economy into a depression and impacts those unable to afford food? In a free market when prices go up, demand goes down and production is cut back. In the case of rising oil prices, the weak are priced out the market, and resort to bicycles, or walking, or whatever. And as they do prices go down to the point where they can enter the market again and production goes up. But in the case of factory farming when demand falls and production is cut back, their unit price goes up and those on the edge are priced out of the market (soup lines and food stamps are not going to going cut it). But they are not about to roll over and die. They will resort to stealing. And when stealing becomes endemic, people panic and hording becomes widespread. And when they go back for more they find the food markets under new management—Old Mother Hubbard standing at the door holding a sign saying “no more food for you”. And so as people turn away from supermarkets, they turn on each other, “a war of all against all.” And given that we are well-armed individuals, life here will be “solitary, poor, nasty, brutish, and short.” This is the art of war. Let the enemy destroy themselves.
It’s time to realize we are in an economic war with China and so it’s time to put our economy on a war footing. And as we do we set off an investment and spending multiplier effect—a ripple effect that creates new jobs and hence more spending, more profits and so more investment. And as it does the Fed will do whatever it takes to provide the necessary liquidity—without any fear of long term inflation. Scarcity is the source of inflation—it is the economic problem, and sustainable development is the answer.

On the energy front our end game will depend on stable oil prices. Yet, oil has, or will shortly reach peak production; reflected by the canaries in the futures markets reading the handwriting on the wall. And even if oil hasn’t reach peak, the buffer of excess capacity is thin, and any disruption in production, real or perceived, sends prices skyrocketing. Even so, when oil does reach peak, there is a plateau of production—how wide depends on how fast we shift to renewable sustainable energy and sustainable development.
Peak oil is an historical turning point just as threatening as the rise of communist China. Trucks, trains, and ships run on diesel empowering trade, mining, conventional agriculture, industry as well any solution to the economic crisis. And that solution by necessity is a long-term solution. So yes, we should drill for more oil off our shores and in Alaska. It’s not about oil today—before they come on line we should well on our way energy independence—but oil for tomorrow’s developing countries. Today, conservation is absolutely necessary. And here we have to be the world leader. The United States, with four percent of the world’s population, consumes one-quarter of the world’s annual production of oil—more than China, Japan and Germany combined. If the rest of the world is to prosper, if our nation is to survive, we are going to have to take the lead—we have to be the agent of change. We have a narrow window of opportunity and if the sash cord of rising oil prices if not checked, it will slam it shut. And falling oil prices should not be seen as a signal to put the pedal back to metal. As demand rise prices again will rise and we’ll have lost what little advantage we gained and be a step closer to peak oil. Indeed, we have to do more. While most drivers are restricting and altering driving habits, shifting to public transportation and turning to rail for their commutes, others who don’t care, don’t want to be inconvenienced, or the wealthy who remain aloof to the crisis, don’t see the light and limit their driving and flying to essential trips, we’ll may well lose the war before we even get into battle.
An unfortunate, but unavoidable outcome in cutting back on travel is that businesses, large and small will suffer and some workers will lose jobs—especially for those who produce cars, trucks, and airplanes. But it is better than going to the bone yard, and better too if producers of airplanes and autos diversify and begin producing locomotives, freight and passenger cars. So relatively it is a small sacrifice as we invest in sustainable enterprises that put us on a path to economic recovery. And while for some, as they shift professions, and see a decline in their life styles, they will be happy just to have a job. So while they may move down, many more will move up to better jobs with better pay.
That said our first line of defense is energy. While coal provides 50 percent of our electricity its costs are rising along with those of natural gas. To fight this war we are going to need to rely on new stocks of sustainable electricity, stabilizing the price of coal and natural gas (we are at war, and our politicians have to ignore the ethanol, coal and gas lobbyists as they seek their own self-interest). This is the path to energy independence, and it’s going to require immediate and significant investment—we can’t think in terms of ten years down the road, we have to accomplish energy independence within five years. And that may be too long. Peak oil waits for no country, no arbitrary dates. If the demand for oil exceeds supply, then all bets are off.
