An Open Letter to Mom and Dad

Dear mom and dad,

I love you guys. I really do. Though you didn't have a lot of money to start with, you kept us living more or less beyond our means in order to keep us kids in a positive environment. You made our meals, you kept us fed and clothed. You gave us good values: sharing, caring, and fairness. You gave us a respect for law and education. You gave us a love of diversity and fostered our circumspection about prejudice and hate. You elevated the ideals of selfless altruism and evil-conquering justice. It's for these reasons I feel there are a few things I need to tell you.

In order to talk about this stuff, I thought I'd talk a bit about history. Your history, in fact. To tell you the truth, I learned a lot about your history - but not necessarily from you (though you did give your own personal anecdotes). My life, and the lives of my co-generationists, were actually filled with endless reminders of your youth. As you know, I was born on the cusp of Generation X and Generation Why. We bore witness to the cultural and demographic domination of your generation over everything we did. You didn't and couldn't notice: you were and are part of the generation doing the dominating. You were simply doing what came natural to you. Being numerically and financially superior, the boomer generation was glacial in its force and staying power. I remember little things, like playing Trivial Pursuit, watching any sitcom on TV, listening to the nostalgic music of your youth constantly played on the radio... these activities were and are permeated with references and sensations that were known specifically to you. You should know this: the weight of demography has made us feel utterly without voice for decades.

This isn't some great "j'accuse". I'm just pointing out that we absorbed a lot about you, and that didn't leave a lot of room for us, at the time. Generation X never really found steady work. They were economically overshadowed by you guys because they were looking for jobs while you were in your working prime and stagflation still had its death grip on the economy of the western world. It was only when your generation started to retire, and Generation Why started becoming financially potent, that our culture started bubbling up. Nowadays, references to the boomers are diminishing as, more and more, my generation becomes the economic power on the planet and your generation starts to muse about retirement and think about buying that bungalow.

Some of us are kind of vicariously nostalgic about the past you had. You had your period of "sex, drugs, and rock n' roll". You had your flower children, your anti-war protests, your draft-dodgers, and your love-ins. Truth be told, many of us non-boomers still listen to and enjoy the Beatles; Rolling Stones; and Crosby, Stills, Nash and Young. A lot of us have dreamed of another "summer of love" to call our own, or a Woodstock, or a cause as deep and unifying as the anti-war movement, but every generation is different. We know what was important to you. We heard a lot about these things, but some of us have been forced to wonder if you've heard about what's important to us. In order to help you understand what's important to us, let me re-tell a bit about your history from the objective (ish) perspective of someone who didn't live through it.

You were well-meaning. With the coming of the "Age of Aquarius", the young, disenfranchised youth of your generation were poor and under the thumbs of rather authoritarian parents - many of whom had witnessed some real tough times. Your parents had lived through the dustbowl era, Fascism, and World War Two. These were not happy events, they were not even mildly discomforting events... these were hell. They came through all this into the after-war economic boom that gave them jobs, the opportunity to own a home, have an extended family, and bring their kids up in a peaceful environment. They went through experiences that may have affected their psychologies deeply. Most of all, perhaps, they exhibited two characteristics: they felt that their suffering helped build calm, stable, and peaceful society you lived in and eventually (in their eyes, ungratefully) chose to reject; and they defended their world order with conservatism and the rage of a damaged youth that had, for once, found some serenity. While I won't say that you yourselves upset this serenity, a lot of kids from your generation did. The peace movements your generation participated in, the drugs your generation enjoyed, and the lifestyle your generation attempted to flirt with, these were generally offensive to the established order.

And so it should have been. We respect that. There was a lot of wrong in that order. You stood up to it, and you achieved some great successes. You righted many wrongs that needed righting.

Going into the 70's, there came the birth – albeit painful - of a general understanding of how the world worked. Since your parents' generation was retiring, there were plenty of jobs for you, and finding work without an education was not a problem. Into this world where you found a new source of income came a shock: specifically, there were oil shocks. In 1973, your money went a lot less far than it used to. Your gas-guzzling land barge couldn't get enough miles to the gallon (it was still MPG then, mom - Trudeau had only just introduced metrication in 1970 and it didn’t take hold until the 80’s), and the west started to realise that a few countries in the middle east actually had us by the short-and-curlies. You had started a real job, you had just gotten into society, moved out, gotten married, and now there was this crisis... well, it's no wonder it took you so long to have me. You went into a work life under incredible stress - not only from the old order your parents still hadn't let go of, but from the fact that their order was now existing only as an hallucination in their own minds. You were entering a harsher reality that necessitated a change. It makes sense that the "back to the land" and "self-sufficiency" movements started in earnest in the 70's. It's no wonder fuel efficiency, methane digesters, the re-emergence of the homestead movement, rediscovery of vernacular house construction all reappeared. You started digging for solutions, and the solutions started to appear. 1979 and the fall of the Shah reinforced the idea that you needed to change the world. Something was wrong. You recognised that the way we were going was no longer sustainable.

