The capitalist crisis and the conditions facing the youth

[Lady Chablis]

The phrase "abusers of the free capitalist system" should be questioned.

I'm referring to greedy capitalists who have no sense of responsibility and proportionality. They succumb to the prospect of limitless pay that is an open invitation to bad, or even criminal, behavior. In the process, they degrade capitalism into exploitation of labor and natural resources.

[Lady Chablis]

It gets worse when one discovers that U.S. banks are heavily exposed to over $370 trillion in unregulated derivatives, part of a quadrillion-dollar global market that hardly involves "government policymakers".
But all of these will be a walk in the park compared to the other effect of capitalism, which requires continuous economic growth in a world with limited resources, and that's a resource crunch. No amount of bailouts or casino capitalism will avoid that.

Business and state co-generate wealth in a system of complex mutual dependence. In good capitalist system, the state establishes robust frameworks in which markets can function and implement comprehensive regulatory body that oversees the players in the system. The U.S. economy is enormously complex. It takes a great deal of cooperation to screw it up and there’s plenty of blame to get around. The current banking crisis is one of layered irresponsibility and each playing a role: the Federal Reserve, home buyers, Congress, real estate agents, the Clinton administration, mortgage brokers, former Federal Reserve chairman Alan Greenspan, Wall Street firms, an obscure accounting rule called mark-to-market rule, and collective delusion.

The capitalist system is neither good nor bad; it is the irresponsible state and people that make it either one or the other.

[paenggoy]

I'm referring to greedy capitalists who have no sense of responsibility and proportionality. They succumb to the prospect of limitless pay that is an open invitation to bad, or even criminal, behavior. In the process, they degrade capitalism into exploitation of labor and natural resources.

There is no such thing as the need for responsibility and proportionality in free market capitalism. Rather, for free marketers market forces are supposed to ensure that the greedy and irresponsible will pay and those who are characterized by the opposite will be rewarded. Of course, reality is always different from illusion.

The same goes for "exploitation of labor and natural resources." Exploitation of labor is not supposed to take place because given a "free market" laborers can also be competitive. At the same time, technology is supposed to ensure that one resource can easily be replaced by another, and that problems like environmental damage can be resolved by market forces. For example, because people care for the environment, then they will not patronize a company that pollute. Again, of course, what actually takes place is the opposite of what free market capitalists imagine.

[paenggoy]

Business and state co-generate wealth in a system of complex mutual dependence. In good capitalist system, the state establishes robust frameworks in which markets can function and implement comprehensive regulatory body that oversees the players in the system. The U.S. economy is enormously complex. It takes a great deal of cooperation to screw it up and there’s plenty of blame to get around. The current banking crisis is one of layered irresponsibility and each playing a role: the Federal Reserve, home buyers, Congress, real estate agents, the Clinton administration, mortgage brokers, former Federal Reserve chairman Alan Greenspan, Wall Street firms, an obscure accounting rule called mark-to-market rule, and collective delusion.

The capitalist system is neither good nor bad; it is the irresponsible state and people that make it either one or the other.

In reality, state capitalism can lead to the same delusions, especially given a global capitalist system that isn't obviously and can never be centralized. That is why China is also experiencing similar problems. See the thread about that topic in LAFI for details.

[paenggoy]

The main problem is: Americans are living beyond their means for years and it's catching up with them. In a consumer-driven economy, the government is encouraging them to spend.

On "Our Oil-Constrained Future": I think peak oil is a myth. The peak keeps moving farther away as unconventional source of oil and environment-friendly renewable source of energy are being discovered, developed and mass-produced.

They have to because that's the only way for capitalist systems to maintain continuous economic growth.

The idea that peak oil is a myth is absurd. Oil is a finite resource and will obviously be depleted. The time in which peak production takes place does not make the fact a myth at all.

In addition, non-conventional sources of oil do not have the same EROI as oil, and several of them as well as other sources of energy do not provide petrochemicals.

Finally, catastrophic bifurcation makes matters worse.

[Lady Chablis]

They have to because that's the only way for capitalist systems to maintain continuous economic growth.

The idea that peak oil is a myth is absurd. Oil is a finite resource and will obviously be depleted. The time in which peak production takes place does not make the fact a myth at all.

In addition, non-conventional sources of oil do not have the same EROI as oil, and several of them as well as other sources of energy do not provide petrochemicals.

Finally, catastrophic bifurcation makes matters worse.

The peak oil theory is based on major claims that the world is discovering only one barrel for every three or four produced. As a consequence, the world would run out of oil—heralding economic catastrophe—a scenario based on anecdotal information, vague references and ignorance of how the oil industry goes about finding fields and extracting petroleum.

When a new field is found, it is given a size estimate that indicates how much is thought to be recoverable at that point in time. But as years pass, the estimate is almost always revised upward, either because more pockets of oil are found in the field or because new technology makes it possible to extract oil that was previously unreachable. Yet because petroleum geologists don’t report that additional recoverable oil as “newly discovered,” the peak oil advocates tend to ignore it. In truth, the combination of new discoveries and revisions to size estimates of older fields has been keeping pace with production for many years.

