Sunday 28 August 2022

Peter Dawe: Globally Distributed Misery

The Globalised Hunger of 2022

28AUG22 0v1 A Guest Post from Peter Dawe

Peter is someone who has always put his money where his mouth is. He made his bone as an internet pioneer with Unipalm Pipex back in the day, and has then done his best to read the crystal ball of the future that the internet he enabled - and spell out the consequences and dangers. He accurately predicted the food crisis (from long before the Ukraine invasion)

"Globalisation means that resources can move easily across the world. While supply exceeded demand, the “rising tide” lifted all boats. Poverty was in retreat, in spite of the increasing population. This free movement, also allowed the “Just-in Time” method of minimising short term costs. However from around 2019, the balance of supply and demand shifted due to: climate change, unsustainable exploitation of resources, population growth and their appetite for a better life. This caused a global chronic slow-burn crisis. The “Ebbing Tide” is rapidly stranding many “boats”. Layered on to this chronic crisis, we then had two further crises (“tsunamis” if you will ), Covid and the Ukraine war.

Historically, a local food crisis, was local, and neighbours, and the world beyond, would eventually respond with aid, offer refuge and seek to mitigate the crisis. The Globalised Hunger of 2022, is very different! Globalisation is distributing the crisis across the world. The poor in every country across the world are suffering.

How will governments respond to this new situation?

Across the media in every country, there is the demand that “The government should do something”. However, as a global crisis, they are powerless. A government cannot magic non-existent resources into being. All government can do are :-

  • “Beggar their neighbours“ in seeking to get their countries share of resources at the expense of others
  • Allocate these resources within their jurisdiction.
  • Ignore the deprivations of other countries

Beggar their neighbours

The typical first response is to restrict the export of any food and energy resources. We have seen this over the last few years, with bans on the export of palm oil, wheat, and many other staples across the world.

Another response is, if you have the currency, to buy up whatever resources are available on the international market. E.g. Germany is buying all the LNG it can lay its hands on.

A third, again if you have the currency, is to build strategic stocks, which of course increases the scarcity of that resource for everyone else!

Fourth, is to use political and military power to divert resources to your country. Arguably the reason for a number of recent wars.

Resource allocation

So far, the “Market Democracies” have allowed the market to continue operating, with only limited government intervention. In the UK, the Energy Regulator has simply caused many small energy companies to go to the wall, and then subsidised the larger companies who are “too big to fail”. The exchequer has been pumping money into the economy, apparently in the hope it will some how magic more resources.

With rapidly rising inflation, the economy also becomes a market where the strongest enjoy maintaining their share, with the consequence that the weakest suffer more. It was no surprise that the early strikers were in the essential logistics sector. - Trains, Post, Ports, Refuse.

During the similar global crises of the two World Wars, the UK government rapidly implemented central control of resource allocation and used rationing to ensure everyone “suffered” the deprivations equally. (Or at least as far as they could)

Perverse policies

The “Market” is a good mechanism for incrementally finding a local maximum for productivity. However, it is useless at resource allocation when the parameters change dramatically.

  • With energy prices going up faster than food prices, the use of food-for-fuel, converting cereals to alcohol, veg oil to diesel and other crops to methane in anaerobic digesters, becomes MORE attractive.
  • One of the biggest uses for Natural Gas is the manufacture of Nitrogenous fertiliser. Governments in Europe are failing to prioritise fertiliser over other uses, (particularly consumer energy use). While this will improve the situation in the winter of 2022, the consequence on global food productivity in the 2022/2023 will be catastrophic. The UN’s World Food Programme, is already warning that the 2022/2023 yields will be significantly down.
  • Food production has time delays. Arable crops are typically annual, as are dairy, lamb and pigs. Chickens are 12 weeks but beef takes 30 months. While one can rapidly reduce production through slaughter, rebuilding breeding stocks can take years. In the UK, and many other countries, the meat, dairy and egg sectors have massively contracted in 2022. Mainly due to the uncertainty of selling prices, when their input costs have in most cases doubled or trebled. And the vegetable sector is not immune either, heated greenhouses that supplied year-round salads etc. have all been mothballed, as the heating costs make their use uneconomic. As we found after the Covid lock-downs, rebooting mothballed sectors is neither easy or fast!

The inevitable policy

The consumption of the population needs to match the resources available. With a massive lowering of global productivity, this means everyone's living standard has to drop. Eventually, governments will have to centralize resource allocation, and implement rationing. This will be the only way to ensure everyone gets enough.

If the situation is allowed to get out of hand, extremist “Social Entrepreneurs” will rise, through scapegoating of some unfortunate group.

Note: I’ve tried to make this paper apply to any country, however I am aware that I only have experience of the UK, and have used UK and EU examples. Not all countries fit this model, the US, Russia and China in particular.

Here we go: four meals away from anarchy...

4 missed meals... then anarchy...

update 28aug22 v0.4

The energy/food/inflation crisis is MUCH more serious than the dubious diversions of Covid or climate. There WILL be civil disorder!  As MI5 once so poignantly observed, Britain is just four square meals away from anarchy. And the realization of savings being devalued (a euphemism for theft by government) by inflation will dawn rather more gradually.

