The only known photograph of Chief Seattle

Towards a spirit of connectedness

A world without hope?

What will the future look like? What direction should we take? There is so much wrong with our current way of living that it is hard to get proper handle on it. So what is wrong with us? Perhaps the answer can be found in a speech the native American Chief Seattle allegedly gave in 1854 when the United States government wanted to buy the land of his tribe. These are the first words of that speech.

How can you buy or sell the sky, the warmth of the land? The idea is strange to us. If we do not own the freshness of the air and the sparkle of the water, how can you buy them?

Every part of the Earth is sacred to my people. Every shining pine needle, every sandy shore, every mist in the dark woods, every clear and humming insect is holy in the memory and experience of my people.

Only Chief Seattle never spoke those words. It is fake history. This speech has been made up by a screenwriter in 1971. Still it strikes at the heart of the matter. Nothing is sacred any more. The pursuit of money destroys our values and our planet. For instance, it is argued that if we don’t allow the airport to expand, money and jobs will be lost. That kind of thinking is killing us in the end. The speech contains some more interesting words.

This we know – the Earth does not belong to man – man belongs to the Earth. This we know. All things are connected like the blood which unites one family. All things are connected.

Whatever befalls the Earth – befalls the sons of the Earth. Man did not weave the web of life – he is merely a strand in it. Whatever he does to the web, he does to himself.

We know this deep in our hearts but it is hard to deal with it. The people from the Strohalm Foundation have worked for decades to define an outline for the society of the future. They were not hindered by established interests nor did a lack of perspective deter them from continuing their search. They tried to learn from history and were part of a small group of people that kept on caring and never gave up. Here is another interesting take-away from the speech.

Even the white man, whose God walks and talks with him as friend to friend, cannot be exempt from the common destiny. We may be brothers after all. We shall see. One thing we know, which the white man may one day discover – Our God is the same God. You may think now that you own Him as you wish to own our land, but you cannot.

In 1991 the Strohalm Foundation issued a booklet named To a Philosophy of Connectedness. It lays out a vision for a future society that is both sustainable and humane. It gives possible steering mechanisms that can help to achieve a durable and more humane society. It is a vision that long seemed unattainable, not because it is impossible to do, but because vested interests stood in the way.

That destiny is a mystery to us, for we do not understand when the buffalo are slaughtered, the wild horses tamed, the secret corners of the forest heavy with scent of many men, and the view of the ripe hills blotted by talking wires. Where is the thicket? Gone. Where is the eagle? Gone. The end of living and the beginning of survival.

In 1994 I became familiar with the Strohalm Foundation. For a long time I believed them to be naive as I considered myself to be realistic. Most people I knew did not really like environmentalists. I kept on supporting their work because there seemed to be no alternative. You cannot allow realism to stand in the way of what needs to be done. And therefore this vision exists because of the hard work of environmentalists like Friends of the Earth and the Strohalm Foundation.

A new perspective

We need a new starting point, a new foundation for our culture, our beliefs and thinking about our place in the universe. There is no other choice. Small steps can’t save us. We need to fundamentally change ourselves and the ideas we currently have. The planet we live on is given to us by God and not ours to destroy. Sadly, the fate of our planet does not compel us enough to do the right thing so God comes in handy here.

As long as we do not completely change our approach to the major problems of our time, our societies will not become more humane and respectful of our planet. As long as production and consumption increase, new problems emerge faster than old problems can be solved with laws, technology, targets and other solutions.1

We are not confronted with an array of regrettable separate incidents, but with a culture that is on the loose. It is a throw-away culture in which not only materials and energy are wasted. Human relationships and values end up on the waste dump too.1

You probably know that in your heart but find it difficult to admit. Admitting this can give you a feeling of hopelessness. And so you may be inclined to ignore this, to focus on smaller and more concrete problems, or to withdraw yourself1 by fleeing into cynicism, new age spiritualism or conspiracy theories.

Most of us believe that massive structural changes are impossible and that we can’t influence the course of history in a meaningful way. And so we choose to manage existing developments with smaller measures. That may not help us in the end.

There is another way of looking at the situation. It is the rational way. Acknowledging a problem is already solving it half. Our feeling that nothing will ever help can be a self-fulfilling prophecy. Still most of us want a solution and help to make it happen. As soon as there is a perspective for change, many of us will let go of their cynicism and help to make it happen.1 And then change can happen very fast.

Twenty years could be all we have left. And twenty years may be all we need.

Natural World Order

You go to your job and perhaps you achieve something there. Your activities do not only have the intended consequences but many others as well. If you succeed and get a promotion, a colleague might get jealous. If you go to your job by car, the exhaust gases can make other people sick.1 The unintended consequences of your actions hardly play a role in your decisions but they change our reality in unexpected ways.

The world is so complex that the models we use can’t get a hold on what is going on. It appears that we can’t change the future in a meaningful way. At best we can anticipate what is going to happen. The failure of communism demonstrated that centralised planning does not create a happy society. That left us with capitalism and markets. They brought us prosperity while our living conditions are being destroyed.

Nature can us show a way out. Organisms start relationships with each other. These relationships can become permanent if one organism makes something another organism needs and the other way around so that both benefit. For instance, plants and animals have such a relationship. Plants produce oxygen that animals need while animals produce carbon dioxide that plants need.1

Plants and animals are part of a self-sustaining cycle. They are connected. They are parts of a whole. If plants die then animals including humans die too. There are many of such relationships in nature. Such a natural order emerges spontaneously but it takes a long time. It starts with individual organisms starting relationships. These relationships can grow to a global scale as long as the external conditions allow for it.1

External conditions are like a dictate. If there were no fossil fuels then we can’t burn them. If there was no technology to build cars, we can’t drive them. External conditions are usually taken for granted but when they suddenly change then we must adapt and that can be brutal. For instance, the spread of the corona virus brought long-distance travel to a standstill. And climate change can become far worse than that.

