|July 9 - July 15, 2009
A crisis wasted
Scientist and economist Chris Martenson offers a crash course explaining what
we should be learning from our current global situation
by Erica Grossman
Chris Martenson is a man who wears many hats. Having completed both a PhD and a post-doctoral program in Neurotoxicology at Duke University, he uses his science background to inform his decisions about energy use and the environment. With his MBA in finance from Cornell, he is considered an expert in matters economic. Martenson has worked in corporate finance and strategic consultation and made a living as the executive of a Fortune 300 company and the vice president of a Fortune 50 company. But Martenson doesn’t live the kind of lifestyle you might expect from a high-powered financier/scientist. He and his family have downsized their home, rather than climb up the social ladder. They dig their gardens instead of sending someone out to the grocery store. And all because of one of Martenson’s predictions: The world in 20 years will look drastically different than the world we know today.
Drawing from his expertise in the three E’s (economy, environment and energy), Martenson has created a free, expansive online educational program called the Crash Course. In it, he discusses in layman’s terms many of the aspects that have brought us to our current financial situation and where continuing these trends will take us.
Boulder Weekly recently spoke with Martenson about the economy’s past, present and future and how to relocalize and shape our lifestyle into one that will best serve our Earth and community.
Boulder Weekly: You cover a lot of ground in the Crash Course. If you had to break it down into major points, what would you like people to come away with most?
Chris Martenson: It’s really, very simply that the next 20 years are just going to be completely unlike the last 20 years. It’s one of the key messages that I reiterate throughout the Crash Course, and it’s really important because one of the tendencies that I have, and that I think most people share, is to sort of base what’s about to happen on what’s just happened. And that’s a perfectly fine way to be for most of history. But the Crash Course is pointing to the high possibility that over the next 20 years, the future’s going to be very different from the past.
And that’s not to say that it’s going to be dark or bad necessarily, but it will be different. And for people who are basing their plans, their hopes, their dreams on the future looking like today, I think that there’s the potential for that to be sort of rudely interrupted, if you will. So, the key purpose of the Crash Course is to help people become aware that these changes are coming. I use enough data, hopefully, to support the conclusions and give people enough meat to chew on it and assess for themselves how much they agree or disagree with those conclusions, but that’s the main thrust of the Crash Course — to start changing the dialogue that we are having with ourselves about the actual opportunities, the actual threats, the actual challenges of the future.BW: Can you point to any major factors you think especially caused our current economic situation?
CM: We started on an experiment with debt that began in the early ’80s. Over the next 10 or 15 years we convinced ourselves that debt didn’t matter. And then, in the mid-’90s, Alan Greenspan really put, I think, the cherry on top and made this all possible. What he did was really relax the rules on banking in particular — he did something that allowed banks to loan out much, much, much more money at much higher leverage than ever before. That started in ’95. It started to fall apart in 2000, and they just poured more gasoline on that fire.
So, ultimately, the main problem was, we had a series of weak political and monetary authorities who did not want to face the music, and so, instead of having a couple of shortish recessions, we decided to save it all up for a big one. And, unfortunately, they made it global. And by they, I mean, the Federal Reserve really cajoled all the federal banks in the whole world to kind of follow along. It’s not just the U.S.; if you want to see a property disaster, check out Ireland, or Spain, or the U.K. It’s amazing what’s been going on. So, really, the seeds of this were planted a long time ago, they were watered in the mid-’90s, they continued to be fertilized in the early 2000s and, unfortunately, now we’re going to have to, I think, eat through the equivalent of two or three recessions all piled into one spot, and some people might call that a depression.
BW: Even though you say that the future won’t necessarily be dark, what kind of surprises are in store for people?
CM: In Boulder, I think, as just sort of a representative of cities anywhere, we are going to be facing a future that is filled with less, not more. And the reason this is really critical to understand is that our entire economy, the dollar and our whole banking system is all based on growth, constant growth. And when that constant growth isn’t there, all sorts of problems just suddenly emerge, as if by magic, out of the woodwork. And until we start to have a conversation with ourselves that doesn’t presume that growth will always be there to bail us out (in essence, from bad decisions or to cover up poor decisions), then the future’s going to require us to be a lot more clever, a lot more intelligent and a lot more engaged in the day-to-day aspects of how our lives actually work.
