The current worldwide slowdown in productivity gains may reflect a combination of decreasing energy returns on energy investments in fossil fuels, and limitations on productivity gains in the early stages of development of renewable energy replacements.
A review of the development process in terms of non equilibrium thermodynamics concepts is in order. The stresses of the upcoming major worldwide energy transitions, accompanied by climate change protections, are likely severely to test national and international coordination systems, and demand insight into the thermodynamic and economic processes involved on the part of those who participate in international diplomacy.
1.The Current Productivity Problem
Numerous publications have been reporting that rates of productivity gain have been declining in recent decades across much of ‘developed world’, and, from higher levels, in many ‘developing’ economies. A recent publication of the highly respected Brookings Institution probes this issue
The National Conference Board in the United States also reports almost imperceptible productivity gains, and some losses, in the most developed economies in the world. The Conference Board’s summation on this is as follows:
Zero or even negative total factor productivity growth suggests that improvements in the efficiency by which labor and capital are used have stalled . . . Ultimately declining TFP prevents companies from improving their competitiveness and profitability, and threatens the ability of countries to maintain or better people’s living standards.
As of this writing, the International Monetary Fund reports low growth prospects across a broad range of economies, and some difficulty in identifying why this should be so.
2. Current Related Financial Policy Actions
Institutions charged with coordinating national and global financial activities have undertaken attempts to encourage a resumption of ‘growth’ (typically measured within States as gross domestic product or gross national product). The conceptual basis for such measures seems to assume that growth rates should be those typical of the late 19th and the 20th centuries.
National governments have considered that they had two principal levers for trying to get economic activity back up to accustomed and/or targeted levels, termed ‘monetary’ and ‘fiscal’.
As to ‘fiscal’ action, the national government is assumed to be able to authorize economic activity directly, and to issue whatever monetary instruments, or forms, will be accepted in the markets supplying goods and services. This may create a current deficit, to be financed over time.
There seems to be more attention given to ‘monetary’ policy, typically managed by central banks, and institutions to coordinate the policies of national central banks.
National central banks have tended to try to stimulate economic activity by actions which make monetary units more amply available for national and international transactions. A part of this strategy is actions to lower the interest rates which generally apply in such transactions. This is thought likely to increase the levels of activity in investing in the production of goods and services (and in consumer purchases) by reducing the levels of yield needed over time from such activities to attract the ‘capital’ which will enable such activities.
At this time, most of the institutions with central bank functions, in the ‘developed’ economies, have been targeting very low interest rates for an extended period of time.
There have been at least two other, external but parallel discussions, with implications for economic activities. This article suggests that these inquiries are particularly significant at this time.
3. Current Awareness of A Need for An Energy Source Transition
It is generally understood that the enormous gains in human populations and activities have come from exploiting the ‘energy’ in fossil fuel, or earth-stockpiled, hydrocarbons. Discussions of productivity gains over time — generally the 19th and 20th centuries — seem to have assumed that the fossil fuel flows supporting such gains will be available at the same levels and costs as have been the case in these last two centuries. But looking ahead a century or two, this cannot continue to be taken as a given.
First, the prospective climate effects of combusting these hydrocarbons, to get the energy yield, has spurred a global search to replace these energy sources.
At the same time, the net energy yields from mining these hydrocarbons have tended to decrease. And, the limits of the most energy-rich hydrocarbon deposits seem visible, given current and prospective consumption rates.
The efforts to develop ‘renewable’ or ‘sustainable’ energy sources have led to a focus on a key measure — the energy returns on energy invested (EREOI) in such renewable technologies. Those tracking the development of renewables are keenly interested in when they will meet or exceed the EROEI of fossil fuels, and whether, and when, such energy yields will be sufficient to support a high energy industrial civilization in the future.
This author suggests that this should lead to shifting the conceptual center of discussion as to economic (and social) activity to the energy flow factors which enable such activity.