Make no mistake. Running into the limits of our planet will be more brutal than anything that ever happened before in the course of human history. That leaves us with no other choice than setting global limits on human activities before the planet does it for us. But the sudden stop of air travel also teaches us that we don’t really need it. And there are many more things we do not need.

People, businesses and governments must deal with these limits. Once they are in place, communities, governments and businesses all over the world can reorganise themselves via communities, so that the Natural World Order will arise more or less spontaneously. Humans can make this happen fast because they can quickly change the ways they cooperate by changing their cultures. That doesn’t require planning every detail but it does require altering the steering mechanisms of our societies and economies.

One of the most important things we must change is the way we look at wealth and conspicuous consumption. Wealthy people are seen as great examples and their consumption is seen as good for the economy. If conspicuous consumption is frowned upon, there is less fun in being extremely rich, and a lot of crime becomes pointless. For example, what’s the point of risking your life by being drug dealer if you can’t drive around in your expensive cars any more? This way looking at wealth and consumption is essential to make the Natural World Order come to pass.

Steering mechanisms

Money is now the most important steering mechanism in society. Realising goals of any kind usually requires the cooperation of others and therefore money. That is understandable. Everyone needs money but it may be better that we are motivated more by our job or our contribution to society and less by money. Economic decisions are affected by interest as well. Interest is a steering mechanism. High interest rates promote short-term decisions while low interest rates promote long-term decisions. So how does that work?

If the interest rate is 5% then € 1,00 next year is worth € 0,95 now. That makes you prefer to get € 1,00 now rather than next year, even when you need the money next year simply because you can receive interest an will have € 1,05 next year. Interest reduces the value of future income and therefore the future itself. Interest makes people and businesses prefer the present to the future and short-term gains at the expense future generations.

This is why a sustainable economy requires low or even negative interest rates. Ending growth also requires negative interest rates otherwise the interest on debts can’t be paid. Interest is any return on capital so interest doesn’t depend on money but on capital. As the wealthy own most capital, interest is a flow from everyone else to the wealthiest. A humane society may therefore need to end positive interest rates. Central banks do not determine interest rates in the end. The supply and demand for money and capital do. But ending interest may soon be possible.

In a free market competition is a major steering mechanism. Competition promotes efficiency and progress but it also causes many problems. Competition affects economic decisions.1 It can force corporations to produce as cheaply as possible or to produce stuff that no-one really needs only because it can be sold at a profit. Many corporations see little room to treat their employees well or to take care for the environment.

If you desire that latest model, the best service, the lowest price, and want more money to buy even more stuff, then you are part of the problem like nearly everyone else, and that includes me. It may be strange to realise that you have enough, or even have more than enough, and that you can do with less stuff, older models, poorer service and higher prices, so that local businesses may be able to survive.

Another important steering mechanism is the distribution of cost. Short-term gains are for corporations while societies deal with the long-term cost like pollution and unemployment. Education and health care are public costs that corporations often do not pay for. Taxing systems do not take into account the limits of the planet. They need to be changed in order to attribute the true cost to the products and services people buy.

Shifting taxes from labour to raw materials and energy can help. This measure can induce people to use items longer and promote repair and recycling. Corporations must be responsible for the entire life-cycle of the products they produce. Non-essential products that are harmful can be banned completely. The advertisement industry can be regulated to stop people from buying items they do no need.

Laws are a steering mechanism too. What is legal isn’t always fair. Unethical behaviour is often not punished by the law. A greater role for ethics in law is needed, most notably in matters of business. Savvy people and corporations use loopholes to their advantage or bribe politicians into changing the law into their favour. Exploiting people, misusing public funds, and harming the planet should be sufficient ground for persecution and conviction, even if the specific activity is not declared illegal.

Most people take the existing steering mechanisms for granted. A few people like the anti-globalists and religious extremists think of an alternative. Only most people would not like a reign of terror. And so we limit ourselves to taking small measures in order to reduce the fall-out. It is hard to believe that the steering mechanisms themselves can be changed. Perhaps technology will save us, we hope. That may not be the case.

The throw-away culture

Science, technology, society and culture are closely interconnected. It is fair to say that we live in a technological society and a throw-away culture. If we have a problem then we look at scientists and engineers to solve it. Even our emotional problems we address with therapy sessions and pills. This is also true for environmental problems.

A good example is perhaps a report of the Dutch research agency TNO in the 1980s about replacing milk bottles by milk cartons. Milk bottles were used many times while cartons are thrown away. The discussion that followed was about the number of times a bottle was reused, which determines whether or not the bottle is better for the environment. That depended, amongst others, on the number of times a bottles was reused.

These discussions can be useful. What was not discussed however, was the throw-away culture. Milk bottles were part of a culture of reuse that was disappearing. The cartons are part of the new throw-away culture. Discussions are about quantity, objectivity and efficiency, but not about fundamental questions about the way we live.

The things we use deserve more respect. Valuable resources and energy have been used to make them. We should not depart from them until they are worn out completely. If they are broken we should fix them until they can’t be fixed any more. And why should we buy frivolous items or make long distance trips for recreational reasons?

The fourth way

The damage done to our planet is escalating. There is a lot of excess. Nowadays there are more obese people than hungry ones. So poverty can be ended. The end of our way of living is here. Communism and state planning have failed. Capitalism and free markets have failed too, perhaps even more miserably, but most people have yet to find out. Many countries have combined state planning with market economies and called it a third way. That didn’t help. But what can you expect from a compromise between two failures?

It is not surprising that people distrust stories that have a claim to the truth like religions, ideologies and science. But it is the absence of great stories we can believe in that makes our societies directionless. Individuals and their desires are now at the centre stage. So is there anything left that binds us together? Sure there is. A soon as a crisis emerges people join and help each other. The future is certainly not without hope.