A related argument — that the “easy oil” is gone and that extraction can only become more difficult and cost-ineffective — should be recognized as vague and irrelevant. Drillers in Persia (now Iran) a century ago certainly didn’t consider their work easy, and the mechanized, computerized industry of today is a far sight from 19th-century mule-drawn rigs. Hundreds of fields that produce “easy oil” today were once thought technologically unreachable.

[paenggoy]

The peak oil theory is based on major claims that the world is discovering only one barrel for every three or four produced. As a consequence, the world would run out of oil—heralding economic catastrophe—a scenario based on anecdotal information, vague references and ignorance of how the oil industry goes about finding fields and extracting petroleum.

Multiple organizations, from the IEA to the Pentagon to Deutsche Bank to Morgan Stanley to the Bundeswehr to Lloyd's of London, already acknowledge this. In fact, BP has already maintained the same in its latest outlook report, and even showed that we reached peak energy back in the late 1970s.

There is nothing "anecdotal" or "vague" about this matter. You just have to research on the topic further. See the thread about peak oil in LAFI for several links.

When a new field is found, it is given a size estimate that indicates how much is thought to be recoverable at that point in time. But as years pass, the estimate is almost always revised upward, either because more pockets of oil are found in the field or because new technology makes it possible to extract oil that was previously unreachable. Yet because petroleum geologists don’t report that additional recoverable oil as “newly discovered,” the peak oil advocates tend to ignore it. In truth, the combination of new discoveries and revisions to size estimates of older fields has been keeping pace with production for many years.

The estimate is revised upward but production still goes down, as seen in the U.S., the North Sea, Cantarell, and other sites.

The additional recoverable oil is actually reported, which is why almost everyone was in denial for decades. The problem is that deniers have been ignoring historical flows, together with EROI. When these were factored in, various groups mentioned above began to see the opposite.

The latest BP report is telling, as it reveals production in plateau even as oil prices remain high, with the demand deficit met by biofuels and other sources.

A related argument — that the “easy oil” is gone and that extraction can only become more difficult and cost-ineffective — should be recognized as vague and irrelevant. Drillers in Persia (now Iran) a century ago certainly didn’t consider their work easy, and the mechanized, computerized industry of today is a far sight from 19th-century mule-drawn rigs. Hundreds of fields that produce “easy oil” today were once thought technologically unreachable.

"Easy oil" does not refer to "work" that is "easy" but light oil, like that of Ghawar. But various sources, including al-Husseini and, now reveal that the "easy oil" is gone. What's left are sources like Manifa and deep sea oil, which have oil that is dirtier and more expensive to process.

Thus, "easy oil" refers to high EROI, not what is technologically reachable. In fact, we can get as much oil as we want from sources that are very deep. The problem is that the energy needed to obtain them will be as great as or greater than the energy that will be obtained from them. The deeper the oil, the more energy needed. And the dirtier the oil, the more energy needed to process them. The same phenomenon applies to biofuels, which have an EROI that's barely above one.

And then there's the problem of catastrophic bifurcation, especially given a JIT global system and multiple resources needed together with oil, not to mention petrochemicals. This article gives more details, with links to longer reports:

http://www.energybulletin.net/storie...alised-economy

Again, no "anecdotes" and "vague references" but studies similar to those used by deniers. The difference is that deniers look at only what is technologically recoverable and ignore everything else.

Finally, the same catastrophic bifurcation will very likely affect "conditions facing the youth," especially the need for formal education designed to feed manpower to industrialized societies that are in turn heavily dependent on oil and other resources to maintain continuous economic growth.

[paenggoy]

I forgot to add that peak oil is a fact and not a theory. Two-thirds of oil-producing countries have reached peak or have gone past it, with the U.S. serving as the most significant example.

What is debatable is the point in which global oil production will peak. Currently, the IEA has acknowledged that we reached peak back in 2006. The latest BP outlook report shows that not only has global oil production been in plateau even as oil prices remain high, excess energy demand is being met by the use of other sources of energy, including biofuels, which not only have much lower EROIs but also contribute to higher food prices.

[rabii]

The problem is that governments need corporations to profit in order to receive tax revenues, and corporations need people to spend more in order to make more profits. And banks need corporations and people to borrow more because that's essentially how banks make money.

Thus, capitalism requires increasing production and consumption of goods in order to ensure continuous economic growth, which is just as well if growing numbers of people worldwide want a middle class lifestyle. Worse, in free market capitalism, more economic growth is needed as more want their wealth to grow faster than those of others. In time, more will want to make money by lending money.

Unfortunately, more lending means increasing money supply, which leads to credit bubbles popping. Increasing production and consumption leads to both resource depletion and environmental damage.

We are seeing the effects of the first problem today, and it is masking the actual cause of the recession, i.e., the increasing cost of extracting oil coupled with increasing energy demand from India, China, and emerging markets. Behind all that is the long-term effects of environmental damage and pollution, which is contributing to higher food prices, etc.