We must mobilize effort on solutions in the same way a vaccine was conjured in a fraction of the usual time? Frack/ coal/nuke/ fusion/hydrogen... and also "control" internet access with transparency and common-sense. 

Let people understand when they are being ghosted and why. The present situation where idiot social media employees try to invoke arcane and misguided policies with opaque inconsistency is only going to continue to foment trouble, and we WILL have to sell the need for genuine old-fashioned "greater good" wartime censorship.

It could be that Covid and climate change have been dress rehearsals with social and mainstream media to refine the process by which the government can muzzle the dissent and debate, when the sh1t really hits the fan.

Boris and Trump have both been hounded out by media manipulation because they represent exactly the type of charismatic popular leadership that the WEF wants to be silenced and replaced with compliant protégés like Trudeau and Mark Rutte (Netherlands) before we are plunged ever deeper into the absurd contradictions coming to try and justify the great reset ahead. Look at the huge effort to spin up trivia in a concerted effort to justify the towering hypocrisy of Pelosi and Starmer. Meanwhile, in China...

Sleight of media: what is going on in China?

"China just experienced its first wave of bank runs, triggered by frozen deposits in online accounts worth 40 billion yuan ($6 billion) and affecting 400,000 depositors. The scattered runs on small banks in central Chinese towns are not singular events but the precursor of a nationwide reshuffle of small and medium-sized banks (SMBs). Social media virality and dramatic stories of losses and protests are shaking savers’ trust in SMBs, presenting an urgent challenge to China’s banking regulators. China is fighting a war on multiple fronts against financial insecurity right now, from dubious online investment schemes to an ongoing property crisis. Preventing potential financial contagion and social unrest triggered by runs on small banks is a battle that Chinese regulators and policymakers have to win.

The recent bank runs started from three rural village and town banks (VTBs) in Henan province. Three more runs on VTBs happened within a month, including two in neighboring Anhui province. Five of the six troubled VTBs have the same major shareholder bank, Xuchang Rural Commercial Bank. Not being able to withdraw their life savings has led to protests by depositors, triggered panic over the solvency of small banks, and increased the nationwide risk of runs on small banks. 

More ..

I struggle to understand the endless news coverage and surprise being expressed that Salman Rushdie has been attacked after years and years of venal threats from the mad mullahs of Iran. The usual WEF friendly world leaders have been queueing up to praise Rushdie for refusing to be intimidated in his pursuit of freedom of expression. 

The same world leaders that stand idly by and watch countries like Canada,France, Italy and Holland abusing their citizens over rather less contentious issues, such as a desire to stay in the business of farming, and not be stamped out, on the basis of an increasingly dubious climate hypothesis. And at a time when shortages of basic food are in the headlines, as war and drought ravages the fields of Europe.

China's heat and drought has led to shutdowns of manufacturing, and possibly helps explain the continuation of the zero covid policy although the rest of the world seem to have decided it's been something of a disaster. But it means the government can effectively close down large areas of the country by strategically planting a few covid cases, and then blame those for locking diwn the population.

But why is the liberal elite mainstream media deflecting attention from what's going on in China? The alternative news on telegram (always take with a pinch of salt) is saying the Chinese economy is in freefall... 

"China's entire economy is about to collapse. But the thing is, this banking crash and financial crisis going on in China right now is hardly being talked about at all. And the story is just plain weird, in so many ways.

"...Slaughtering one sacred cow after another, Xi has destroyed profitable industries with a word, shut down major cities for months at a time, and sought to cut China off from international markets. Analysts have often portrayed these moves as blunders that open Xi up to challenges from within the party. Yet it is time to embrace the reality that Xi prefers it this way. His vision for maintaining stability calls for extreme political and ideological control, and he is more than willing to sacrifice economic progress to achieve it....

China’s potential banking system bankruptcies and inability to pay funds to customers has already started spilling out into the West. And if China’s economy falls, things could get much worse for us all."

And this story is also edging into more mainstream publications but not the TV news. What was the point of sending the increasingly unstable Nancy Pelosi to poke the Chinese dragon in the eye, and instigate a considerable military response, ended intimidating Taiwan and the rest of the world?

There's nothing like an offshore military adventure to take the minds of the disgruntled folks back home off an awkward economy (rewind to 1982, and ask the blessed Margaret Hilda).

However you look at China, you must conclude that it is a big problem that is not going to go away. Not least because of all the money owed to it by the United States and others and, the fact that it controls manufacturing and has probably intercepted and warehoused detailed data on just about every user on the internet, anywhere.

China's "soft" invasion of Commonwealth countries and threats to Australia also need to be taken seriously!

Elon Musk should be tasked with using his is astonishingly effectivy skilled manufacturing organisation to build semiconductor fabrication plants in the US. After all the evidence of many centuries, brought into sharp relief over just the past year, that foreign governments (understandably) cannot be trusted to look after any but their own interests, it must be an obvious precaution to eliminate all critical dependency on anyone beyond the borders you own and control.

So is manufacturing now at a level of automation that the robots can be reprogrammed overnight to turn out just about anything? 

// Work in progress //