But then, something happened. For reasons of expediency, I will simply remind you of the names Thatcher, Mulroney, and Reagan. I still remember you telling me, when I was a little boy and perhaps you thought me incapable of remembering, that “Ronald Reagan wanted to destroy the world”. The 70's were a somewhat frightening time, but they were full of promise, too. You were learning new ideas. Your flower child past told you that something had to be done to live with the earth, to live without taking more than we needed. Some of you thought we could wean ourselves off foreign gas imports. Well, modest efficiency improvements and the failure of many industries took its toll on oil demand and also oil prices: by 1986, the taps were open and less people were buying oil. Even in the midst of the period of stagflation, industry started slowly to pick up again. With oil prices so low, for so long, all of a sudden growth was possible. Oil was indispensible to that growth, and you became accustomed to that cheap oil.

For some reason, when the taps opened up, the advances of the 1970's were completely forgotten. Environmentalism was once again relegated to the closet reserved for the socialist predilections of youth. You advanced in your jobs, and your parents’ generational old guard shuffled off to retirement. You stayed in those jobs, too... so much so that a lot of our brothers and sisters in Generation X couldn't find steady work. The only way many could compete was to get one or more university degrees – something I know you may have resented when younger people with degrees stole your promotions - but there you have it. We are probably the most educated generations in the history of North America, and part of that drive came from the fact that we had to compete for jobs your generation held onto with an iron fist. You know it well: I’m the only person in the history of our family to get a university degree. Nowadays, it’s mandatory. There were layoffs and hiring freezes on many parts of the Government of Canada and the US through the 80's and 90's that reflected private sector freezes, such as that of Cognos in 1985. Many OECD nations had the same issues. That meant your generation filled the jobs you had and didn't let anyone else in until the tech boom of the 90's. That's when my generation went to University. Luckily I wasn't a full-fledged Gen-X-er, or I might not be doing as well as I am today (knock on wood). I got my degree and nosed my way into the job market, taking part-time jobs to bide time while something more long-term opened up. That took about two years.

The problem was that during this 15-year period in the 1980s and 1990s, you experienced an environment where leaving your job was not practicable, and very little new blood came in to make an orderly change in culture from the older to the newer – so culture froze with the hiring. Our generations didn’t have a voice because we were either pre-employment or working in the jobs your generation didn’t want to take. You worked to put food on the table, kept your head down, and did what you had to do to survive. All those fancies of your youth? They were impractical. Besides, once the locks came off your salaries in the later 90's and the world started booming again, those fancies became more the nostalgia of a youth well-spent rather than the reality of the here and now. You certainly reflect on those periods often - in movies, song, and Jeopardy trivia. Up until just recently, I must admit to thinking most forms of entertainment in North America were simply boomer fan-service products. Now, your grip is slowly loosening. The culture that had kept you your job, though, had paid off. You became the old guard - OUR old guard. Your culture firmly entrenched from well before we arrived on the scene in numbers. For a long time, our culture simply didn’t stand a chance. Many of your generation think we Gen X and Gen Why’ers are apathetic and uninterested in political change – or even politics itself for that matter. Nothing could be further from the truth. We are interested in change, but we are being crushed underneath a demographic boulder that is the boomer generation. We can’t change anything as long as you guys keep thinking in the old economic mode and keep voting for the same people. We are accustomed to our vote being worthless because it can’t overcome yours, no matter how hard we try… so many of us don’t bother.

And now, after the past 10 years of economic upheaval (2000-now), you are - perhaps - wondering what happened. Perhaps not. You've come to the end of your working lives, and many of your friends have a nice retirement to fall back on. Your days of being concerned about the world are more or less over. The next issues for you are going to be keeping fit and healthy, eating right, and enjoying the occasional visit to your grandchildren. But there's a problem. Mom, dad, the path you didn't travel back in the 70's and early 80's - it's coming back to haunt us again. I don't want to sound rude, but someone has to say this directly or it just won't stick: there is a reason the boomers are called the "me" generation. During your lifetimes, the oil production of all oil-producing countries has already more than likely peaked. You have been the beneficiaries, at the expense of an entire generation, of a great deal of corporate largesse that no longer exists. The path not travelled - that of sustainability and living within our means - is now staring us in the face as the only path with a future. The choices you made - and failed to make - have doomed your children to clean up your mess. Oprah is still preaching to the Cult of Taking Care of Number One, and many of your generation are still listening.

