Subverting the Global Economy through Local Action Part 2

[part 1 here]

For a while, I had intended to write this post all by myself and make it a masterpiece of bloggery, so I started looking around for inspiration and links.

And I found others have already mastered this topic.

So I'm not going to write an article, post, diatribe, or paean: I'm going to stop right here and link to others' works that cover the topic far more thoroughly than I could in a single article. The overriding thesis: we don't need to do anything particularly organised to overturn the current economic order. All we need to do is reduce our overall need for money. That can be done through sharing, gifting, cooperation, crafting, making, and swapping - all of which is fun and builds community, which is far more useful than money. But don't take my word for it:

The concept of Earthship Village Ecologies links ecological concepts by creating work and resource flows rather than currency flows, and creating community instead of economy.

This is a good core article on the economic underpinnings of the Sharing Economy, and how we can resuscitate it for the modern age.

The Creative Commons is a global open-source style movement that gives a legal basis for sharing IP without giving corporations or individuals the opportunity to monetise or acquire the rights to an idea, product, or piece of work. A good example is this website for the sharing of free designs for 3d printing, in this case featuring designs for how to print an entire flying quadcopter. It's quite simply a fact that IP stifles small-scale economic development and in many cases is counterproductive. The people who realise this can share their concepts and code through these above movements so that their ideas serve the greater good of the community and allow small-scale economic development to expand.

The anti-colonial and anti-enclosure movement rising in (primarily) the third world seeks to defend cultural legacy from corporate patents.

The Transition Towns movement seeks to create regional and local economic autonomy and development from the "great powering down" that is starting now. The link is a practical primer on how to get local research to assist in economic development on a local level.

This is just the tip of the iceberg, but countless groups are looking at a less cash-intensive future that is more community-based, sustainable, and happy. Less money can mean less security in these cash-intensive times, but less need for money means greater security, more community, and in the end, more happiness for all concerned (except the bankers, who might actually have to learn to work for a living).

Subverting the Global Economy through Local Action, Part 1

It's a common and nonetheless sad story that, no matter where or who we are, we assume that the only way to change our lot in life is to rally behind a figure who, inevitably, betrays his or her ideals once in a position of power. The politicians who win elections can bend but won't act, and those who won't bend and would act: don't win. Leaders are, on the whole, incapable of NOT doing what the system is set up to make them do. In a democracy, politicians appeal to their base with stirring rhetoric to get elected, and once in power, must compromise and please the majority. That's the democratic system. On the other hand, authoritarian concentration of power comes greater need to offer power and wealth to the people who support you, and no matter how benevolent the despot, his innate sense of entitlement and ability to rationalise make it impossible for him to resist the trappings of power and reject its substance. So much for leaders.

So what have we got to rely on? First, we must take power over ourselves. Power over oneself is the greatest of powers, but we just happened to have become acculturated to giving this power up to authority to the point that we don’t know that it’s gone. Next, realise that there’s a lot more in this society than just governments and individuals. We're not only talking about ourselves, but the communities that we left behind to inhabit our soulless suburbia. Building on a few of my previous articles, I wanted to talk about how to use your personal power to make the world a better place. No, this isn't intended to be some kind of self-help or inspirational article. This is a blueprint for a peaceful and insidious revolution that just happens to be inspiring.

The global economy has made many goods very affordable. The more globalised we become, the cheaper everyday items seem to get. Economies of scale, container ships, and big box stores are efficient: they are able to produce the most amount of widgets for the lowest price. Efficiency is exactly what the global economy is about. Companies can move production of widgets to the countries with the lowest-cost workforce, countries that provide the most favourable tax laws, or countries that subsidise corporate inputs. Given the smorgasbord of potential options for cost externalisation (fancy language for how corporations make other people pay for the stuff they use) and arbitrage (fancy talk for simultaneously exploiting the margin in price between two regions for profit), companies can naturally make their homes in locations that offer them lowest cost for their operations.