There is an alternative, a fourth way. It can be called the Natural World Order. It is setting limits on a planetary level and letting people deal with them via communities, governments and markets. It is not clear from the outset what will happen if we do this. This can’t be planned from the top. Developments can take different turns. For instance, if energy is to become expensive, international trade would diminish and local products would be favoured. If most people know what needs to be done then they are willing to contribute but it does require using force against people who do not comply.

This is not the time to put more lipstick on the dying pig that the failing current order is. This is not the time to make it appear as if the current order can provide for us in the future. The limits of our planet should be respected. Administrating these limits would require a relatively small global government, but only if people, communities, businesses and governments all over the world, help to make the Natural World Order become reality. The Natural World Order needs massive support. It can only work when the vast majority of people believe in it and want to make it work whatever it takes. And that begins with everyone who has enough admitting that enough is enough.

We want more stuff because the advertisement industry tells us that we need this or that product or that this or that product will make us happier while in reality we don’t need it and it also doesn’t make us happier. Our current economic system needs growth. We must buy more stuff to keep the economy from collapsing. That is why real change is scary and can easily freak you out. The reason for this predicament is interest on money and debts. We need growth to pay for the interest otherwise the interest on debts can’t be paid and the financial system breaks down. The first priority is therefore ending interest payments on money and debts. Luckily financial markets allow it for the first time in human history.

Negative interest rates can be a steering mechanism on the global level that channels money from those who have enough to those in need and are willing to make good use of it, for instance by starting a business in developing countries. It doesn’t mean that poverty suddenly vanishes once interest rates go negative, but it does mean that the economy and the financial system can be made more favourable to the poor, most notably to those who are willing to enterprise in places where there is not enough.

Negative interest rates may signal the end of scarcity and the beginning of abundance. Eve and Adam did not know of scarcity in the Garden of Eden. They had everything they needed. Many of us can do with less and still have a good life. There is enough for everyone’s needs but not for everyone’s greed. And so we may enter the Final Gardens of Paradise that await for us at the End of History. This may be God’s plan for the future. Time will tell. I hope you agree we should try to make it happen. So let me be your guide.

Featured image: the only known photograph of Chief Seattle taken in 1864

1. Naar een filosofie van verbondenheid. Guus Peterse, Henk van Arkel, Hans Radder, Seattle, Pieter Schroever and Margrit Kennedy (1990). Aktie Strohalm.

Morality clause

Legal is not always fair

What is legal isn’t always fair. The role of morality in law may be too small. People have different views about what is right and what is wrong so the prevailing liberal view in many Western societies is that people should be free to do as they please unless their actions harm others. Even that view can justify a greater role of ethics in law as humanity is on suicidal path. If moral views converge in the future the role for ethics in law can grow.

For now we need to focus on what is most important as we could easily get trapped in issues of secondary importance. Moral issues can be contentious and people reason according to their beliefs and political views. The following arguments people with different political views use against each other illustrate that:

  • Leftists might be concerned with the rights of criminals in jail but not of the rights of unborn children who are innocent of any crime.
  • Conservatives might be concerned with the fate of unborn children but as soon as they are born in misery their compassion suddenly vanishes.

It is easy to simplify matters in this way. This is how issues are framed. And as soon as you are dragged into a dispute it is hard to stay moderate. Moral issues are often complicated. Euthanasia can be an act of compassion but it can be turned into a way of getting rid of undesired people. Perhaps criminals have had a poor life and never realised that they had a choice but making them suffer can give victims a sense of justice.

Leftists and conservatives have different moral views and can be passionate about them. This is difference of opinion rather than an absence of morals from one or both sides. Rational debates might help to clarify these matters and balance the laws on these issues.

In some areas ethics are needed urgently because the capitalist market economy is destroying our planet. So the primary focus should now be business and law. Research has shown that CEO is the job with the highest rate of psychopaths while lawyer comes in second,1 possibly because traders in financial markets were not included in the survey. Media came in third, possibly because it was a British research. Salespeople make a rather unsurprising fourth position.

Vulture capitalism

Rural areas in the United States are turning into an economic wasteland. Closed down factories and empty malls dominate the landscape. Communities are ravaged and drug abuse is on the rise. One reason for this to happen is that jobs are shipped overseas. Several factors contributed to this situation, but a major cause is CEOs not caring for people and communities. In many cases other solutions were possible.

Paul Singer is wealthy hedge fund owner. He made a fortune by buying up sovereign debt of countries in trouble such as Argentina and Peru at bargain prices and starting lawsuits and public relation campaigns against those countries to make a profit on these debts at the expense of the taxpayers of these countries.2

In the United States Singer bought up stakes of corporations in distress. He then fired workers so that the price of his shares rose. In the case of Delphi Automotive he and other hedge fund managers took out government bailouts, moved jobs overseas, and cut the retirement packages of employees so they could make a huge profit.2

Vulture capitalists prey on patients too. They buy patents on old drugs that are the standard treatment for rare life-threatening diseases, then raise the price because there is no alternative. Martin Shkreli was responsible for a 6,250% price hike for the anti-retroviral drug Daraprim. Many people died because of his actions.3 Perhaps he should be in jail for being a mass murderer but he is not because what he did is legal.

Profiteering at the expense of the public

In the years preceding the financial crisis of 2008 there was a widespread mortgage fraud going on in the United States. Few people have gone to jail because much of what happened was morally reprehensible but legal. Financial executives and quite a few academics share this view.4 And so nothing was done. Perhaps fraud can be proven some day but that may take years if it ever succeeds.