4. The Rise Of Academic Understandings of ‘Non Equilibrium Thermodynamics’
This dovetails into a stream of academic thought which has steadily expanded in recent decades, often termed ‘non equilibrium thermodynamics’.
The foundations of this thought go back at least as far as Heraclitus of Ephesus, born about 560 BC, who saw all things as process. However, in recent decades astronomers, physicists and others have expanded, elaborated, and measured these concepts in universally applicable ways.
Re-casting the productivity issues in thermodynamic terms may help answer a key question.
On the one hand, some suggest that the current slowdown in productivity growth in developed economies is just a pause in the realization of gains from innovations in process as to the economic potentials of current developed societies — e.g. ‘big data’ computations, self driving cars, the spread of ‘digitization’ of business and government operations.
An alternative suggestion might be that the combination of restrictions of fossil fuel use, the energy costs of such use, and the energy investment costs of creating and deploying renewable energy sources now imposes or will impose constraints on the rate of productivity gains, if any, which we can project for coming decades.
Given the recent ascent into widespread scholarly discussion of non equilibrium thermodynamics, I should to state at the outset what version of nonequilibrium thermodynamics frames the premises here used in approaching human productivity and ‘finance’.
Briefly stated, this essay proceeds from the premise that all ordered structures in the Universe are manifestations of ordered energy flows. All ‘tangible’ structures are composed of relational systems — systems of correlated elements. Thus, the ‘order’ In the universe arises from correlations among the elements in the structures. In some, as in ‘solids’, the correlations are so stable as to stabilize both spatial dispersion, and radial degrees of freedom, over the periods of observation — or interaction with another ordered structure, or system.
Dynamic systems at the macro scale available to humans — processing energy flows and altering its internal conformation and/or relationships with external systems over time, or process — entail both energy intake and dissipation. Ilya Prigogine condensed this seminal insight long ago. A simple and visible astronomic example is the Red Spot on Jupiter.
Thus, ‘energy’ is in a fundamental sense the sovereign coin of the realm, so to speak, in the creation and maintenance of all ordered systems.
The leading explicant of the underlying dynamic nature of the Universe is Tufts/Harvard professor Eric Chaisson. In a series of exhaustively documented, elegant books and articles, he explains the energy densities, and related complexity levels, of galaxies, suns, ants, plants, humans and human societies. See for example “Cosmic Evolution”, Harvard, 2001, and for beautiful illustrations
A critical metric in Chaisson’s extensive documentation of energy flows is ‘free energy rate density’ (the amount of energy flow through a system per unit of mass and unit of time). Life units, for example, embody higher free energy rate densities than do galaxies or suns: animals higher free energy rate densities than plants, and humans, with their artifacts, like cities and particular elements in cities (e.. Jet planes and computers) much higher free energy rate densities than animals as a whole. In the energy scales of the Universe, human civilization is an extremely rare high free energy density phenomenon.
For a somewhat broader context, though condensed, overview for the interested general public, one can consult an article on ‘relational order theories’
As humans have organized the world around them, they have identified and constructed systems which have, to the humans, the characteristic of yielding more energy to the humans than the humans invest in them.
In agricultural societies, ‘land’ was often used as a conceptual catch-all for an energy yielding asset. (However, I understand the the word ‘capital’ was derived from the indo-european term for cattle, in an semi-nomadic phase of the indo europeans). A fishing resource, or the ocean as a whole, could also be so considered.
Let us focus on a world in which systems other than ‘land’ (or a fishery area) were made to yield energy returns on energy invested in them.
In the fossil fuel era, such a system could be a coal mine, an oil or gas well, etc. where we have accessed energy bound in hydrocarbons by previously living systems, and learned how to liberate and turn to our use that energy. In this world, more types of resource, and energy flows, are organized more flexibly, by entities including the holders of the symbols of ‘capital’.
As we seek to enter a larger scale ‘sustainable’ or ‘renewable’ energy era we consider artifactual photosynthetic systems, wind energy systems, nuclear energy systems, etc. As to all such systems specialized so as to yield to humans more energy than humans organize into them, we have come to seek to measure the ‘energy return on energy invested’.