But shifting to electricity means nothing unless the automakers quickly shift to producing inexpensive A to B electric cars (while we don’t have the ideal technology for batteries, you go to war with what you got). Or consider Air Cars that run on compressed air (if proven to be viable). If not, there is no path to energy independence and we’ll remain on the oil track—heading us away from the front lines.
To fortify our energy line we have to invest in those technologies that can be quickly be developed and deployed. On the energy front we have a choice of windmills, photovoltaic arrays, solar thermal power, deep geothermal, and so on. While not eliminating the development of any, still, we should focus on those that are the most viable and the most promising.
And while it makes sense to immediately begin installing solar arrays on homes that use natural gas or oil—financed by loans or second mortgages whose monthly payment matches or reduces their monthly energy bill—it also might make sense to focus on solar thermal technology at the same time.
For example: Ausra, an up and coming entrant into the renewable energy field, have embraced the technology that has significantly reduced the costs of bringing on line base load (day and night) solar thermal energy to the point where it is becoming competitive with coal-fired and nuclear power plants. Currently they have completed an automated factory in Las Vegas that produces the necessary components for their domestic power plants—and eventually, as they spread throughout the country these components can be produced for export.
Whatever it takes, our goal is energy independence and without a sustainable supply of energy, any vision is, well, powerless.
So said, on the consumer front we can invest in factories today where various brands share the same assembly line of robots and workers. Breakfast cereals, pet food, flour, sugar; etc,. can be packaged (in reusable plastic containers) under the same roof lowering their unit costs. The same holds true for various brands of toasters, microwaves, refrigerators, computers, and so on. And as we build these factories, we take it upon ourselves to produce untainted and cradle to cradle products. And while it may be improbable to compete with workers that barely have subsistence incomes, nonetheless, we just have to cut back on superfluous spending. Think of it in terms of organic food, you may pay more, but our nation becomes healthier (and this applies also to domestically produced steel). Here’s how we wean ourselves from China while creating new jobs.

On the agriculture front there is controlled-environmental (indoor) farms that can provide cities with a local sustainable food supply while playing a significant part in meeting the challenges of severe droughts and extreme weather, looming worldwide water shortages, along with rising oil costs and rising food prices.

While there are variations of indoor farming, they all are pretty much based on hydroponics and tout the same economic efficiencies. They all can be located within cities or neighborhoods. They all run on electricity, require no pesticides, herbicides nor fertilizers (all derived from fossil fuels). They produce crops year around, and depending on the technology, use from one-tenth to one-twentieth the water of conventional farms. They not only use less water, they can use recycled water from the surrounding communities.

One up and running venture was the phytofarm (re: Discover magazine December 1988, The Green Machine: Indoor Farming). This is a fully enclosed farm fed by artificial lighting where one acre can produce 100 times the yield of conventional farms (in the dead of winter). And while it was geared to produce leafy greens and herbs, there is practically nothing that cannot be grown indoors—albeit it would require a shift to growing some food in composted earth pots. Yet, while the project had a successful run, producing sought-after high quality crops, for a number of years, in the end it lost out due to high-energy costs and closed its doors in the early 1990s. But with rising fuel costs, the indoor electric farm becomes competitive, and its doors can open again.
In the meantime greenhouses are up and running. And they are in the process of literally reaching new heights. Visionaries are proposing vertical farms—high rises with greenhouses stacked on one another (check out the technology on the internet). Yet they have not gotten off the ground, and so their technology remains unproven. But as venture capitalists get off their hands and get to work, this could quickly change. It was our collective stupidity that did not prepare us for peak oil. If we are going to wait again for the marketplace to signal (screams: do or die) the price will be famine and death until population is balanced with available food.
So here again we have to take the lead. And as we Johnny Appleseed these farms throughout the country, or economy grows as well as our confidence while leaving more oil for our conventional farms—that we and the world will depend on well into the future.