Healthcare is another domain for fraudsters and unscrupulous corporations. Patients are often not in a position to bargain. Perhaps that is why privatised healthcare performs poorly compared to government organised healthcare. In 2015 the Dutch government introduced the Social Support Act, making municipalities responsible for assisting people who are unable to arrange the care and support they need themselves.5

The municipalities were ill-prepared so fraudsters took advantage of the situation. Most businesses are legitimate but several private contractors enrich themselves at the expense of taxpayers and people in need. The Dutch prosecution is overwhelmed by fraud cases and it is not always possible to get a conviction because of loopholes in the law. Until these loopholes are fixed, several schemes remain legal.6

In the United States hospital bills are feared. A routine doctor visit for a sore throat can result in a $ 28,000 medical bill.7 And so many people in the US go without healthcare because they can’t afford it. Efforts to reform healthcare in the US haven’t succeeded, perhaps because those who send $ 28,000 bills for sore throats have plenty of money to bribe politicians into keeping the US healthcare system as it is.

Attributes of the law

First we have to recognise why it is so hard to prevent these things from happening. On the political front it is because once politicians are elected, they can do as they please until the next election. Lobbyists prey on them. Citizens have few means of correcting politicians, except in Switzerland. The Swiss have direct democracy. Swiss citizens can intervene in the political process when they see fit and fix laws if they think that is needed. Direct democracy might help to fix many of these issues.

Laws are often made with the best intentions but it is not possible to test them in a simulation to see how they will work out in practice. So once laws are enacted, unexpected problems pop up. The process of law-making is slow and it can take years before issues are fixed, at least if they are fixed at all because law-making is often political process, and that can make it rather complicated.

Even more importantly, the underlying principles of law benefit the savvy. The system of law is the way it is for good reasons. No-one should be above the law and people as well as businesses should not be subject to arbitrariness. The rule of law implies that every person is subject to the law, including lawmakers, law enforcement officials, and judges. It is agreed that the law must be prospective, well-known, general, treat everyone equal, and provide certainty. Only, in reality not everyone is treated equally.

Laws being prospective means that you can only be convicted for violation of laws in force at the time the act was committed. Legal certainty means that the law must provide you with the ability to behave properly. The law must be precise enough to allow you to foresee the possible consequences of an action. Businesses prefer laws to stable and clear. Corporations invest for longer periods of time. If laws change they may face losses. If laws are not clear, investments won’t be made, and a country may end up poorer.

With the rise of neo-liberalism came the era of shareholder capitalism. Making profits became a goal in itself. Greed was considered good. Wall Street traders and CEOs were seen as heroes even when they were just psychopaths outsourcing jobs for profit. There was little consideration for the planet, people and communities. Consumers preferred the best service at the lowest price so businesses were pressed into cutting costs and moving jobs to low-wage countries. Ethics in business were a marginal issue at best.

A bigger role for ethics

More and more people believe that ethics should play a bigger role in business. Activists pressure corporations. That may not be enough. Corporations must be competitive and can’t make real changes if that increases their costs. Levelling the playing field with regulations is an option but that may not be sufficient. The law needs a morality clause, making unethical behaviour unlawful, even though the action itself is not explicitly stated as forbidden in the law. That increases the cost of unethical behaviour.

A randomly selected jury of laypeople could make verdicts in these issues. Perhaps it is better that the legal profession stays out of these matters because it is not a legal matter in the first place. There are a few issues that come with a morality clause. Ethics in business can be a political issue. People may differ on what kind of behaviour is ethical and people may differ on what kind of unethical behaviour should be punished.

Introducing a morality clause to enforce ethical behaviour in business affects legal certainty. It will be harder for businesses to predict whether or not a specific action is legal. Business owners may incorrectly guess moral sentiment and believe they did nothing wrong. The uncertainty that comes from that might reduce the available investment capital for questionable activities. But that may not be so bad. And if immoral profits and bonuses from the past are to be confiscated, it affects the prospectiveness of the law.

International treaties like the Transatlantic Trade and Investment Partnership (TTIP) have been set up to accommodate the unethical practises of corporations and to protect those corporations from making those unethical practises unlawful. Because that is often what reducing the regulatory barriers to trade like food safety laws, environmental legislations and banking regulations often amounts to in practice.

In most cases it can be known on beforehand what actions are unethical. For instance, investors in corporations that extract fossil fuels should know that burning fossil fuels causes climate change. They are gambling with the future humanity. So if some countries decide to outlaw the use of fossil fuels then these investors should not be compensated.

Perhaps you have serious doubts about this proposal as it upsets the very foundations of the current system of law. And I can imagine that you think: “Where does this end?” But there is something very wrong with the current system of law. Business interests often take precedence. So do you want the law to protect the psychopaths who maximise their profits at the expense of people and the planet? And do you really think that the law can be made without failures so that corporations and savvy people can’t exploit them?

Featured image: Of course the laws are always functional. Loesje. Loesje.org.

1. The Wisdom of Psychopaths: What Saints, Spies, and Serial Killers Can Teach Us About Success. Kevin Dutton (2012).
2. The death of Sidney, Nebraska: How a hedge fund destroyed ‘a good American town’. Charles Couger, Alex Pfeiffer (3 December 2019). Fox News. [link]
3. Vulture capitalists prey on patients. The Sacramento Bee (22 September 2015). [link]
4. How Mortgage Fraud Made the Financial Crisis Worse. Binyamin Appelbaum (12 February 2015). New York Times. [link]
5. Social Support Act (Wmo 2015). Government of the Netherlands. [link]
6. Gemeenten starten onderzoek naar Albero Zorggroep. Eelke van Ark (31 October 2019). Follow The Money. [link]
7. How a routine doctor visit for a sore throat resulted in a $28,000 medical bill. CBS News (31 December 2019) [link]

Beautiful countryside in southern California

Capital for the future

Making the economy sustainable may require an unprecedented amount of capital in the form of knowledge and outfits like solar panels, sustainable farms and energy-efficient transportation systems. It is hard to imagine that it can be done. And imagining it is still a lot easier than really doing it. It is going to require some economic magic to divert investment capital from destructive activities to the future of humanity. We may need more useful capital and less consumption.