The problem with this efficiency is that it means one thing: concentration. Profits become concentrated when corporations operate in an environment where they are free to reduce or externalise their costs. As much as I believe in the free market, I believe that everything from lower salaries and cheap electricity to favourable tax legislation and undervalued currencies are externalities naturally produced by the current way of doing business. My definition of a truly free market is as free of these corporate advantages as it is free of hindrances. All externalities must be internalised to create a truly free market. Economies work best when all actors have an even playing field. When the field is uneven, groups can effectively arbitrage (for example) the high-currency consumer power of country A with the low currency and tiny salaries of country B. There are plenty of multinationals that would be unable to survive if it wasn't for these arbitrages and externalities. In my opinion, they shouldn't survive: they are poster-children for unfair business practices and unsustainability... but I also understand that, when the only goal of a corporation is to expand share value, they will naturally act amorally to achieve these ends.

The WTO (formerly GATT) has facilitated a kind of corporate wonderland where corporations (through their governmental proxies) can take countries to court for throwing up trade barriers. Trade barriers, in this case, can mean even something as simple as health legislation (where the US forced the EU to accept hormone-laden beef that has been linked with increased risk for cancer) or environmental protection legislation (where Venezuela forced the US to allow them - effectively - to sell more polluted gasoline on the US market than extant EPA legislation allowed), or indeed human rights legislation (where Massachusetts was forced to deal with Myanmar even though they had made legislation that disallowed them to deal directly with despotic regimes). This is simply in their nature: corporations act to increase share value. They will use all tools at their disposal to grow, and prying open other markets is one of the things necessary for growth past a certain point. It is no surprise that GATT became the WTO and the WTO may likely expand to the TPP. It's a natural evolution. Predictable, really.

We need a way for economic proverbial Davids to compete against proverbial economic Goliaths. The purpose is not to abolish the WTO, throw out the multinationals, eat the rich, and establish a dictatorship of the unions. That can't be done, especially not through any kind of direct conflict. No, the purpose is to make the people in your immediate area able to compete against money. Not simply against this company or that company, or this product or that product, but against the fundamental underpinnings of the entire neoliberal economy: money itself. 

More in the next instalment. Read this for a taste of the direction we're going. A shout out to The Valhalla Movement, a step in the right direction.

True Cost Accounting and Utilities

Let's say you work at a job where you are paid $24,000 a year to make widgets.

The problem is that your commute to work costs too much money. You report to your supervisor and say "Hey Steve, I need some kind of help to pay for my commute costs. I spend $400 bucks on gas each month and it's eating into my salary something awful!"

Steve replies, "Yeah, a lot of other people have been noticing that, so the company has decided to open up a staff gas station. If you buy gas at the station, then it will only cost you $200 per month, and you should have more of your paycheque left over at the end of the month."

"Great!" you say, and walk happily out of Steve's office.

Sure enough, the company has built a brand new gas station right in the company parking lot. It's not exactly under the umbrella of your widget factory, so it pays rent to the widget factory for the space in the parking lot it takes up, and buys its gas by itself. It's a real honest to goodness gas station... it just happens to charge less for gas. You fill up your tank, and sure enough, instead of costing $40 bucks per tank, it costs $20. You're pleased with yourself as you walk into the office and give Steve a high-five. Life is good.

Your paycheque comes around, and you notice a problem. Instead of being $2000, it's $1700. There's some entry on there that says "Energy costs" and they've docked you a full $300 bucks for it. You storm into Steve's office to ask him what gives. Steve, who talks too much and doesn't know how to lie (it's why he's still your supervisor and not Vice President), tells you: "well, because the company is offering these rebates on fuel, we had to recoup costs somehow. It's about sharing the burden."

"But you docked me $300 bucks! I already paid $200 for gas, that's $500 total where before I used to pay $400!"

"Well, yeah," continued Steve, "it's cost sharing, so some people drive more than you and some dive less, but we all have to share the load equally, right? I mean, teamwork and all!"

You cast a sideways look at John, who drives his Humvee three hundred kilometres every day to the office and back. He shrinks under your gaze. Your blood starts to boil. You realise you're paying for his gas. But wait... not everyone has that kind of commute. The average amount of gas has to be about the same as you. There's no way that EVERYONE in the office uses that much fuel. You challenge Steve on his murky accounting.

"No, no, no..." says Steve, "that's not the total cost of the deduction. You see, in order to allow the gas company to make money, we decided to waive its rental fee for the lot where it's sitting. Since the company has to recover that cost somehow or another, we added that rental fee to the deduction."

By now, you're mad. "But that's just rent! There's no WAY that would come up to three hundred bucks!"