So this could encompass everything from where our food comes from, how it comes to us, how we build our houses, how far we decide to bus our kids to school. All of these things, I believe, have to be re-examined in light of the possibility that what I talk about in the Crash Course could be reality — which is that the future will actually be defined by slightly less and less each year rather than more and more. And it’s just a whole different set of challenges. It impacts everything from planning at the county level, at the town level, at the personal level, but it will impact us at the state and at the federal and, I think, even global levels.
BW: Isn’t there an argument for the positive aspects of growth? I think of technology and the ways in which it’s desirable that we’re continuing to promote growth in a specific field like that, since it will help us to hopefully be more efficient in how we deal with the problems of the future.
CM: This is a great question, and it’s one that’s central to the whole argument of the entire Crash Course, which is that growth by itself doesn’t necessarily give you the things you were just describing, which I ascribe to prosperity. I love advances in technology. I love medical advances. I love advances in understanding of how the weather works and climate and farming — everything. I think that’s all brilliant. Growth sometimes gives you that, but usually it is just accidentally coincident with that stuff, meaning that if you just grow for the sake of growth, you may or may not get prosperity.
And if it turns out you’ve used up all of your surplus energy just to get yourself back to a position of growth, you won’t have any surplus left over for prosperity. So, true prosperity, in the world that I want to create, the vision that I see that’s not apocalyptic, that’s very positive, is that we start to collectively use our resources more wisely so that we can create conditions where we have prosperity and not just growth.
BW: Could you give an example of superfluous growth that hinders prosperity?
CM: Just think about the sprawling collection of huts around Rio de Janeiro. That’s a city that’s grown just magnificently, if you like growth. It’s had just absolutely banner years for population growth. It has more cars. It has more people. But the standard of living has been declining rather inexorably all through that to the point where it’s impacting mortality, happiness, satisfaction, and all these other sort of non-monetary aspects.
Growth itself is good up to a point, and after a point it becomes an end of its own and becomes destructive. I’m a past scientist, so I’m very comfortable thinking about organic systems and organisms and all of that. I always default back to thinking about how growth serves us in the natural world, and I still see humans as part of the natural world. So when I look at organisms that grow beyond the boundaries of their systems, there is not a single organism that has managed to escape the limits of the container in which it lives — be that an ocean or a log or, in this case, the whole surface of the planet. So, growth is good up to a point.
I think through the remaining period of my adult life I am going to see, across the globe, humans have to actually confront for the first time ever in our species’ entire history — by the way, this is a landmark kind of thing — the actual limits to our ability to get more and more and more out of the world around us. And our economy is a reflection, is the lens through which I sort of look at that process, and we’ve built ourselves an economy that is predicated on an assumption that I no longer think, or just accept, to be completely true. And it’s something that is absolutely vital for everybody to explore because it can impact your portfolio and how much you need to put away for retirement and the types of things you might invest in, and it’s really something that is absolutely for everybody to begin to engage in. And we haven’t had to for the past 20 or 30 years. So that’s led to a sense of complacency. In some cases, we’ve lost the skills or the desire or the ability to look into these things.
One of my key points is that I think that people — everybody — now owes it to themselves, personally, but then to their communities, secondarily, to really re-engage with this and start to understand how the system is designed, what are its pluses and minuses, and where it might serve us and where it might fail us.
BW: So the assumption that growth is equivalent with prosperity is false?
CM: We’ve made the assumption that growth equals prosperity because they’ve happened to have been coincident for a very long time. We happened to have been growing and we also happen to have had prosperity come along with that, and so I think we might have accidentally started to confuse the two.