Perhaps the invisible hand can be of some help. It is easier to finance a great endeavour from investments than from taxation because nobody wants to pay taxes but everybody is happy to invest. It is the secret of the success of the European empires that conquered the world after the Middle Ages. England, France, Spain and the Netherlands were much poorer and smaller than China, India or the Ottoman Empire, but they didn’t finance their conquests with taxation, but with the use of investment capital.1

Europe won out because European conquerors took loans from banks and investors to buy ships, cannons, and to pay soldiers. Profits from the new trade routes and colonies enabled them to repay the loans and build trust so they could receive more credit next time.1 The same logic may need to be applied to making the economy sustainable. The challenge is so enormous that it may never be possible to finance it by taxes. Nowadays interest rates are so low because there is plenty of investment capital.

It’s the economy stupid!

It is often argued that the economy is unsustainable because of short-term thinking. The economy must grow in order to have positive returns on investments. And it is believed that returns on investments need to be positive otherwise the economy would collapse. The economic time horizons of individuals are reflected in their time preferences. The time horizon of the economy as a whole is reflected in the interest rate.

The lower the interest rate, the longer the time horizon of the economy could be. The following example from the Strohalm Foundation can illustrate this:

Suppose that a cheap house will last 33 years and costs € 200,000 to build. The yearly cost of the house will be € 6,060 (€ 200,000 divided by 33). A more expensive house costs € 400,000 but will last a hundred years. It will cost only € 4,000 per year. For € 2,060 per year less, you can build a house that lasts three times as long.

After applying for a mortgage the math changes. If the interest rate is 10%, the expensive house will not only cost € 4,000 per year in write-offs, but during the first year there will be an additional interest charge of € 40,000 (10% of € 400,000).

The long-lasting house now costs € 44,000 in the first year. The cheaper house now appears less expensive again. There is a yearly write off of € 6,060 but during the first year there is only € 20,000 in interest charges. Total costs for the first year are only € 26,060. Interest charges make the less durable house cheaper.2

Without interest there is a tendency to select long-term solutions. Interest charges make long-term solutions less economical. Interest promotes a short-term bias in the economy. It may explain why natural resources like rainforests are squandered for short term profits. If interest rates are high, it may be more profitable to cut down a rainforest and to put the proceeds at interest rather than to manage the forest in a sustainable way.

Only, things are not as simple as the example suggests. For example, the building materials of the cheap house might be recycled to build a new house. And technology changes. For example, if cars had been built to last 100 years, most old cars would still be around. This could be a problem as old cars are more polluting and use more fuel. Nevertheless, the example shows that long-term investments can be more attractive when interest rates are lower.

This also applies to investments in renewable energy. For instance, a solar panel that costs € 100, lasts 15 years, and generates € 150 worth in electricity in the course of these 15 years, is feasible at an interest rate of 5% but not at an interest rate of 10%. Many investments in making the economy sustainable may have low returns and are only feasible when interest rates are low. Low and negative interest rates can also deal with low economic growth. That may be needed for living within the limits of the planet.

Living within the limits of the planet

When interest rates are negative, the time horizon of the economy could go to eternity so that it makes sense to invest in making the economy sustainable. A few examples from history can illustrate this. In the Middle Ages some areas in Europe had currencies with a holding fee like Natural Money. As there hardly was economic growth, interest rates were negative. It was the era of Europe’s great cathedrals. These cathedrals were built for eternity. As better investment opportunities were absent, wealthy towns people spent their excess money on cathedrals.3 For similar reasons, the people of Wörgl planted trees as the proceeds of the wood were expected to occur in the distant future.3

A bit of calculus shows why. At an interest rate of 5%, putting € 1 in a bank account turns into € 1,05 after a year, so you would rather have € 1 now than in one year’s time, even when you need the money in one year’s time. That’s because you can put the money on a bank account at interest. At an interest rate of 5%, € 100 in one year’s time is worth € 95.25 now. The distant future has even less value. The same € 100 in one hundred year’s time is worth only € 0.59. And € 100 after 1000 years has no value at all in the present.

At an interest rate of -5%, you would prefer to have the money when you need it, otherwise you would end up with less. At an interest rate of -5%, € 100 in one year’s time would be worth € 105. The same € 100 in one hundred year’s time would be worth € 13,501 now. And € 100 after 1000 years would be worth more than everything there is in the present. Income in the distant future is also very uncertain, so it is unlikely that investors will shift their time horizon to 1,000 years, but this logic may help us to come into terms with the limits our planet poses on human activities.

Living within the limits of the planet may require unprecedented investments in the future. These investments may require low or even negative interest rates as their returns may be low. Only low and negative interest rates can make these investments economical. Everyone who has money to save can help by shifting money from consumption to saving and investing. The more people act like capitalists, the lower interest rates may go, and the more sustainable the economy may become.

Capitalists think that money spent on a frivolous item is money wasted, because when you invest your money, you will have more money that you can invest again. Capitalists hardly care about interest rates. They will save and invest anyway because of their capitalist spirit. Rich people may be encouraged to save even more if luxuries that use a lot of natural resources and energy aren’t available any more. One can think of luxury yachts, private jets, but also of travel by airplane for holidays. When energy becomes a constraint, local products may replace long-distance trade.

Featured image: Beautiful countryside in southern California. James McCauley (2005). Wikimedia Commons. Public Domain.

1. A Brief History Of Humankind. Yuval Noah Harari (2014). Harvil Secker.
2. Poor Because of Money. Henk van Arkel and Camilo Ramada (2001). Strohalm.