The fact is that you, and your generation, have to hear this from us: your kids. We're just starting out now. Your grandkids are just being born. We are in that same precarious place you were in the mid-70s trying to get your financial bearings. We're going into an economic crisis that makes the 80's look like a minor blip on the line graph of economic history. We're running out of fuel. We're running out of food. There is only one thing I can guarantee you: your generation has made certain that your grandchildren will lead very, very uncomfortable lives unless something is done now. I know you have always protected and taken care of us, and for that you have my unflagging respect, love, and loyalty - but now I have children. Not even you are more important than they are, and your choices might harm them irrevocably. If that comes to pass, I must admit, I will not be able to forgive your generation, ever. I'm sorry, as much as I love you, these are my children. It would be them, not you, who would bear the future punishment for your generation’s failure to act now.

Unless something changes - and by something, I only partly mean you - we are headed for difficult times. Ordinarily I wouldn't come out and say this. I hate doomsayers. They are typically wrong. I would very much like to be wrong, too, but the signs are there for all to see. I lived through the food shocks in Sri Lanka. China, wher I live now, is about to have a food shock of its own. Everyone is having oil shocks. Housing prices are rising faster than inflation, and the younger generations are being priced out of living space. Food is going to become more costly, as petroleum-based fertilisers become more expensive to make and ship, pesticides are reducing yields. Soil productivity is dropping even with all the power of the green revolution’s technology (and sometimes because of it). Coffee and cocoa are just the tip of the iceberg. The people who grow these cash crops are going hungry… precisely because they are growing cash crops and depending on the big breadbaskets to produce their staples. I know it sounds weird, mom and dad, but the third world countries that produce tea, coffee, sugar… all those cash crops… they don’t actually produce enough food for their own populations to eat. When I was in Sri Lanka, the only nation in the region with a rice surplus was Thailand, and the rest of the region literally went begging. We’re one of the breadbaskets that produce ample staples, but if we start going without, our governments will hold back grain exports, just like Moscow did after the fires last year. We will do well for a little while longer on the strength of our industrial food output, and the third-world cash-croppers will starve as they make the painful and difficult shift from cash to staple crops. In the end, there will still be scarcity, and scarcity means higher prices. Higher prices means I pay more for my kids’ food and I have less left over for mortgage payments. Or I pay my mortgage and my kids eat a bit less. The old paradigm - which is leading into the "new normal" -  will end one way or another. Ending it mindfully, consciously, and conscientiously will be less painful than letting it end on its own.

We're at a historical tipping point. There is still time to do something about it, but the job of my generation now is to force you to care. We've got to snap you out of this late-life reverie of a paradisiacal post-employment existence in the south of France, sipping wine. The economic system is buckling. If we keep thinking of things in the terms of well-worn economic adages (you know, the same theories that said such a thing as stagflation couldn't exist - the same stagflation you lived through?) we will keep getting the same economic results. We need a change. We need you to wake up that dormant war-resisting flower child. We need to pull the cobwebs off your sleeping inner homesteader. Didn't you notice that the American boomers - the ones who grew up as flower children - were the same parents who proudly sent their kids off to war in the Middle East?

Didn't that raise any alarm bells with you? How could the boomers have so forgotten their past that they support the activities they once decried? That revolutionary youth you once were, was he or she right to believe peace and understanding were better than blind consumerism and resource conflicts? Do you remember how that youth thought?

Bring all the old memories back, mom and dad! Bring out your civil rights protester. Bring out your peacenik. Bring back the spirit of your youth. We need you now. We need your numbers to bring sanity back to our civil discourse. We need to start thinking about how to build a sustainable future - not how to buy a motorhome. Get out and vote with your feet. If you aren't with us, we may miss our window of opportunity. It's possible to make change. You did it once before. I believe in you. I love you. Come with us.

Of Amphorae, Sea Containers, and Jane Jacobs

So I just finished The Nature of Economies. Good, done in truly ancient literary style, and pretty open ended. Jacobs doesn't much try to explain how or why things happen, she simply explains what happens - which is actually far more useful than a lot of economic theory that's been written in the past couple hundred years. I still prefer Cities and the Wealth of Nations, partly because I feel the narrative style slows down the transmission of information and Cities and the Wealth of Nations is written in a far more textbook style. I do like The Nature of Economies simply because it elucidates clearly the connexions between economic and ecologic systems.