And consider this: the tax cuts are what economists call helicopter money, throwing billions into the wind in the hope of sidestepping the liquidity trap; imagine instead if they were invested in sustainable enterprises. A hundred billion dollars could have immediately funded the construction of three hundred and thirty vertical farms at a cost, at the high end, of three hundred million per building—providing food for tomorrow and creating jobs today.
But investing in sustainable energy and sustainable agriculture may not be enough. Our economy has to create somewhere in the neighborhood of a hundred and fifty thousand jobs a month just to keep up with population growth. And when you push that number to include the unemployed, the underemployed and part time workers, we are going to need a major construction boom.
It’s hard to imagine peak oil having a bright side, but the silver lining is that urban sprawl is dying. We weren’t addicted to oil, put a pattern of development that is unsustainable. To live here, cars and light trucks are a necessary fact of life. Not only a fact but are a status symbol (the bigger the better), but a fact and status that reflects our decline. Today owners of SUV’s and their light (heavy weight) truck cousins are feeling the pain at the pump and are not only upside in their loans, but are finding that their resale value have significantly dropped—they are pretty much stuck with a dinosaur or at best a lawn ornament.
But as some grieve their demise, understand they played a significant role in the depletion of our oil reserves, and now as we turn to the world for more, they are a major factor in driving up world prices, slowing down the global economy, pushing up our trade deficits while pushing the dollar to the edge of credibility. And in their production and use they produce air pollution as well as heat—another factor contributing to global warming. Also, as they roll off of assembly lines they demand too much energy and resources for their infrastructure—and there are never enough highways. So there is a constant need to tear down homes and businesses or build freeways on top of freeways to expand their capacity. And even as we enter and exit them, our roads are clogged. And just consider the costs of traffic lights. At the top end they cost $250,000 per intersection to regulate their flow—so, if we don’t find ourselves inching our way to work on our super-highways, we find ourselves idling away our time and our gasoline at intersections.
Sprawl is a phenomenon that survives by feeding on itself as it adds on more suburbs (and longer commutes). But since the housing crisis is in play, as we drift towards a depression few will be buying existing homes let alone new homes. More people will rent houses, move into smaller apartments, or move in with family and friends or rent rooms. The only new home construction here will be that of cardboard boxes (made in China) as more people lose their jobs.
Productivity is the hallmark of capitalism and the source of our prosperity. But in the case of urban sprawl prices and taxes go up while efficiency goes down. Meanwhile, as it grows, it reaches out for more water, food, energy and land. But it is the demand for land that is the primary threat as speculators bid up the price of real estate. The thing is, as the price of real estate went up, so did the sale price of everything, and to keep up to it was necessary for wages to go up—setting off a price/wage spiral that in itself is unsustainable. Nonetheless economists have always viewed homes and commercial property, in the throes of urban sprawl, as good investments.
While economists refuse to admit that cities and their sprawling suburbs are a source of rising prices, nonetheless the marketplace has been signaling all along, with high prices, for a better product. And while some cities proudly wear the sustainable label, and should be the first to embrace sustainable farming and continue to vigorously pursue renewable energy, they are among the most expensive places to live and do business. So as more people flee the suburbs to cities (will businesses follow?) to get closer to their jobs, they are going to drive up the cost of housing, they will need to embrace the idea of competition to stabilize their population and so the cost of living.
Since sprawl is dying, that competition, by necessity, is going to come from new cities that will absorb the expected three plus million per year population increase (along those willing who are displaced by wildfires, droughts, floods, hurricanes, and tornadoes). How many depends on their size. And these are just not new cities, but sustainable cities. Cities that not only work hand in hand with nature, but do more with less. So out with old and in with the new. To do so, enlightened planners, politicians and investors are going to have to take the lead. The problem is they are at work in China. Instead of aping and outdoing our regional car congested skyscraper egocentric cities of the West, enlightened sustainable architects from the west are attempting to shift their pattern of development to sustainable cities.
While that may be good China and the world, it is an economic necessity for America. New cities are going to be the backbone of our economic recovery. And they are not going to be connected by super highways but by railroads carrying passengers, cars, trucks, commodities, construction equipment and freight.