5. Initial Application of Non Equilibrium Thermodynamics Concepts to Productivity and Energy Transition Issues.
Assuming that ‘productivity’, as to humans, corresponds roughly to the ‘energy’ which the human or the system in which the human functions brings to ‘goods and services’ — the fabrication, transport, communication, etc. which the human becomes involved in ‘producing’ — productivity, as measured by the output of units specified per person work unit, would be enhanced by more energy entrainment, and decreased by less.
Generalizing this, one might posit that in a world of high EROEI, per person ‘productivity’ gains can be high, and in a world of low EROEI, they will be low.
We have noted that some suggest that underlying gains in efficiency — compositional productivity, or multiple factor productivity — are in operation but not yet manifested in ways which register in the statistical identities and measures we now use.
Let us entertain an alternate hypothesis oriented to a nonequilibrium thermodynamics framework, and a simple model which might be used to attempt to test such an hypothesis, over time, with enough data accumulation and analysis.
A candidate hypothesis would be that the energy returns on energy investments in the interconnected global economic systems are now rewarding investment in energy production at lower than historic levels, and at levels which, given all the energy dissipation in cycling energy through the generation and consumption, re-generation cycles does not allow for much increase in the over all activity levels of the societies involved, over time and the continuing cycling process.
Let us consider a simple model in which the key variables are a ‘capital’ sector, the energy return on energy which is invested into the ‘capital’ apparatus, and a population. These elements are arranged in a simple linear cycle, and the result which matters most to humans is designated as per capita wealth, in energy terms, as follows.
Per capita (energy) wealth = ((K*EROEI)-ReinvE)/P
That is, the wealth per person, calibrated in energy units (which have correspondences to ‘goods’ and ‘services’), equals the energy flow into the capital apparatus times the energy return from that apparatus per unit of energy investment, minus the energy reinvested in the capital apparatus, divided by the total population.
The physical system is a cyclical, reiterative one, as follows. The population inputs energy into the capital apparatus, the apparatus returns (and distributes) the energy back into the population, the population ‘consumes’ the energy, building some of it into population and amenities, etc, and returns energy into the capital apparatus. And keep cranking.
Using a model such as this, one can imagine differing endowments in different polities — e.g. higher or lower current capital endowments, populations, EROEI results. Some interesting possible relationships are noted in the footnote.
Malthus’s famous views come to mind. If we were to adapt a Malthusian point of view, the K, or capital, factor was largely seen as land. The yield — the EROEI — of land had not shown great increases in centuries prior to Malthus, and nothing like ‘geometric’, or exponential, or repetitive doubling, would seem plausible at his time. So if one assumed that the total population would increase faster than did energy production from land, using historic forms of agricultural technology, people would live more poorly, or some of them would, or some would have to go — to be subtracted from the equation.
Let us now put in this formula the Industrial (or fossil fuel) Revolution. Suddenly (in historical terms) EROEI skyrockets — let us say up to 50 times the energy input. The population can expand (improving food supply in various energy-fed ways), the energy using apparati generally (goods and services) can expand, and the capital factor can increase. The cycle becomes wonderfully virtuous, and humanity bestrides the Earth beyond its agricultural dreams.
But now let us suppose there are limits to the extent the capital factor can increase, or the EROEI begins to decrease, or both. Depending on how one varies the critical factors of population size, capital stock, and EROEI, many scenarios can be produced, as noted before. But with capital limited or fixed, and no appreciable gains in EROEI, we could be headed back to the Malthus type of calculation.
Let us sketch a more optimistic scenario for a few centuries ahead.
Let us continue to assume that the EROEI on fossil fuels decreases, and/or fossil fuel capacity is capped in order to avoid overheating the whole human complex, with major losses of system function and human welfare.