A simple analogy for that would be to think of a family of four — and let’s imagine that this family of four, husband and wife, two children, and they earn enough money so that they just make it to the end of the year and that’s all they have. They can’t afford to have another child because they don’t have the money for that, and they just come to the end of the year and they just have zero at the end of the year. But now if we give that family an extra 10 percent raise and that’s enough to either support another child in the family or to buy everybody additional comforts of life and raise their individual levels of prosperity, we can see that with that amount of surplus we’ve given to that family situation they can either support growth or prosperity, but there’s not enough money to do both.
And that’s an exact analogy for where we’ve gotten to as a nation.
This was my analysis that I had started to put together. It was five years ago now that I saw all of this coming in large measure, although there’ve been some surprises to me, to be honest, but I was noting that the ways in which our economy was starting to chew into its surplus, and was using it solely for growth and wasn’t rededicating it to prosperity. It was just a foregone conclusion that our current troubles were going to arise and they have.
BW: What were some of the surprises that you found?
CM: I was really surprised that our federal government would ever get itself into a position of spending 12.5 percent of its GDP in a deficit situation. Those are numbers more associated with banana republics. I was completely surprised that no real pressure was put on the banking system and that they were delivered trillions of dollars with basically no strings attached. I was really surprised at how ineffective our political processes were, apparently, to really confront the true nature of the crisis.
And I think I wasn’t quite as surprised, but maybe a little disappointed, that this seems like a crisis is going to waste. I like to say, “A crisis is a terrible thing to waste.” And I think we’re wasting this one because there’s a lot of good lessons we could be learning from this one, but instead the plan seems to be to get us back onto a path of growth as fast and as rapidly as possible without really learning from our past mistakes. And that, unfortunately, will be a prescription for a larger crisis in the future.
BW: Keeping those surprises in mind, isn’t it a difficult thing to really predict what we will be seeing in the next 20 years, given that not all predictions come through and that there is room for things like surprises?
CM: What did Yogi Berra say? “Predictions are difficult, especially about the future.” So, I’ll quote him there. Well, there’s a number of things where I do make predictions and I always couch those, and I’m very careful because you’re absolutely right — predicting the future is perilous business.
Against that, though, there are a number of trends that are in place about which we don’t have to make any predictions. So, the baby boomers are a demographic reality in our country. There is a bulge of people, ranging in age now, I guess, from about 47 on up, and there are more of them than there are people behind them. And it’s not a prediction to say that they’re going to age in a way that’s going to create massive difficulties for our pension and our entitlement programs. There are very few things that could actually interrupt that trend.
We have failed to save as a nation, instead preferring to rack up massive amounts of debt. It’s not really a prediction to say that’s going to cause certain types of trouble for us. Our choices include either paying those debts off or defaulting on them. Either of those actually has an enormous number of fairly predictable and undesirable impacts that will result from that. The trend of energy dependence in this country is what it is and we can make predictions off of that. Also, the concept of peak oil and overall peak energy are also trends that we know within a reasonably narrow frame of time with very little disagreement. If you can give yourself a decade of leeway in either direction, there’s fairly small disagreement about the reality and the timing of that. So, those are things where we can put all of those as building blocks upon which we can make some fairly safe predictions and then we can start to make some more aggressive predictions that are harder to put forward.
It’s pretty safe in my mind to think about the fact that the standard of living to which Americans have become accustomed is going to decline, and we’re already in the early throes of that process. But the good news is that a standard of living decline doesn’t have to mean a quality of life decline. And I’m a personal living example of that. I’ve personally, with my family — I have three youngish children, 15, 11 and 9 — and we have downsized our lives fairly aggressively and we’ve never been happier. We went from a five-bathroom house on the coast of Connecticut when I was a vice president of a Fortune 50 company, and now are renting a small house in western Massachesettes with one bathroom. Where we bought all of our food at the store before, we now belong to CSAs, we have a little garden, we know the people who raise our meat and we have this richer sense of community and connections. And for us, we’ve managed to really dial back our lives in a way that I think we’ve managed to both enjoy and has been very good for us because a) we’ve given ourselves the time to do it and b) we got to choose how and when we wanted to make those adjustments.