In the short-term, as we prepare for their building, they create thousands of jobs, and as they rise they will provide a steady stream of employment, a steady demand for workers, consumer goods, services and resources that will ripple throughout the country bringing our economy up to speed. As it does our regional cities (an euphemism for sprawl, conurbation of cities) qualify for loans to develop the necessary regional rapid transit systems for intercity connections along with the wherewithal to begin repairing our aging infrastructure. Albeit developing local transportation systems for the suburbs are going to be a challenge. More than likely they will have to turn to mopeds until electric cars become available.
But understand this is the end of sprawl. We can either have more cars or increase the capacity of earth to carry more people. So those developers can finish their residential and commercial projects along sustainable lines, and then become part of solution and invest and partake in the development of new cities.
So to begin the first step is for developers to survey our regions, our nation for a sustainable niche and inexpensive land (owned entirely by the developers—no speculators here) and begin building new cities.
Here, in the new cities, along with providing homes for an increasing population, some workers will be sending money back to their families and others become would-be homebuyers and lenders can feel confident in providing them with mortgage loans that will help finance their development.
Actually to call these sustainable cities is a misnomer. Sustainability here is defined as a unit that takes in more than it replaces. And while they are able to produce their own food and utilize renewable energy, and somewhat produce their own consumer goods the concrete, steel, and all that all that goes into building cities is not going to be replaced. A better term might be eco-cities. It is the wise use of resources that defines these cities of tomorrow.
So what would these cities look like? First it should be said that all sustainable planners are following in the footsteps of Ebenezer Howard. His turn of the 20th century book, Garden Cities of Tomorrow provided the initial blueprints for sustainable cities. Second it’s a given that these new cities are limited in size so as not to overwhelm the natural environment. As they mature we’ll move on and build new cities in other regions. Also these sustainable architects either plan for the elimination of cars or greatly reduce their numbers, along with fully embracing innovative green building technologies.
So, here’s how I see them: clusters of neighborhoods (linked by elevated transportation arteries shared by electric vehicles, bikes, pedestrians and rapid transit systems) will form the city. These neighborhoods are large terraced multi-storied structure sheltering thousands. Here their terraces are reserved for greenhouses and homes and their centers for fully controlled-environment farms, factories, convention centers, or stadiums.
So, as you walk out into your neighborhood you encounter not hallways but wide walkways, allies and breezeways lined with trees and plants, schools, libraries, theaters, businesses, shops, and restaurants—all within walking distance. And when you go to the first floor, at ground level you find barns (for pigs, beef and dairy cows, and chickens that are harvested next door) opening onto natural habitant mixed with organic farms, orchards, parks, playgrounds, and golf courses.
Here, instead of sending our table and produce straps, our unwanted leftovers, dry bread, spoiled fruit to landfills, we recycled them to neighborhood barnyards or to community organic orchards and gardens.
These cities not only provide a sustainable source of energy, food and sustainable products, not only do they do more with less, but they also provide the economic benefit of lower taxes (since the infrastructure is fixed, so then are taxes), lower prices and greater efficiency. And as these cities rise they provide shelter from extreme weather and as they rise worldwide they become the solution to global warming. So, altogether our economy becomes more efficient and robust and the world becomes a better place for all its inhabitants.
And as it does, as we channel investments into IPO’S for those enterprises, those entrepreneurs who rise to meet the sustainable challenge, the stock markets too becomes robust and produce their most important product—taxes on capital gains. So along with ending the tax cuts for the wealthy and a cut in military spending as the world shifts from conflict to cooperation, we can pay down our debt even while providing health care and underwriting our social security system.
In the long term, when the worlds’ population has stabilized and sustainable cities have nestled everywhere, they will become the primary care givers for their citizens. Sustainable cities are the end point.