But our specialists advise us that life on earth taps only a very small fraction of the solar energy impinging on earth, we also tap a small fraction of the wind energy available, and if we are clever, farsighted, and disciplined enough we might replace the fossil fuels, at levels comparable to or above current civilization energy levels, at EROEI ratios sufficient to maintain our population levels and our per capita welfare, and also feed back into the capacity machinery enough energy to keep that machinery, and the whole system, stable and growing.
If humanity is not to go on a severe diet at some point, this is clearly the situation which will have to be managed. We humans have a very big and tricky energy supply transition coming up, and there are many uncertainties involved in it.
We may not know just how rapidly the energy supply transition can occur.
Vaclav Smil counsels that we think in terms of a century or so, and has historical evidence to support his view. Vaclav Smil (2011), Global Energy: The Latest Infatuations, American Scientist.
Others suggest that the coming transition could be managed more rapidly. The current Administration in the United States is pursuing an aggressive program to facilitate adaptation of the electricity system to increased proportions of wind and solar electricity generation.
As of this writing, a 2016 projection of the Bloomberg New Energy Finance group projects that by 2027 renewable electrical energy sources will cost less than operation of fossil fuel plants, and by 2040 renewable technologies will improve their cost levels 40-60% and fossil fuel production will have shrunk to less than 50% of total electrical energy production worldwide. In the advanced economies of Europe and America, the fossil fuel shares will have shrunk to a third or less of total electrical energy supplies. And, as to transportation, electric vehicles would constitute about 35% of new vehicles sold.
We also may not know exactly what system wide EROEI levels are required to maintain the high levels of free energy densities prevalent in highly industrialized civilization. A currently circulating guess is 10/1.
We do not know how well the public in the industrialized areas will understand their situation, and have the patience and foresight to soldier through the required transitions.
Given these uncertainties, we still must attempt to project a path forward.
Let us trace out a scenario reflecting the possibility that we are at or near a difficult point in our energy base transition.
This scenario might be called a ‘valley of disappointment’ scenario. (That is the pessimistic part. The optimism is reflected in the projection that only a valley, not a cliff, looms before us.)
If and as we are now entering a situation in which the fossil fuel energy recovery rates are declining, and the renewable energy yields are increasing, but are currently only a bit above the base rate needed for advanced civilization , account only a small part of energy supply at this moment and need extensive energy-consuming complements to fill out the entire range of energy uses, we might predict that our societies could encounter the following situation.
●A slowdown in global, composite EROEI levels relative to historic fossil fuel boom era EROEI levels,
- and thus widespread, aggregate slowdowns in GDP, or GDP growth
- and related slowdowns in per person productivity gains,
- and thus slowdowns in consequent ‘standard of living’ gains.
●Even if the renewable energy sources were eventually to produce high and reliably increasing levels of energy flows in human societies, efficiently spread throughout our societies, we could see
- lags between investment in the renewable energy sources, and the related complexes which are required to make them broadly and efficiently usable, and their full effectiveness, and thus
- human societies enduring some decades of transiti
●All this leading to
- A lull in standard of living gains, if not a period of decline, and
- slow progress in improving them again. And, consequently,
● as these slowdowns occur, and a resumption of something like historic welfare gains seems remote, considerable dissatisfaction arising in populations which are accustomed to rapid gains in ‘welfare’, or standard of living.
Does this picture resemble what we now may be seeing in the ‘highly developed’, extremely entitled populations of America and Europe?
Were this overview accepted, the 2016 Bloomberg new energy investment scenario seems to suggest that by 2040 renewable EROEI would have increased by 40-60% and even transportation would be moving toward energy efficiency sufficient to service high energy human civilization. Such a rate of progress could make less onerous the ‘valley of disappointment’. We could at least better see our way to a more abundant future, perhaps even more abundant than our fossil fed recent past.
6. Implications For Financial Policy
In this sort of scenario would the roles of ‘finance’ differ from those now prescribed?