Parang kagagawan nga ng US government ang problema kasi nga nagpautang ng Federal bank sa mga private banking institution ng funds sa napakababang interest para ipautang sa mga tao para tumaas ang consumerism. Parang yong taxes and revenus na remitted sa Federal government ay purely financial in nature at hindi industry based or galing sa production and creation of goods. Kung tutuusin, hindi na purely practice ng capitalism eto kasi nakisawsaw ang government, parang socialism na rin kasi government ang involved. At ang umutang naman sa China ay ang US government, hindi naman ang mga private banks or private corporations, so hindi na rin purely essence ng capitalism eto kasi government to government ang transaction, parang socialism nga rin eto kasi gobiyerno ang entities at hindi private individaul or corporatrion. Kaya para sa kin mali talaga na i-attribute ang present crisis sa nature ng capitalism more na gumawa ng crisis ay ang gobiyerno ng US .

[paenggoy]

Parang kagagawan nga ng US government ang problema kasi nga nagpautang ng Federal bank sa mga private banking institution ng funds sa napakababang interest para ipautang sa mga tao para tumaas ang consumerism. Parang yong taxes and revenus na remitted sa Federal government ay purely financial in nature at hindi industry based or galing sa production and creation of goods. Kung tutuusin, hindi na purely practice ng capitalism eto kasi nakisawsaw ang government, parang socialism na rin kasi government ang involved. At ang umutang naman sa China ay ang US government, hindi naman ang mga private banks or private corporations, so hindi na rin purely essence ng capitalism eto kasi government to government ang transaction, parang socialism nga rin eto kasi gobiyerno ang entities at hindi private individaul or corporatrion. Kaya para sa kin mali talaga na i-attribute ang present crisis sa nature ng capitalism more na gumawa ng crisis ay ang gobiyerno ng US .

The difference is that the largest component of total money supply worldwide isn't money created by the Fed and central banks but by commercial banks, esp. unregulated derivatives.

[paenggoy]

"Majority in US earn near-poverty wages"

http://www.wsws.org/articles/2011/oc...ineq-o22.shtml

[paenggoy]

"The American Nightmare: Student Debt Will Be A Long-Term Drag On The Economy"

http://www.forbes.com/sites/evaperei...n-the-economy/

[paenggoy]

"The Economic Agony of Today’s Twenty-Somethings"

http://finance.yahoo.com/blogs/daily...143253138.html

[paenggoy]

"Mass protests against university fee hikes in Quebec"

http://www.wsws.org/articles/2011/no...queb-n19.shtml

[paenggoy]

"John Steinbeck's bitter fruit"

http://www.guardian.co.uk/books/2011...john-steinbeck

[paenggoy]

"17N: the global revolutionary wave of 2011 thunders on"

http://roarmag.org/2011/11/17-n-glob...udent-strikes/

"Students playing key role in 'Occupy' protest"

http://www.clarionledger.com/article...Occupy-protest

[paenggoy]

"The truth behind the new jobless generation"

http://www.telegraph.co.uk/finance/f...eneration.html

[borge543]

as the Chinese used to say, personal crisis offers new opportunities.

in a broader scheme, social crisis or imbalance of key elements in a capitalist society may give rise to a new order that is still within the realm of capitalism.

whether it is capitalism with an element of socialism or vice versa is basically nominalism- a matter of name-calling.

The article under consideration is very much valid in the Philippine society, high rocketing tuition vis-a-vis basic daily wage. This is an opportunity for us to re-think our approaches or mentality in terms of obtaining education, e.g., from formal to informal; from white paying jobs to field-work (agriculture, forestry, mining). Or, better still, create job generating activities that do not require formal education.

Going school is a way of life to every formal education, but it (going to school) is not really critical/necessary in obtaining education/knowledge (e.g., the case of Open Universities).

Without the students going to school on daily basis, the demand for facilities (buildings, professors, computers and the likes) will be less. The effect: less tuition and other financial charges.

Acquiring knowledge starts from reading and validating it either thru reflective thinking, professor consultation, and conducting experimentations.

Reading can be done at home (very true in law studies). The costly nature of formal education starts from the premise that every student has to be in school on daily basis to check whether he reads the assignment. History had shown that some leaders that changed the world have no formal education.

Maybe in the near future, going to school on daily basis is a luxury; and, paying high rocketing tuition is a joke.

I got a very good idea from this statement

[Queen_Vakler_IV]

I think that our measures of quality of life should drastically be reviewed and improved.

Technically, the GDP measure is measuring the cost of what we produce. It does not take ino consideration the purpose and method of producing the products.

Example, there is a city in China that no one lives in. The construction activity contributes to the GDP but does it contribute something to human welfare?

Another point is the GDP per capita of Singapore is destined, according to economic forecasts, to be the highest in the world but GINI is disappointing.

[paenggoy]

"Mexican students in Guerrero gunned down by government security forces"

http://www.wsws.org/articles/2011/de...mexi-d21.shtml