Meanwhile cities are the key to stabilizing global population growth. As nations modernize and urbanize their citizens have fewer children that fall below the replacement rate. As such their populations stabilize and then somewhat decline in the long term. But in the short term, however, it poses problems. One, with an aging population and fewer children, fewer workers, social entitlements cannot be adequately funded. And second, as countries modernize and urbanize they create what economists term mature economies, that is, along with a decline in population there is a decline in home construction and infrastructure and so a decline in economic growth.
So most industrial nations turn to immigration as an answer to maintain their economies, to keep their population in balance with fiscal demands. But immigrants do not easily assimilate and have more children exceeding the replacement rate and in so doing create social stress. Especially in the United States where immigration goes beyond what is necessary to maintain a stable population—it is betting on growth to create more wealth. Yet given the magnitude of its economic problems, it’s going to have to rely on growth to balance our books. So immigration will remain a fact of life in the short term. In the long term, as our economy becomes self-reliant, and as new cities rise in their homelands, immigration will decline.
Meanwhile, the U.S. is having difficulty in coping with millions of illegal immigrants. This is a problem because politicians haven’t come up with a simple guest worker program. There’s no point in sending them back. Have them provide the necessary information, give them a work card, an international driver’s license and let them find jobs on their own and pay their taxes. Putting up a border fence is not the answer. What we should be doing is mending fences. If our economy is going recover, if we are going to pursue sustainable projects, we are going to need those workers from Mexico.
And as far as closing the borders to drug dealers, it is no time to be getting high, sober up, take that money and invest in the defense of your nation. And as to terrorists, no trespassing signs, no matter how high or wide, are going to keep them out.
In the meantime, we’ll work together with our neighbors Canada and Mexico in the development of sustainable cities—utilizing our workers, our resources, and our will to provide prosperity for all North Americans.
And what works for us, can work throughout the world. The industrialized nations should form an economic coalition (the moral equivalent to war) to assist the Palestinians, the nations of Afghanistan and Pakistan (first developing sustainable food and energy projects), and other nations, in the development of new cities that in turn sustain the economies of those participating countries. And Iraq should consider forming a coalition government, take its oil wealth, while it can, build up its infrastructure and begin the construction of their new cities (separating the factions or not).
Regardless what criticism may arise, this is a war economy, and it is how we win the ideological battle--it is how we fight World War III. A war that will be led by our captains of industry—those who contribute to the welfare of the nation in contrast to the robber barons that simply take. This is not to say that the President, Congress, the Federal Reserve, governments at all levels and the people will not have a significant role to play—it means that if our corporate CEOs, those who focus on the bottom line and their personal wealth and those geniuses who focus on exploiting currency and financial markets don’t step up, they put the war effort at risk.

There is also something that all nations should consider: that it is in their best interest to shift to a global economy where trade is no longer a zero-sum game, but a sustainable end game where everyone wins--it's about cooperation and balancing trade. There is a huge amount of work to make the transition to would-be sustainable cities throughout the world, and that requires that nations with a trade surplus, who are shifting their economies (their workers) to the development of new cities, turn to those nations with a trade imbalance--an imbalance in employment--take their foreign reserves and invest in or directly trade for whatever is necessary to facilitate and expedite the building of their cities.

Certainly, development cannot exceed available resources, but given a sustainable agenda and paced development (and perhaps a simplified city design that reflects the realities of our resource base) there are no market uncertainties and investors and producers can feel confident in bringing the necessary commodities to market. While the people of developing nations can feel confident that their leaders will channel their resource revenues into the development of new cities--as a condition imposed by those enlightened countries that import those resources.

Now, those jobs going to China, India and elsewhere is a good thing. Instead of a zero-sum game, instead of a world teetering on the abyss of nuclear war, we now have a global alliance for peace and sustainability.

Epilogue: Humanity was conceived in ignorance, hence our trials and tribulations. We were also born free. But freedom, rightly understood (you are free to continue in ignorance), is that it is the spirit of the mind, the advance of knowledge that allows us to hurdle the obstacles that we created in our infancy. And as we get over economic wars, our national hubris, and the falsehood of racial superiority, we allow history to continue and so allow the truth, the underlying of reality of everything, to will out. When you think about it, is this God’s will?