Clutching at a straw

When I was eighteen years or so I once read The Limits of Growth. That’s depressing stuff, most notably if you’re young and expect to live for another sixty years or so. Doom seemed imminent and I would probably live to see it happen. That was the moment when my views about the future turned grim. Before that I hardly had views about the future at all. A few years later I became an environmentalist and a member of Friends of the Earth in Groningen. Friends of the Earth does research and tries to convince people that they should change their lifestyles. Friends of the Earth also lobbies with politicians and pressures corporations. And sometimes we protested.

One day we blocked the entrance of Groningen Airport to protest against the government subsidies for the airport. The city council felt that Groningen needed an airport but Groningen wasn’t big enough to make it profitable. When we were sitting there, the police came to remove us, and it suddenly became clear to me that activism didn’t help. Politicians will be voted out of office when they are serious about solutions. Businesses will go bankrupt if they take appropriate action unless all other businesses do the same. The required measures are extremely costly and will affect our lifestyles so profoundly that it would never happen in the current political and economic system.

Once being over a cliff, a cartoon character can only clutch at a straw. And only in cartoons the straw might hold. Friends of the Earth in Groningen worked together with the Strohalm Foundation. The meaning of the Dutch word strohalm is straw. According to Strohalm, the economy must grow because of interest, and that’s destroying the planet. It is ‘grow-or-die’ because interest rates need to be positive. Any solution begins with ending interest, they believed, and interest causes a lot of other problems too, like poverty and financial instability. Strohalm’s idea was banning interest and charging a fee on money as Silvio Gesell had proposed, so that it would be attractive to lend out money without interest.

Economists didn’t take interest-free money seriously. If you can receive interest elsewhere then why would you lend out money without interest? And if you can borrow money at an interest rate of zero, you would borrow as much as you can and put it in a bank account at interest. Therefore, interest-free money with a holding tax would never work, at least so it seemed, and it didn’t take long before I realised that too. Only, that wasn’t satisfactory. Accepting doom is like committing suicide. If interest is the root of many social and environmental problems, and may destroy human civilisation, you can’t ignore that. And perhaps it could work. During the Great Depression it had been tried in a small Austrian village and it was a stunning success.

For years I used public transport as much as possible, but at some point I began to realise that it was all pointless. More and more people started driving SUV’s. They didn’t care. It didn’t matter what I do. A car can make your life more comfortable and I had no higher morals than other people.

A few years later, in 1998, I became a freelance IT specialist. I made a lot of money so I had money to invest. My first investments were small and not very successful. That was because I believed that the profits of corporations matter. But investments in loss-making internet startups did very well while profitable corporations did poorly. And so I came to believe that I had to stay informed about the developments in the financial markets. In 2000 I joined the investment message board Iex.nl.

On the message board was a day trader who shared all kinds of conspiracy theories with us. For instance, if the markets were about to collapse, a secret group called Plunge Protection Team would come to the rescue. He was ridiculed, but after the internet bubble popped, markets often miraculously recovered when they were about to crash.

And gold often crashed because of sudden selling. The day trader believed central banks wanted to keep confidence in their currencies. If the gold price were to rise, he claimed, people would lose trust in central bank currencies. This was new to me, and probably it wasn’t true, but I already had bought some gold because I didn’t trust financial markets and the people operating them. I was not good picking stocks, and I was too risk averse to be very successful in the stock market, but the gold turned out to be a good investment as I held on to it for decades.

In 2001 after the Internet bubble had popped I pitched the idea of interest-free money on the message board. My lack of knowledge was eclipsed by my zeal and lengthy discussions followed. On the Internet people from different backgrounds and different knowledge can be in one virtual room and participate in a discussion. I was rebutted time after time, but as these discussions went on, my knowledge of the financial system increased and I became aware of the issues that had to be resolved in order to make interest-free money work.

As a gold investor I became familiar with the Austrian School of Economics. This group questions money creation by banks and the need for central banks. They pointed at the inflation caused by money creation and central banks. At some point all the debt banks create would eventually collapse the financial system and money would be worthless, they believed.

And so two opposing fringe ideas, interest-free money with a holding tax and Austrian School, were challenging each other in my mind, which may be how Hegelian dialectic is supposed to work. In 2008 this resulted in a resolution and the idea of Natural Money was born. The economy can do better without interest so returns for investors can be higher. As positive interest rates are not allowed, the money may rise in value, so that interest-free money can give better returns. Hence, interest-free money was possible, perhaps even inevitable. In the following decade I integrated modern main stream economics into the theory of Natural Money. This research can be found on the website Naturalmoney.org.

Featured image: Roadrunner and Wile E. Coyote. Warner Bros. [copyright info]

The last day

The limits to growth

Imagine there is a lake in a distant forest. On the surface of the lake a plant is growing. It suffocates all life below. The plant has already been there for a 1,000 days and it grows at a rate of 100% each day. If the lake is already covered half by the plant then how many days are left to save the remaining life in the lake? The correct answer is one day.

The plant doubles in size in one day. As the lake is already half covered, it will be fully covered the next day. It doesn’t matter that the plant was there already for 1,000 days. This is exponential growth. And it ends suddenly. As soon as the lake is fully covered, there is no more room for growth. For every leaf the plant adds, another has to die.

The lake represents Earth. The plant represents humanity. The leafs are people like you and me. No more room for growth may mean that for every child that is born, someone else has to die. It is estimated that as of 1971 humans use more of the Earth’s resources than nature can replenish. Currently we use one-and-a-half times as much as nature can replace. By 2050 three Earths may be needed to sustain humanity.1 Make no mistake, this is the ‘last day’.

The end may come suddenly. Most people don’t see it coming. Others believe that it can’t be avoided. They are preparing for the worst. In 1972 a group of scientists called the Club Of Rome predicted ‘the end’ when natural resources would run out. They claimed it would happen shortly after the year 2000.1 It didn’t happen until now, but that doesn’t mean that the current path of humanity can continue for much longer.