One of the keen insights that I struggled to get my head around was the concept that imports are actually a better sign of economic growth than exports. If you think about it, though, it's true. A forest keeps taking on sunlight, using it to power chemical reactions that keep energy cycling through the system for as long as possible. None of the energy is lost unless it's taken out in the form of hunting, logging, trapping, or harvesting. The more energy enters the system, the more lush, diverse, resilient, and productive it becomes. If a new animal enters the system, it brings its biomass and chemical reactions into the mix, adding to the overall wealth of the system. Cutting down trees is export. Sunlight is an import. A new species or new animal is an import. Exports actually remove natural capital from the forest.

Now, exports done right can actually help a system. Exports of lumber, intelligently harvested, can allow niches for other trees or other plants to grow. Keeping a predatory species in check can allow a prey species to expand. If these modifications are minor and temporary, they will not affect the system. But removal of predators can make prey overharvest their food sources, explode into abundance, and lead to an explosion of predators in response. Left unchecked, they can denude the ecosystem of their own food, and be forced out, making the entire ecosystem poorer by three species: predator, prey, and the prey's food.

Our current economic model attempts to keep a steady flow of exports going by making the resulting products disposable. It could be said that that's a natural way for us to exist as humans - we disposed of stuff in nature when we wore animal skins. Nowadays, however, we don't. We bury stuff. We burn it. We don't allow it to return to the ecosystem in a useful form. It gets taken out of the ecology (hence the economy) and loses its innate value.

It's like the trade amphorae of the ancient Romans. Rome used amphora only to transport goods, not to keep them. Trade amphorae had purposely pointy bottoms and slender shapes - totally useless for putting on a table or in a flat-floored storeroom - so they could be put into racks on ships. They were cheap and couldn't sit upright on a flat floor, so once they were transported across the Mediterranean, they were shattered, and new amphorae were purchased with the next shipment. The potters kept employed, and all was well with the world.

I simplify too much sometimes, but you get the point. People kept getting paid for doing the same (export) work. Clay reserves were diminished, natural capital in one area turned into waste in another, and it was not returned to the economy in any kind of large-scale systematic way.

Nowadays, we have intermodal containers. Containers are made by a variety of companies on standard sizes. They stack, fit container cranes throughout the whole world, and are durable enough to be used for other purposes once they end their service life. They are a brilliant solution to the problem of standard cargo units, and what's more - the more containers that are produced, the more containers there are. They are eminently reusable. Trade volume doesn't decrease that often nowadays, and containers are always needed. The more containers there are, the more trade can occur through them. Sea trade being the cheapest form of moving goods by far, the number of containers in the world is actually very important. In other words, the ecology of trade holds on to the energy that went in to those containers. The growth in the number of containers grows the carrying capacity of the sea trade system. Trade itself is able to develop concurrently with the total number of containers in circulation. If containers kept leaving the system, there would be more container makers, but there would be less cheap trade by sea.

Our interest in exports is an interest in money. Money is not wealth, capital is wealth. Capital isn't money, it's the ability to make money. The longer you can hold on to and reuse your capital, the more you amortise that investment, the more money you stand to make. This is why stopping waste isn't about saving the environment - that's just a very pleasant side effect (and one I am particularly interested in achieving). The real benefit to stopping waste now is that throwing stuff away diminishes the entire economy by depriving that economy of capital. Yes, friends, even poo is capital.

So, really, the more natural capital that enters an ecosystem, the stronger it becomes. The more capital that enters an economic system, the stronger it becomes. Imports are real wealth, not exports; exports are just money.

Imports are capital.

Phase three: the Lawn

The lawn is something I have never truly understood. For some reason, fully grown men (typically men, I don't often see women infatuated with their lawns) spend untold hours fertilising, mowing, aerating, and preening their lawns to a brilliant, lush green. I don't get it. It's just work. I would rather plant bamboo, or hay or something.

Still, if people want to have a lawn on their own land on their own time, more power to them. There's just one problem. People use too much fertiliser. Not all of it goes into the ground, and a lot washes out storm drains into bodies of water. There, it creates algae blooms. Sadly, these are not particularly good for their environment: they grow, metabolise all the CO2 in the water, then choke on their own oxygen. When the algae die, aerobic bacteria come in to eat up the stuff that remains - absorbing all the oxygen in the area in the process. This can create huge, lifeless sections of water known as dead zones. It's wasteful, harmful, and it's all for the purpose of an ornamental crop that does nothing much other than suck up municipal water supplies in Calgary's semi-arid climate. There has to be a better way than fertiliser to make a lawn lush and green. What's more, there has to be some other kind(s) of ground cover that would be equally pleasant and less labour and water intensive.

