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The Eighty Percent Pay Cut

It's a well-known maxim that, in the final analysis, all politics are local. The political dimensions of peak oil are no exception to this rule; for that matter, the global politics surrounding the decline of American empire, the subject of last week's post, draw their force from everyday issues in the lives of 300 million Americans -- not to mention the six billion other human beings on this planet, most of whom must make do with less so that Americans can continue to live their unsustainably extravagant lifestyles.

It’s considered impolite to mention this last detail, of course. The mythology of progress treats it as a temporary state, and claims that someday or other, everyone in the world will be able to live like the affluent middle classes of the world's industrial nations. This faith is so widely held -- at least among those same affluent middle classes -- that few of its believers notice two awkward facts. The first is that the vast majority of the benefits of industrial civilization go to a tiny fraction of the world's population, while nearly all the costs are spread among everyone else. The second is that this state of affairs has persisted throughout the history of industrialism, and shows no signs of changing in the foreseeable future...........

...............All this is the roundabout but necessary background to understanding one of the most important and least mentioned factors governing local, regional, and national politics at the dawn of the age of peak oil. Among the core factors supporting business as usual in today’s world are unequal exchanges that funnel wealth from the rest of the world to the industrial nations, especially the United States. Those patterns are hardwired into the global economy in the form of wage, price, and interest differentials, and they enable people in the industrial world – again, especially in the United States – to use far more than their share of the world’s resources.

Petroleum, as the most important natural resource in the global economy today, makes a rough but workable surrogate for the entire pattern of unequal access. Right now the United States uses a little over 20 million barrels of oil a day, or about 25% of global production. The US accounts for a little less than 5% of the world’s population. If everyone on the globe had equal access to petroleum, the 5% who are Americans would use around 5% of the world’s oil, or around 20% of what they use today. And the other 80%? That’s a rough first approximation of how much of America’s lifestyle is paid for by impoverishing the rest of the world.

Again, this is not how today’s economists and social theorists prefer to look at the matter. They hold that Americans have simply reached the resource-intensive lifestyle ahead of everyone else, who will eventually all be using resources at an American rate. In a world of finite resources on the brink of peak oil, this is empty fantasy, but let that pass for the moment. Why is the distribution so asymmetrical now? It can hardly be said that the rest of the world has no use or desire for the oil Americans waste so profligately, and the willingness of people elsewhere to work hard and save – supposedly the foundations of prosperity in a capitalist system – far exceeds that of Americans. What keeps people elsewhere from having access to an equal share of oil? Systematic patterns of unequal exchange, hardwired into the global economy.

The dependence of the American standard of living on these patterns of unequal exchange goes far, I think, to explain the remarkable meekness of the political left in this country over the last few decades. It’s one thing to talk about bringing fairness and justice into the world economy, and quite another to face up to the consequences. Again, oil makes a rough but workable surrogate for wealth as a whole. If the United States were to abandon the patterns of unequal exchange that support its current standards of living, its citizens would face something like an 80% reduction in wealth and access to resources.

Put that in everyday terms and the political implications are hard to miss. Imagine that a candidate for public office launched her campaign with a speech announcing that if she were elected, everyone in the country would suffer a permanent 80% pay cut, while prices, interest rates, and outstanding debt would remain as they were before the cut took effect. The pay cut would bite deeper with each passing year, too, to make up for the effects of resource depletion. How many people would vote for such a platform? Would you?

This, in a nutshell, is why no useful response to the current global predicament ( disparities in the usage of world resources, and very importantly energy resources ) will come from within the political systems of the world’s industrial countries..........................