Steve doesn't break pace, explaining calmly and exasperatingly patiently: "well, there is more to it than that. You see, the gas is hard to control. In order to get the pumps here, we had to cut corners on some of our valves and switches. The truth is, the system is really hard to stop pumping, and there's very little capacity to store the actual gas itself onsite. The problem is that even if there isn't a car at the pump, the pump has to keep pumping for a little while because it has to be shut off at a completely different location. We lose about 9-10% of the gas that way... so we have to pay for that, too..."

Steam is gradually billowing out your ears.

"...and then there is the matter of upkeep of the equipment, payment for the gas itself, and the central administration of the program. We all have to work together to make the savings happen."

Now... let's stop this madness for a moment. What I was talking about wasn't actually gas... it's electricity. It's generated by central power stations and transmitted over wires to get to your house. In the process of transmission, there are current losses due to inefficiency of the system and the fact that some of the electricity has to be discharged. In the US in 2007, the total system loss was about 9%. Also, the system is administered (in the case of Alberta, for example) by a government-run agency: AESO. AESO has to pay for the construction of new electrical capacity in the form of grid improvements. The grid, after all, is a "public good" they say.

Who pays for AESO? Well, one way or another, the end user does. Either we're taxed to pay for it (Alberta spent $500+ million on utilities in 2009) or we're charged for it through end user fees. One way or another, we will pay - it just comes out of a different budget line. Even if you were completely off-grid, your Alberta provincial taxes and levies will go to pay for the grid. Even if you use extremely energy-efficient appliances, you still pay for the people who don't. There's also the question of the Alberta Utilities Commission, which is the administrative arm of the utilities issue.

So let's think about this. Per year, each household in Canada spent an average of $2204 in 2009 for utilities. That's not a small chunk of change. Over the life of, say, a photovoltaic panel (25 years plus), that would be $55100... not counting increases in utility prices. Also, a portion of your tax goes to pay for utilities without you being able to say anything about it... so if we were talking real cost of utilities, this amount of money would be higher.

In Alberta, your average detached house uses 7453 kWh electricity and 140 GJ natural gas.

A GigaJoule is about 278 kWh electricity. 140x278=38920.

If you had to replace all that heating and electricity with something like photvoltaics, that would be nigh impossible. A 30,000 kWh system costs about $150,000, and is huge in size. That kind of expenditure is just plain stupid. But what about using energy efficiency combined with local generation? For example, the PassivHaus specification states that a house cannot use more than 15kWh/m.sq. of heating per year. Since there are over 25000 houses in the world that meet this specification, it's possible. That's a grand total of 2787 kWh/year in heat for a 2000sq.ft. house. Calgary houses do not need air conditioners.

If we add the typical energy use (7453kWh) plus the heating (2787kWh) all of a sudden we have a much more manageable 10240kWh for a regular dwelling. That's doable within the budget for less than $30k in PV alone.Mix it up a bit with wind (ample in Alberta) and you could really pump out the juice for that price and make money back. Add 14% to the price of the house for PassivHaus certification, and you're off-grid. You can even save more energy, because with energy-saving appliances and the proper systems, you can be using far less electricity than a normal detached dwelling does. Don't forget to calculate in your $4500 rebate for energy efficiency. Plus you never suffer the cost of a price increase in fossil fuels again (or suffer the cost of simple inflation on energy prices).

Right now, in-situ generation seems to be only a break-even scenario, but the reduction in costs over all is far greater than the sum of its parts. That's because, like in our stupid gas example above, the actual cost of the grid, utility administration, and inefficiencies, are actually passed on in your tax dollar, not in your energy bill. Imagine Alberta no longer having to repair power lines? In Calgary, where the lines are underground, imagine the avoidance of repair costs... if you've ever seen a power line repair in Calgary, you know: they have to dig in under the asphalt to get at the wires and then patch the whole thing up again. It's labour intensive. What if we simply didn't have to pay for the grid anymore? It's possible. It costs less over all than the grid does, and it would actually create jobs for installers, repairmen, and retrofitters. I know that on the face of it the math just comes out about even out between the two scenarios over an amortisation of 25 years... but that's only because nobody counts the hidden costs that come at us in our tax bill rather than our electricity bill. With real cost accounting, and a full reckoning of system costs on your electricity bill, you'd be saving FAR more money with a home system. Now, just to make the government include all the costs in the bill rather than in hard-to-find nooks and crannies in your tax bill.