Now, as I've said, I'm not against people having their own lawns. Even though I find them an utter waste of time and effort, people should have the freedom to cultivate their lawns to their hearts' content. Just one catch: no chemical fertilizer

Luckily, phase two of the "ground up" project provided us a couple things we can carry into this phase: compost tea and vermicompost. Phase three is a landscaping company that purchases and applies these products to the nutrient-hungry lawns of the subdivision. Thanks to this source of ready natural fertiliser, the lawns of the subdivision do not have to go wanting, and will find themselves as lush if not lusher than the heady days of phosphorous and chemical runoff.

But there's more to this service than meets the eye. First of all, it wants to take your lawn clippings. Second of all, if you're keen for a little experimentation, they might grow some varied cover crops on your lawn other than grass for all sorts of economic uses - anything from barley to sunflowers - and they'll take care of it for you. Any number of things can be grown with the amount of lawn area that a full subdivision has, and whether the landscapers want to harvest barley for a brewery or sell sunflower seeds, they will be able to populate your lawn with something nice. They'll even take care of it, harvest the crops, make a little cash on the side, and do it all without you having to pay them.

Let's examine the ideas I had above: a brewery or a sunflower seed operation. Breweries are wonderlands where humans and nature have the potential of living and working together in harmony. Beer is produced from malted barley by yeast. The by-products are: CO2, dead yeast, spent grain, and beer... delicious beer. Through the miracle of phase 1, we already know where the off-gassed CO2 will go: into the algae bioreactor. The dead yeast and spent grain can go any number of places, including the Black Soldier Fly composter from phase 2, or a biochar pyrolizer. More on that later. Of course, the beer can be consumed locally or exported. With sunflowers, the natural product is sunflower seeds, but at harvest, there is an awful lot of biomass left over. This is especially true if the seeds are de-shelled and sold as baking goods or snacks. This is also a great candidate for reduction to biochar.

Biochar has some benefits that are not only agricultural. Besides being able to combine it with vermicompost for an organic one-two punch that will invigorate your lawn, a pyrolizer makes its own fuel, and a continuously-run pyrolizer does not need any input except biological matter. The combustible gases released in the pyrolization process - after having been started by some form of outside combustion such as propane - continue to power the unit until it is turned off again. This means the pyrolizer is a free heater. In wintertime, this byproduct would be a boon to any number of pocket industries - including the brewery itself for roasting malted grain. Finally, the process of biochar pyrolization produces sequestered carbon, which can be eligible for carbon credits. This will make even your lawn clippings a reasonably lucrative product, and make leftover biomass from beer making and sunflower cultivation positive energy inputs that can stay in the economy for just that much longer.

In this phase, we take care of garden waste, eliminate polluting chemical fertilizers, some people help a brewery make beer, some people help a company produce sunflower seeds, and both companies send their biomass to a pyrolizer to produce biochar that can be fed back into phase 2 or exported as well as being redeemed for carbon sequestration credits. What's more, there's beer, sunflower seeds, and heat left over as by-products, and all three can go back into the economy after consumption in the coming phases.

The China-Killer

In 1853, Commodore Perry arrived in Japan with four black ships and a piece of paper. The piece of paper requested a treaty from Japan that (to make this short) cracked open the previously closed nation.
In 1875, a small flotilla of Japanese warships sailed close to the "Hermit Kingdom" of Korea on a "survey mission". Passing the fort of Kanghwa, Korean guns opened fire on the IJN Unyo,(trivia: in English, ship names are supposed to be italicised) to which the Unyo responded decisively. The port was silenced, the Unyo went on to obliterate another port, and in 1876 (to make this short), the Japanese forced the Koreans to open their borders.

Humans learn and imitate. Ideas are readily diffused from person to person and culture to culture. The Japanese learned from the West that to be strong, and to be considered part of the team, you had to open up other people's countries to foreign trade. All well and good. Then there was that thing about kicking other people's asses and making them produce raw materials for your industrial machine. It was called Imperialism, and it was in its dying days in the end of the 1800s and the beginning of the 1900s. That is equally to say it had reached its peak. Japan saw France, Prussia, England, and Russia beating concessions out of China. In 1894, they found their excuse to do so as well. While the Tripartite Intervention took away their land gains on the continent, it still won them an ally in England. This Imperialism thing didn't necessarily fizzle out with the Tripartite Intervention... Japan still had the opportunity to live up to its promise to England by containing Russian expansion in 1904-5, and this became a jumping off point for further expansion on the continent: Manchuria.

