Peak Wealth

The suicide of a Greek pensioner who claimed he could not afford to live with new austerity measures has sparked a new round of protests in Greece. People are essentially questioning why they are being forced to suffer for a crisis that isn't their own making. Depending on your own view of things, you might sympathize with this viewpoint, or you might point out that people have fed at the trough long enough to be part of the problem, whether or not they meant to be. However, as usual in the modern narrative, the issue is that the underlying problem is not really being explored.

Enough has been written about Peak Oil over the years to where discussing it in the absence of any new revelation on the topic is probably a waste of time, but I think there is a corollary to it which really hasn't been discussed much yet, something that would probably accurately be called "Peak Wealth." By this, I mean the tipping point where the actual economic worth and soundness of the average individual and the overall begins to decline, where our options become increasingly limited, shifting from a luxury-seeking preference to a subsistence-seeking one.

If we use an analogy of Peak Oil to examine Peak Wealth, consider it in these terms. As Europe emerged from the Dark Ages, it began an evolving process of using trade (and sometimes conquest) to build wealth. This wealth began to be accumulated in a banking system (initiated by the Knights Templar, perfected by the Medicis) which was used to power economic and technological expansion for centuries to come. Then, came the rise of modern consumerism. Just like sheep being turned loose on verdant Achaean hillsides, spendthrift politicians and credit-addicted consumers have sheared the accumulated wealth of civilization lean over the past couple of centuries, leaving us with little in the way of actual resources.

This is maybe a harder thing to define in real terms than it is to capture as an concept. Per capita income, which is sometimes kicked around, is a misleading figure. If wages are adjusted for inflation, we'll see incomes raise, even though the prices of commodities may rise even faster than what people can afford with their new-found "wealth."  Purchasing power calculators may offer more of an accurate glimpse, but this may require matching price to commodity. Things like consumer confidence and unemployment are even more misleading, both figures being so politically volatile that they are more "cooked" than a Fukushima hot dog.

I plan to do a little digging and follow up this blog post with something which has some meaningful number crunching, but consider a few things here. Real wages have not risen in America since 1970, yet the pressure put on commodities has increased by an expanding population. Some commodities (such as oil) have been available only because of a technological race between depletion and the science used to extract or process them. People have to work two or three jobs to cover just basic household expanses. The labor pool has increased, but the value of labor has dropped because there is no corresponding increase in actual wealth.

On a national level, it means we can't fix the roads or bridges, or figure out how to come up with a real, workable solution to resources depletion, or balance the budget, and so on. On a personal level, it means we have to do much more with much less, and can no longer really look to other parties to even minimally ensure our economic futures. Greece is the tip of the iceberg, but the rest of the world is going to eventually follow. What is also telling here is that this wealth was carefully built through the exploitation of natural resources, trade, scientific innovation, conquest, etc. These things are no longer possible now, especially since we have decided as a species to remain on earth and to choose luxury over progress. Our heroes are sports stars and singers, not scientists or inventors.

The question then comes to mind of what this actually means with regard to the possibility of collapse? The answer simply is that this is the collapse itself, when we're no longer able to realistically maintain the economic systems we've built. Just like depletion of oil resources would mean an end to the labor multiplier that every person has enjoyed for the last few generations, the depletion of wealth resources, and the inability to rebuild them, will mean an end to the independent economic existence that most people have enjoyed for the past few centuries.