So one of the things I’d like to do with the Crash Course is help some people avoid having to make some rather abrupt, unpleasant adjustments (not of their choosing) at some point in the future. This all can be done very rationally and very deliberately, and actually with joy and a great deal of optimism, which all are things and words that I feel describe me, my family, my colleagues, the staff that I work with now. We are really building towards what we think is a very positive future that, frankly, is just going to be what it is. It’s coming and it’s up to us to adapt to it, and not vice versa, is the way we look at it.
BW: Based on what you know of local efforts and resources in the Boulder community, do you think we’re heading in the right direction?
CM: I absolutely think that Transition Colorado is on the right path and doing what needs to be done in order to meet the challenges of the future, no question about it. And I’m about as certain about this as I am of anything: In this period as we go forward, some communities are going to fare well, and some are going to fare poorly. And this difference between the two is going to be organizations like Transition Colorado.
BW: What should we be learning from all of this right now?
CM: The first thing is that it’s important for us to live within our means. Credit’s been a wonderful invention and it’s enabled some things, but if it’s abused, it really becomes a destructive element. And I’m hoping that most people are starting to get the message that debt needs to be something that has a relationship to your income. And that is, if we want our currency to survive and if we want our dollar to live long and prosper, we’re going to have to strike a relationship between what we produce and what we consume. As a nation we’ve not struck that balance well. We’ve spent 15 years over-consuming. And at the personal level, this is something for individuals to really sit down and think hard about and make sure that everybody can balance what they’re really producing and what they’re really consuming and leaving a little bit left over for savings. I hate to sound like my grandfather, but it’s that simple.
BW: Telling people to change their ways is often met with resistance. What do you suggest people do in order to embrace this future change, or to relocalize their lifestyle? Should people be taking small or large steps in this direction?
CM: Oh, yeah, I think that the smaller the steps the better. I’m a huge advocate that your first step ought to be the smallest one you can conceive of. That is absolutely the right way to start. And there are just a very few short set of recommendations.
First off, I think everybody needs to begin to educate themselves and to learn about these larger issues. I don’t believe that the Crash
Course is the be-all, end-all. It’s the beginning of that journey.
For some people, it means they are going to continue that education process and they’re going to dive right in. And for the people who are ready to get started doing something, my first piece of advice is to begin the journey of doing more with less. And what this means could be running a self-assessment on your life. Find out where you’re spending money, find out what you’re consuming, find out how your life is configured with respect to food, energy, all the basics, and then starting to find ways to do more with less. And the worst that can possibly happen — let’s imagine I’m totally wrong, there’s way more energy than anybody thought and the economy is just fine with a little stimulus — the worst that’s going to happen is you will find you actually have a little bit of extra money in your pocket and you’ve learned how to be frugal in a couple of ways. And you know what, you can always undo that stuff if you want to later.
And for people who are younger, acquiring skills and really thinking about what are the skills of the future — I think every generation has to figure that part out and it’s always a changing landscape. So the trends that are in play speak to me and talk about some skill sets that have a higher chance of being needed, desirable, full of purpose and with opportunity as we go forward, and others that may be less so.
And the last piece is around community. And this is where Transition Colorado and relocalization efforts really dovetail. I’m a huge proponent of the fact that none of us can make these transitions alone, nor should we want to, and that it’s community, local community — this is your personal lives within your walking or biking distance community or short driving — that it’s time to begin to weave those deeper connections and start figuring out what you have to offer and what your community has to offer and where the gaps are and how to plug those and really begin working with people to create the kind of place you want to live.
For More Info:
Chris Martenson will give a public talk at Unity Church (2855 Folsom St.) in Boulder on Thursday, July 16 and at the Tivoli Turnhalle (900 Auraria Pkwy.) in Denver on Friday, July 17. Both events begin at 7 p.m. On July 18-19, Martenson will also present “The Crash Course Seminars: Thriving in Any Future” at the Curtis Hotel (1405 Curtis St.) in Denver. All events are presented by Transition Colorado. For more information, please call 303-494-1521 or visit www.transitioncolorado.ning.com.
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