The problem was that, by 1937, Imperialism was becoming somewhat (to make this short) uncool. You could say this was because European nations suddenly realised that pounding other people into being their economic slaves was mean. You could also cynically say that the European nations had gotten all they wanted out of Imperialism and didn't want those Asian upstarts cutting into their fun. Either way, a bunch of Europeans and Americans decided the world needed to change paradigms. Out with Imperialism (it was too expensive after a while anyhow) and in with... I dunno. Something else. There was a war on, they didn't really have time to think about it. Rapidly after that war, the British Empire began to disappear. Colonial possessions were spun off into independence... to be swallowed up into one of two opposing sides in the Cold War.

This wasn't Imperialism... this was somewhat different. This was a war of ideas. Two really powerful countries each had their own really nifty idea. Each wanted the other to try it out. They wanted everybody to try it out. It was like Christmas. Either way you went, you got all kinds of presents. Side with one idea, and all of a sudden you got factories, aid, a secure oligarchic vice grip on power legitimised by political theory, vodka, and... secret military installations. Side with the other and you got factories, aid, a secure oligarchic vice grip on power legitimised by economic theory, bourbon, and... secret military installations. The nice thing about the factories in each case was that not only did you get them for free, the two nations who gave them to you wanted to buy your stuff and even sell you stuff at subsidised low prices!  Eventually, one of the ideas was more resilient than the other, and both big nations stopped buying a lot of that stuff from everybody, and stopped giving them aid and subsidising their sales as much. That sucked, just a little. We called it the development of a multipolar world. Multipolarity didn't last long. People don't like having to make up their own ideas about how to do stuff. They tend to take their cues from other people. Or other "isms".

I was trying to keep this short. I promise I'll get to the point eventually.

The issue was that the paradigm shifted again. The people who lagged in the paradigm were the people who were latecomers and ended up following the lead of one of the big guys. All of a sudden, all those dictators who had kept their countries - willingly or unwillingly - toeing the line of one or the other ideology, were uncool. They started to fall in rapid succession, starting from those who picked (or were picked by) the losing side in the Cold War: Najibullah, Jaruzelski, Kádár, Krenz, Husák, Zhivkov, Ceauşescu... the list goes on. But the winning side also began turning against its original groupies: Pinochet, Khan, Rhee, Marcos, and even finally Hussein. All of a sudden, it was more important to be democratic than aligned with a given idea. All the dictators who clung to power - now unsupported by the largesse of their selected big nation - slowly withered on the vine unless other revenues filled their coffers. As an aside, history has recently shown that even those dictators with secure sources of oil income are subject to forces of popular discontent.

From around  the year 1990 to now, we have been in a kind of realignment period. The USA has maintained the policy of (to make this short) currency supremacy through import. As long as the US buys enough stuff, specifically oil, the world will have to buy oil in American dollars. The European Union has tried to maintain a strong unitary currency, but also constructed a Byzantine legal environment that, oddly enough, produces a grand variety of industries (and protects indigenous ones). China has made money by producing a lot of stuff cheaply and quickly. It is assisted in this by pegging the Yuan to the American dollar. While this means the cost of raw materials is relatively high for the Chinese, they can make their margins in the economy of scale and the relatively low pay of their workers. This necessitates inputs that can not be reliably found in China: R&D, technological innovation, and management expertise.

Yes yes yes, China has some managers and some engineers and some scientists. They do some neat stuff. Typically they do neat stuff that makes things cheaper, not better. That's how you do better in business in China. You make something cheaper than the other guy. I know, I live here. Best Buy just pulled out of China. To quote the article, "Mao Xinlie, 78, said he will miss Best Buy's reliability. "The good thing about Best Buy is the quality of stuff they sell, but their prices for products and services are higher," said Mao outside the retailer's store in Xujiahui". Quality doesn't get you sales in China, price does. Best Buy's business model is service-oriented. Service does not get you sales in China, price does. Best Buy's competitor, oddly enough sporting a dark-text-on-yellow bold logo, is local, and competes where it counts here. Price. The corollary: when the nouveau riche throw their money around, they don't care about quality - they simply want to buy lots of high-priced stuff. It's not about quality. It's about showing your wealth off, and you can't do that unless you blow it on stuff, no matter how crappy that stuff is.

