Philobiblon

I think I should say at the outset that it you are feeling a bit down today you really shouldn’t read this post.

Some notes from a fringe session at the Green Party conference entitled “after the crash”.

Seven possible causes of a “crash” were identified:
1. Economic cycles
2. Peak oil
3. US economy
4. Iran war
5. Climate change (an explosion of Katrina-like events)
6. Avian Flu (or another epidemic) *
7. Unknowns …

The initial speaker, Tom Lyons(sp?), a former Reuters commodity writer, focused mainly on the US economy: “The aggressive stance of the US government is not at all unconnected with the growing weakness of the economy. It is not hegemonic, as it was fifty or sixty years ago,” he said. Cited particularly was the current account deficit, which “has to be paid for sometime”.

Currently it is being supported by China, Japan, Taiwan and the rest of Asia. They are supporting the “hoover effect”, by which goods and services are sucked in to support the US way of life (or at least the way of life of the rich). So China et al buy Treasury Bills.

But the problem is, given the declining level of the US dollar, these are a declining asset. And it cannot even be sustained at the level it is now. There’s a problem for Europe too, since the economy has a dependence on the US export market.

For the majority of poor countries the crash has already happened – in the 1980s’ debt crisis. Since then the IMF structural adjustment programme has ensured that the cost of the speculative lending boom of the Sixties and Seventies was borne by the poor states. So we have arrived at this distribution of income: GDP person par parity – US $34,320 and Sierra Leone $470 (UNDP 2001 figures).

On these figures the c. 30 developed states at the top are racing ahead, while the states at the bottom are stagnant. Their problem is commodity prices: from 1977 to 2001, 46 basic commodities (agricultural and mineral) have fallen by an average of 2.5% per year.

The worst is “hides and skins”, very important to the poorest states, which have fallen by 4.8% per year, while coffee has fallen by 5.1% per year. The number of “least developed states”, using an eighties classification, has risen from 25 to 50; only one country, Botswana, has got out of the condition.

Dr Richard Lawson, author of Bills of Health, said the likely effects of a crash, whatever its cause were: business failures, mass unemployment and mass poverty, social conflict and unrest, and wars might be promoted as a “cure”.

How to cope? “This is when green economics really cuts it for real” – a localised economy would supply the essentials of human existence. Greens should get involved in work on emergency plans.

Not sure which speaker said this, but an interesting thought: One possible US action would be to withdraw quickly from the world, as Britain withdrew very quickly from the empire after World War Two.

Update: Frank’s comment below leads me to add an additional note – it is not suggested that the “cut it for real” comment means the speaker wants this to happen. The emphasis was on trying to stop “the crash” happening (except where it has already happened) – first by understanding the situation. This was perhaps intended as a push to work harder to stop it happening, plus a “what to do in the worst case scenario” point.

* Personally I discount avian flu and similar on the ground that while indeed it could happen, this is one area where virtually all that can be done is being done, and due to that it is less likely to happen than ever before. Worrying about it is a bit like worrying about an asteroid.