‘Policy makers’ may be unclear whether they may just assume that ‘fiscal’ stimuli will draw on an underused and available well of production and productivity-increasing opportunities on which to spend money tokens, or whether their justification rests solely on a judgment that they, better than the market, can discriminate between higher EROEI possibilities and less productive ones. However, they may be inclined to choose to funnel resources to long term thermodynamic gain as well as or better than an unguided or unassisted market. We have done well in the past by encouraging canals and railroads, for two examples.
As to monetary tools, on the face of it, a regime in which low interest rates prevailed would seem to accord with a relative scarcity of thermodynamically fruitful (in customary language highly productive) investment opportunities. That is, low interest rates would appropriately reflect generally low returns to investments.
If one expected that ‘natural forces’ — e.g. ‘innovations’ — would soon replenish the inventory of potentially rewarding opportunities, one might just hold steady and wait — perhaps a few years.
If on the other hand the ‘valley of disappointment’ construct more accurately depicts our situation, the ‘wait’ — the period of low returns on ‘capital’ generally — might go on for some decades. A great deal of adjustments in matters such as annuities, pensions, bond integrity — indeed, public and private finance generally — would be compelled.
Thus, there would seem to be a strong case for monetary policy functionaries and advisors to focus clearly on non equilibrium thermodynamics, EROEI oriented, analyses of economic phenomena. If this work is done thoroughly and well, the ‘valley of disappointment’ hypothesis may be confirmed in whole or substantial part, or disconfirmed. We may learn enough to get a better picture of workable paths through the transition before us.
If the more advanced economies are facing thermodynamic/economic constraints in the upcoming Great Energy Transition, whereas on the other hand less developed venues feel entitled to a great deal of economic catch-up, regardless of atmosphere heating results, we have a continuing difficulty in managing world climate protection and acceptable rates of welfare improvement in some large and ambitious countries.
The oil-laden Persian Gulf area is a continuing management problem. The deepest and most easily accessible pools of liquid hydrocarbons are in the hands of archaic political systems, some of whom — like Iran — have felt badly treated by the industrialized ‘West’. But USA Investment in an order-maintaining military presence in the Persian Gulf area most directly benefits India and China –the US only indirectly. This has not escaped the attention of one of the presidential contenders in the United States.
Diplomacy will be involved in finding ways to reconcile nativist-nationalist impulses in several European countries, and in the United States, with the economic and social advantages of global integration. The recent ‘Brexit’ act highlights the significance of this phenomenon.
Notwithstanding all the above, the hierarchy building imperative evident the hierarchical construction of order in the Universe explains at the most basic level currently available the tendency to global human integration evident in the last few centuries. This integration dynamic is fundamental.
But the equally underlying stochastic nature of the Universe counsels that nothing is guaranteed to we weird, extreme, socialized apes who seek to live like high technology, high energy, densely clustered ants, in a dynamic, promising, but perilous journey through life’s accumulated energy bounty into a new era of energy entrapment on Earth.
Thus the civilized effort to make light out of international heat, and workable coherence out of urgent parochialisms, has fundamental tasks before it in this era of change in the energy fundamentals. An understanding of the currents moving the ships of state, as well as steady hands on the helms, are needed.
No let-up in Indian farmers’ protest due to subconscious fear of “crony capitalism”
The writer has analysed why the farmers `now or never’ protest has persisted despite heavy odds. He is of the view that the farmers have the subconscious fear that the “crony capitalism” would eliminate traditional markets, abolish market support price and grab their landholdings. Already the farmers have been committing suicides owing to debt burden, poor monthly income (Rs. 1666 a month) and so on.”Crony capitalism” implies nexus between government and businesses that thrives on sweetheart deals, licences and permits eked through tweaking rules and regulations.
Stalemate between the government and the farmers’ unions is unchanged despite 11 rounds of talks. The farmers view the new farm laws as a ploy to dispossess them of their land holdings and give a free hand to tycoons to grab farmers’ holdings, though small.
Protesters allege the new laws were framed in secret understanding with tycoons. The farmers have a reason to abhor the rich businesses. According to an a January 2020 Oxfam India’s richest one per cent hold over four times the wealth of 953 million people who make up the poorest 70 per cent of the country’s population. India’s top nine billionaires’ Inc one is equivalent to wealth of the bottom 50 per cent of the population. The opposition has accused the government of “crony capitalism’.