So price is the motivator, so that means the market privileges items that offer the same basic services as innovative products (like, say, the iPhone) cheaper. It makes sense that if a product is successful, it gets reverse-engineered and built cheaper. So yes, there are engineers and scientists here. The price signals tell them to build it cheaper and sell a lot, not to build it cooler. The three things this market niche depends on is stable prices for industrial inputs, a low currency value, and low salaries. These things are pretty much the three legs of the Chinese economic stool. The problem is that these things are being disrupted.

Raw materials prices are going up. Copper $3.50 to $4.50 USD/lb in the past six months. Nickel: $10.00 to $13.00 USD/lb in the past 6 months. In addition, China is a net food importer now and has just suffered a drought in Yunnan and may lose a large portion of its wheat crop this harvest season. Food prices are skyrocketing - I can tell you that first hand. China has always tried to engage primary resource producers to sell in large quantities at substantially reduced prices in order to fuel its economic machine... but spot prices are making this an uneconomical way of doing business for the producers. The demand is still there, and selling to the market is more profitable. This is why China has an aggressive development strategy around the world, especially notable in Africa: to get access to those desperately needed raw materials at fixed (or near fixed) prices. Those prices will not last for long.

Raising costs for things such as food are also a problem. After the Economic meltdown in the end of 2008, China basically shut down huge portions of its manufacturing industry and let the migrant labourers who work in factories simply go home. When work picked up again, many labourers were not keen to go back for the same price. Food has been creeping up in value, and workers wanted better conditions. Interestingly, they are sometimes getting them. Labour unions (which have miraculously started by restricting themselves only to petitioning foreign companies and nobody else - I wonder how that happened) have started to form. Labour costs are going up, and workers will be demanding more with the increase in food costs. Two of the legs of our hypothetical stool are therefore a bit wobbly.

The last is currency value. This is a bit of a damned-if-you-do, damned-if-you-don't problem. With so much foreign pressure on China to float its currency, no Chinese leader can do so without being perceived as weak-kneed in the face of Western Imperialism. If China doesn't float its currency, it may be priced out of the raw materials market. More importantly, now that it is importing a good deal of its food, it will be priced out of the food market, too. Chinese food production is in a downward trend with more and more land producing less and less food. Imports are not a temporary glitch, imports are here to stay for China. With high food prices comes the need to raise salaries or face food riots. Riots are already becoming commonplace in the countryside (it's just not reported that much). They are called "mass incidents" by the government and they are rising in frequency. This isn't to say China will be toppled by a bunch of mass incidents. It may, but that isn't what I'm talking about at all. The mass incidents are simply an index of discontent. If China does float its currency, all bets are off. "Central planning" goes to the whim of the currency markets. If the Yuan rises, exports halt, the low salary bonanza ends, and all of a sudden China has to develop a completely different type of industry simply to survive. End of story.

All this to say that China is in a precarious position right now. It is going into a period of stagflation, the growth of the economy is financed by very bad debts, two of the legs of the Chinese economy's stool are starting to get wobbly, and the last one can't be cut to measure accurately enough to counterbalance these forces. This doesn't make the position of the USA or Europe any more rosy. Each of these paradigms are feeling stresses. So what would push one to the forefront and leave the others in the dust? A paradigm shift.

North America, the US in particular, is really good at coming up with crafty ideas, fun ideas, interesting ideas. These ideas get financed, then sent to China to manufacture. The thing is, the North American market is rather diverse even though less populous than China. It actually doesn't obsess about price as much as service. Do you think to yourself "I want an air conditioner from GE" or do you think "I want this room to be cooler right now"? Do you think "I want a brita water filter", or do you think "I want fresh water to drink"? Our so-called obsession with stuff is actually not so much an obsession... we buy stuff to fulfill a need, and then when it breaks, we buy a new one. It's cheap, we end up focusing on the stuff and not the service. But if someone came up to you and said "I can make your house the temperature you want for $700 per year, no cost for repairs or replacement of the equipment", would you be tempted? The market in North America could easily become one of services.

The purchase of services would create a demand for quality over quantity. Service providers that use machines to provide their services would go for the best value over the amortisable life of the machine. The longer that life, the bigger their margin. The better the spare parts services and distribution, the bigger their margin. Economies of scale start to lose traction.

But there's more. Rapid prototyping and 3D printers and fab labs would make spare parts even more available, especially if designs were provided to decentralised manufacturers over the web. With local CNC operators and manufacturers turning out spare parts, there is no transport of huge masses of bits to nodal points for further distribution down the logistical chain. A design company makes an air conditioner design. They can test it by firing off designs to CNC millers and fab labs in their region to prototype it. When they have a working model, they put the design online and license its parts on a per-click royalty system - kinda like a printer service contract. Individual millers and fab labbers could make money off other people's designs, and kick back a small percentage to the designer. Local manufacturing that was nimble as opposed to efficient would win the day. Economies of scale be damned - in this model, local economies, durability, and innovative design win.