This is the end
Beautiful friend
This is the end
My only friend
The end

– The Doors, The End

The depletion of natural resources and the degradation of our planet are amongst the most serious challenges humanity is facing. If these challenges are not addressed, billions of people may die of hunger, pollution, resource wars and ecological disasters. Poverty may spread because of the depletion of natural resources.

Perhaps new technologies will become available in the future that can deal with these issues but we don’t know whether that will happen and when. Even if these new technologies become available, we may need to bridge a gap in time and adapt our lifestyles until then. That might require buying less stuff for those who can afford it.

Climate change

The average temperature on Earth is expected to rise by three degrees Celsius by the year 2100. It has already risen by one degree Celsius since the year 1900. Such a rise in temperature can alter the weather globally and cause massive harvests fails. Polar ice may melt so that the sea level will rise and low-lying territory where more than 500 million people currently live, may be lost. The main cause of the temperature rise is our use of fossil fuels. There is little doubt about that.

There is a lot of uncertainty about the accuracy of the estimates regarding the consequences of climate change as was the case with the predictions made by the Club Of Rome. The exact impact of rising carbon dioxide levels on the weather is hard to predict. The estimates of the climate scientists are the best we currently have as were the estimates made by the Club Of Rome in 1972. Probably they are right about the direction but not accurate in time.

Ignoring climate change is like playing Russian roulette with the future of humanity without knowing exactly how many bullets are in the revolver, but sensing that it is two to five out of six. Taking action may result in wasting an unprecedented amount of effort and resources on combating climate change if these predictions are wrong, but you need to pull the trigger to know that.

It is hard to imagine how bad it will get and it is even harder to imagine that it may be happening soon. Drastic actions like ending frivolous uses of fossil fuels and investing massively in clean sources of energy appear necessary. Several scientists believe that nuclear energy is an alternative. There may be accidents and dangerous waste, but they believe that nuclear energy will cause fewer deaths than fossil fuels.

Going nuclear?

In 1994 I met my wife Ingrid. The next year we spent our first holidays together in the Dutch province of Zeeland. During one of our trips we came across a village named Kwadendamme. The English translation of this name is Evildam. Ingrid was driving. Suddenly she hit the brakes. “Antiques,” she cried. By the side of the road was a shabby shed with a sign ‘King’s Antiques’ on it. Inside were piles of stuff. An elderly couple entered via a back door. They may have been in their seventies or eighties. And perhaps they were the only antiques there.

Ingrid was browsing the shelves and soon she found a doll. 185 guilders (85 euros) was the price tag. Ingrid kept on staring in bewilderment. “This doll isn’t very old but the price reflects that,” the old lady said. Later Ingrid told me that she had seen this doll in a store chain a few years earlier. Back then the price was 9 guilders (4 euros). We were about to leave. Then the old man said: “Don’t go yet, there’s another hall.” He pointed at the back door. Behind the shed was a small place and another shed. It may have been a henhouse previously. I could hardly stand upright in there. It was filled with more stuff.

Just after we left Kwadendamme we found ourselves on route N666 (National Route 666) to Borssele. Back then I already found this to be a bit peculiar, not only because of the route N666 passing Kwadendamme (Evildam), but even more so because it was the route to Borssele, which is the site of the only remaining Dutch nuclear power plant. The N666 ends near Borssele next to a village named ‘s Heerenhoek, which can be translated into The Lord’s Corner. With the benefit of hindsight, this probably isn’t a coincidence.

The only other Dutch nuclear power plant was located in Dodewaard. It had been closed in 1997. Dodewaard can be translated into Death Holm, which is a bit spooky considering that Route 666 leads to Borssele. The Dodewaard area is 66.5 square kilometres, close enough to 66.6 to be a bit eerie. Nuclear fission energy is ‘a deal with the devil’. If we use it, accidents might happen and people might get killed. Only the number of people killed when using fossil fuels would probably be far greater.

Solar and wind appear to win the race in terms of cost but until now only a few percent of the global energy production comes from these sources. Furthermore solar and wind aren’t a stable source of energy and storing electricity is cumbersome. We need a reliable source of energy. The only real alternative to fossil fuels appears to be nuclear energy. Nuclear energy produces dangerous waste and accidents can’t be ruled out.

Nuclear fusion can be a lot safer than nuclear fission, which is the type of nuclear energy that is currently used. If something goes wrong with nuclear fusion, the process dies out. It can’t go out of control like nuclear fission. The nuclear waste from fusion would be more manageable. There may be energy from nuclear fusion within a few decades, but that’s still far from certain. Safer nuclear fission reactors may become available in the near future and they may also be cheaper to operate.2

Nuclear fusion might bring us unlimited energy at virtually no cost. In that case it would be possible to recycle much more than we currently do as the value of the recycled materials is now often lower than the cost of the energy needed to reclaim them. Even though developments in the field of nuclear fusion seem promising, it will take time and it is still far from certain that it will become available. And as long as it isn’t available, living within the limits of our planet may require considerable sacrifices.

Mass extinction

Climate change gets a lot of attention but there are several other environmental disasters happening at the same time. Many species of plants and animals have become extinct or are on the brink of extinction because humans destroy their habitat. On average, there was 60% decline in the size of populations of mammals, birds, fish, reptiles, and amphibians in the last 40 years.3 There is hardly any wildlife left.

