October 23, 2017

The energy syndrome

Review of: The Titanic Effect by Kenneth E. Watt. Published by Sinauer Associates Inc. Stansford Conn. U.S.A. 1974.

This is a very important book for those interested in the future of our industrial society. It is not written by an economist, as some people would expect, but by a highly respected ecologist, who is best known for his application of the Systems method of ecology. Watt points out that conventional economic wisdom cannot deal with the problems our economy at present faces. For instance, according to all accepted economic criteria, the economy was in a perfect state of health in December, 1972, just before a terrible crash. Clearly the criteria must be wrong.

According to Watt, the reason Modern Economics are so unsatisfactory is that they do not take into account social and ecological factors—which is what he attempts to do. “The thesis of this book,” he writes,

“Is that all the symptoms, good and bad, together constitute a syndrome pointing to a single acute economic ailment: excessive, unplanned, undirected and destructive growth. By this, I mean the concurrent growth in population, economic activity, the per capita use of energy and other resources, plus the resultant growth in pollution and the effects of pollution on the environment and on human health.”

From the economic point of view, the principal symptom of this syndrome is a massive rise in the cost of keeping the economy functioning.

Thus, the depletion of oil stocks is causing the U.S. to depend more and more on imported fuels.

How can America pay for them? The answer is by exporting food. Assuming realistic changes in the relative values of fuel and food, however, this is not likely to be possible for more than another five years or so.

He is particularly interesting on the environmental cost of air pollution. In order to calculate this, he takes four Californian counties, two of which, Santa Barbara and San Luis Obispo, are relatively air-pollution free, and two others, Riverside and San Bernardino, which are close to Los Angeles, and hence highly polluted. A comparison of the death rates in these areas is particularly illuminating.

The incidence of respiratory diseases is two to five times less in the non-polluted areas than the polluted ones. In general, it would appear that clearing the air pollution would reduce the death rate by 38 per cent. Further material from both the U.S. and the U.K., according to Watt, suggests that this is an underestimate, and that 50 per cent would be more realistic. He concludes that, “almost any expenditure to control air pollution in big cities would be justified.”

His chapter on unemployment is equally valuable. He shows that during a period of unrivalled affluence and economic growth, the civilian labour force increased by only 1.26 million each year. Even if we keep up this rate, which is extremely unlikely, the economy would not be absorbing anything like the number of people entering the labour market, which will be increasing every year until 1977, on the basis of the increased birth rate of the last few decades, and which is likely to remain at this level until 1985. The fact that women are entering employment in greater numbers, that less people are likely to stay on at universities for post graduate degrees, and that the Vietnam War is over, can only make matters worse. Even more important is the increased ‘efficiency’ of industry and, as a result, the reduced efficiency of capital to generate jobs.

This must lead to increasing unemployment. He also shows, for instance that in the oil and gas industry, between 1950 and 1960, the work force declined in spite of the fact that production almost doubled. In agriculture, while farm production has increased by 41 per cent, 5.3 million workers—more than half the total work force—have lost their jobs. If the Government were to try to solve the inevitable unemployment problem, by increasing expenditure so as to provide jobs for an extra million people, since the average price of a job is now 7,400 dollars, “the federal budget would have to be increased by 7.4 billion.” If one took into account associated costs, like extra office space etc., it would come to about 14 billion.

Watt goes on to examine the cost to the U.S. Government of selected expenditure which must be undertaken in the next twenty-five years, if the U.S. economy is to survive. This includes the cost, of putting up the necessary power stations to provide the U.S. with the energy it will require, the cost of installing mass transit systems, of installing water and air-pollution controls and of urban renewal, to prevent the complete breakdown of America’s cities.

The total is likely to be about 52 billion dollars per year, or almost half the investment by all U.S. industry in new plant and equipment in 1972. To this must be added a whole lot of other major expenses that have not been important hitherto, a tremendous increase in the number of railroad cars for shipping grain and fuel; an enormous investment in hospitals and the training of physicians to deal with an ageing population; research on methods of generating energy, as well as on innovations in housing. Can America meet the bill? He thinks it can, but only just, with the proviso that too much money is not wasted on other things: but it is clearly marginal. My feeling is that he has only touched on the subject. There are all sorts of other massive costs which can only escalate in the next twenty years, and which will become increasingly difficult to meet, even in the U.S. If one projects the probable rise in expenditure of Health and Welfare Agency (H.E.W.), the figures are truly terrifying.

According to U.S. News and World Report (21st April, 1975), they are expected to increase from about 11 billion dollars in 1974, to 500 billion by 1985, which represents half the total Gross National Product of the U.S. today.

What is the answer? Like all serious people today, Watt advocates a reduction in the size of things, i.e. political and economic decentralisation. This, would appear to be the only way to reduce costs.

Particularly eloquent, on this matter, is his calculation of the costs of Education, Public Welfare, Police, Fire, Highways and direct general expenditures in towns of less than 10,000 inhabitants, 25,000 inhabitants etc., all the way through to a city such as New York with 7.9 million inhabitants.

The most dramatic figures are those for Public Welfare. 12 dollars per capita, in the former case, and 192 dollars in the latter. Significant too, is the cost of police protection which rises from 5.70 dollars to 52 dollars.

I sincerely hope that this book obtains the wide readership it deserves, especially among our politicians and economists, who still seem to be living in a world of their own.


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