So, that was a really long story. To sum up: the leader wins in a paradigm shift. If North America switched to a service economy, decentralised manufacture, and paid designers their due, economies of scale would be relegated to the compost heap of economic history. That paradigm shift would be the China Killer, and China imperils itself every day by not developing indigenous high-tech industry that focuses on product and not on price.

Desalination and Energy Production: at room temperature

Tsinghua University does it again: their reputation for skilled engineers is often inflated, but perhaps in this case not undeserved (page 32).

The implications: pipe seawater through fuel cells - especially if it was combined into an algae bioreactor to produce biodegradeable matter - and you produce both power and desalinised water. This was something I found when searching for a mechanism by which seawater could be used  for algae bioreactors and then provide water for use in African agriculture. This could create power, biodiesel, and clean water to bring life back to the overly arid lands now unavailable for cultivation.

Throw a little urine in there for nitrogen, and you have an indigenous source of ammonia fertiliser. Full of win.

Phase Two: Food Waste

Taking the focus back down to the subdivision level, what might be possible to achieve once an algae biodiesel plant has been set up. The central location in the subdivision where the plant and gas station can be set up would also be the site of several other pocket industries. In most of the next developmental phases, these industries are waste management related. This development can happen either within or outside of the waste management concept I've already talked about. The reason for this is simple: throwing away garbage creates no revenue. Processing it creates revenue. We are simply foolish to let the opportunity to generate revenue get buried in a landfill instead of exploiting it. It also happens to be more environmentally friendly. Funny that, eh? Both making money and saving the environment! I love it.

Right, the first waste stream to begin work on is the one it seems most people don't have any time for: organics. Food waste. A two-tier system would be highly useful in this phase. Black Soldier Fly (BSF) could compost the organics received first, and vermiculture could be used in the second tier. I've already talked a lot about BSF and vermicomposting is a reasonably well-worn technique. One thing to note: the two systems are complimentary. BSF digest food very rapidly, on the order of kilograms a day. Worms are slower to digest whole foods. When the worms process BSF waste, however, they process it much faster. What's more, items high in cellulose, which BSF find hard to digest, are easily digested by worms. BSF reduce the total volume of waste by 10 or 20 times each day so long as there is adequate surface area. Worms can then take those castings and turn them into superb humus. In the process, the byproduct of loads of BSF larvae and worms are produced, along with compost tea and vermicompost. These things are eminently marketable.

In the case of the worms and BSF larvae, the nutritional profile of the little beasties just happens to be rather good for fish feed. This, with a little algae residue left over from the biodiesel, would combine into a protein-and -fat rich fish pellet if properly processed. BSF and worms also produce chitin, which is oddly enough a useful flocculant in helping algae settle out of solutions. If the BSF and vermiculture operation was paired with a fish feed company that also harvested chitin, it could feed back into the algae biodiesel processor to increase efficiency in algae recovery! The system would then feed back into upsteam products as well as take leftover algal biomass (typically equal to the weight of oil extracted) and put it into a nutritious dry fish feed.

The nice thing about this arrangement is that all the byproducts of the biodiesel process are now spoken for (except the trace glycol, but I have heard of systems that feed the glycol back into the process). We are now handling food waste - which could be collected on a daily basis, feeding in from restaurants as well as homes - and producing a nutritious dry fish feed for profit. We also have leftover vermicompost and compost tea to sell into the next phase of the program.

Vermiculture in Philippines

I should go talk to this guy.

"About two years ago, Rico experimented on raising the African nightcrawler to produce vermicompost. At first the purpose was to solve the problem of disposing goat manure. He soon discovered that vermicompost is a potent fertilizer for their forage grasses. He then decided to make vermiculture an honest-to-goodness business venture.

Today, they are producing 8 to 10 tons of vermicompost every month. The goat manure is an ideal substrate for vermiculture together with the left over grasses of the animals. The combination of goat raising and vermiculture is a winning strategy. Why? Well, the big sales come from the sale of the goats for breeding and fattening. But that comes just a few times a year. On the other hand, the vermicompost provides cash flow regularly throughout the year. The vermicompost is bought by hobbyists as well as commercial organic farmers and gardeners."

Edit:
Found him! RLD Farms, Cabuyao