To put it into perspective, one can compare the total weight of all humans and their domesticated animals with the remaining wildlife, which are all the wild animals except insects and microbes. The seven billion humans on this planet together weigh 300 million tonnes. All the domesticated animals, such as pigs, cows, horses and sheep, together weigh 700 million tonnes. By comparison, all the remaining large wildlife on planet Earth, such as lions, elephants, whales, crocodiles and penguins, together weigh less than 100 million tonnes.4

And then there is pollution. The list with problems caused by the exponential growth of human activities is long. This is perhaps not a complete list:
– depletion of natural resources, especially fossil fuels;
– shortage of drinking water;
– air pollution, water pollution, soil contamination and noise;
– deforestation and loss of ecosystems that sustain global atmospheric oxygen and carbon dioxide balance;
– loss of arable land and a growth of deserts;
– increased chance of new epidemics;
– low life expectancy in countries with fastest growing populations;
– unhygienic living conditions for many because of water resource depletion and discharge of raw sewage and waste disposal;
– more crime rate as people revert to stealing in order to survive;
– conflict over scarce resources leading to wars;
– fewer personal freedoms and more restrictive laws.

Why produce garbage

Why produce garbage if it is thrown away?

Wealthy countries are throw-away societies. There is an excessive use of disposable items. Why should we recycle garbage when we can use more durable goods? Why are there so many packaging materials? For instance, liquids be transported in tanks and consumers could fill up their bottles at the supermarket. Why isn’t anybody doing this? It might be because marketeers believe that the packaging and not the content is what makes a product unique. The amount of packaging can be reduced significantly.

There may be no other option than to curb polluting activities, the consumption of raw materials and carbon emissions. Frivolous consumption may need to be banned if it uses too many scarce resources. Harmful activities that are difficult to end may need to be taxed and the proceeds of these taxes may be used to reduce taxes on labour, so that labour can replace energy and materials consumption where possible. These changes can make it more attractive to recycle and to make products longer lasting. Tariffs may need to be put on products from countries that do not comply to these standards.

Population control

A mother in waiting once asked the biologist Midas Dekkers what she could do to raise her child as environmentally friendly as possible. Dekkers then said that nothing affects the environment more badly than having a child. For the environment it is better to cut down one hundred hectares of tropical rainforest than to have a child, he added. It may be a good idea to limit the number of children, for instance to one child per couple.

Population control becomes even more urgent as humans may soon live indefinitely. The people who live 1,000 years or longer probably already live today. And if no-one dies of age then it may be stupid to let people die of hunger simply because we couldn’t control our desire for having children.

Apart from people wanting to have children, poor people seek security. They worry about making ends meet. The depletion of natural resources is not on their minds. The only long-term plan of many poor people is having children who can care for them when they are old. Even though poor people do not use a lot of resources, they often have many children, and if we like them to prosper, that could be a problem.

If the rights of a couple to have a child can be sold, wealthy people may bid up the price of these rights, and poor people can have a pension out of selling them. There are some ethical issues with such a measure as it may result in poor people having fewer children and people from specific ethnicities opting for this more often than others. The limits of our planet are such a serious issue that these consequences may need to be accepted. And on the bright side, fewer children may be raised in poverty.

The food situation

In the face of climate change and the possibility of massive harvest failures it is wise to look at the food situation. Currently, the available food stocks can feed humanity for a few months. Famine may be just around the corner for billions of people. It therefore seems wise to heed the advice Joseph gave to the Pharaoh, which is to store massive amounts of food for bad times. Perhaps a Natural Money currency backed by stored food can be issued to pay for the storage.

The food situation requires another look at meat consumption. Animals used for consumption eat food humans could eat. It takes three to seven kilograms of grain to produce one kilogram of meat. There are other disadvantages to meat. Eating meat causes animal suffering as many of these animals live in factory farms. It will be hard to change human diets unless good substitutes for meat become available, but reducing meat consumption may be needed to deal with potential food shortages.

Nothing but flowers

The challenge is so huge that it seems impossible but there is hope. The plan can succeed because that might be part of the script. When we believe this then we can make it happen. In the past no appropriate action has been taken, so drastic measures seem inevitable. It probably will not be easy to make you accept the proposed measures. They may require sacrifices you never imagined you would make like taking holidays near home rather than taking a long trip to the other side of the world.

Measures can have undesirable side-effects. For instance, China had a one-child-policy for decades. Many parents preferred a son so baby girls were often killed. Nowadays many men in China can’t find a wife. Another example is tropical rainforests making room for palm oil plantations to produce ‘renewable energy’. We need to deal with undesirable side-effects as soon as they emerge.

When everything ends well, you may not be satisfied with the outcome. The Garden Of Eden was a Paradise for Eve and Adam, but it may not be great for many of us. We can adapt. Just think of the children of the future. They won’t remember this era of excess from personal experience and they may be happy with their lives.

Here we stand
Like an Adam and an Eve
Waterfalls
The Garden of Eden
Two fools in love
So beautiful and strong
The birds in the trees
Are smiling upon them
From the age of the dinosaurs
Cars have run on gasoline
Where, where have they gone?

[…]

And as things fell apart
Nobody paid much attention
You got it, you got it
I dream of cherry pies,
Candy bars, and chocolate chip cookies
You got it, you got it
We used to microwave
Now we just eat nuts and berries
You got it, you got it
This was a discount store,
Now it’s turned into a cornfield
You’ve got it, you’ve got it
Don’t leave me stranded here
I can’t get used to this lifestyle

– Talking Heads, Nothing But Flowers

Featured image: Judgement Day. Royal Museum Of Fine Arts of Belgium. Rama (2008). Wikimedia Commons. Public Domain.

Other image: Why produce garbage when it is thrown away all the same. Loesje. Loesje.org.

1. The Limits to Growth. Donella H. Meadows, Dennis L. Meadows, Jørgen Randers, William W. Behrens III (1972). Potomac Associates – Universe Books.
2. Can Nuclear Power Offer a Way Out of the Climate Crisis. Philip Bethge (7 January 2020). Der Spiegel. [link]
3. Living Planet Report. World Wildlife Fund (2018). [link]
4. Sapiens: A Brief History Of Humankind. Yuval Noah Harari (2014). Harvil Secker.