Government has tried every tactic in its tool- kit to becloud the movement (sponsored y separatist Sikhs, desecrated Republic Day by hoisting religious flags at the Red ford, and so on). The government even shrugged off the protest by calling it miniscule and unrepresentative of 16.6 million farmers and 131,000 traders registered until May 2020. The government claims that it has planned to build 22,000 additional mandis (markets) 2021-22 in addition to already-available over 1,000 mandis.
Unruffled by government’s arguments, the opposition continues to accuse the government of being “suit-boot ki sarkar” and an ardent supporter of “crony capitalism” (Ambani and Adani). Modi did many favours to the duo. For instance they were facilitated to join hands with foreign companies to set up defence-equipment projects in India. BJP-ruled state governments facilitated the operation of mines in collaboration with the Ambani group just years after the Supreme Court had cancelled the allotment of 214 coal blocks for captive mining (MS Nileema, `Coalgate 2.0’, The Caravan March 1, 2018). Modi used Adani’s aircraft in March, April and May 2014 for election campaigning across the country.
“Crony capitalism” is well defined in the English oxford Living Dictionaries, Cambridge and Merriam –Webster. Merriam-Webster defines “crony capitalism” as “an economic system in which individuals and businesses with political connections and influence are favored (as through tax breaks, grants, and other forms of government assistance) in ways seen as suppressing open competition in a free market
If there’s one”.
Cambridge dictionary defines the term as “ an economic system in which family members and friends of government officials and business leaders are given unfair advantages in the form of jobs, loans, etc.:government-owned firms engaged in crony capitalism”.
A common point in all the definitions is undue favours (sweetheart contracts, licences, etc) to select businesses. It is worse than nepotism as the nepotism has a limited scope and life cycle. But, “crony capitalism” becomes institutionalized.
Modi earned the title “suit-boot ki sarkar” when a non-resident Indian, Rameshkumar Bhikabhai virani gifted him a Rs. 10 lac suit. To save his face, Modi later auctioned the suit on February 20, 2015. The suit fetched price of Rs, 4, 31, 31311 or nearly four hundred times the original price. Modi donated the proceeds of auction to a fund meant for cleaning the River Ganges. `It was subsequently alleged that the Surat-based trader Laljibhai Patel who bought the suit had been favoured by being allotted government land for building a private sports club (BJP returns ‘favour’, Modi suit buyer to get back land, Tribune June21, 2015).
Miffed by opposition’s vitriolic opposition, Ambani’s $174 billion conglomerate Reliance Industries Ltd. Categorically denied collusion with Modi’s government earlier this month. Reliance clarified that it had never done any contract farming or acquired farm land, and harboured no plans to do so in future. It also vowed to ensure its suppliers will pay government-mandated minimum prices to farmers. The Adani Group also had clarified last month that it did not buy food grains from farmers or influence their prices.
Like Modi, both Adani and Ambani hail from the western Indian state of Gujarat, just, who served as the state’s chief for over a decade. Both the tycoons are reputed to be Modi’s henchmen. Their industry quickly aligns its business strategies to Modi’s nation-building initiatives. For instance, Adani created a rival regional industry lobby and helped kick off a biannual global investment summit in Gujarat in 2003 that boosted Modi’s pro-business credentials. During 2020, Ambani raised record US$27 billion in equity investments for his technology and retail businesses from investors including Google and Face book Inc. He wants to convert these units into a powerful local e-commerce rival to Amazon.com Inc. and Wal-Mart Inc. The Adani group, which humbly started off as a commodities trader in 1988, has grown rapidly to become India’s top private-sector port operator and power generator.
Parallel with the USA
Ambani and Adani are like America’s Rockefellers and Vanderbilt’s in the USA’s Gilded Age in the second half of the 19th century (James Crabtree, The Billionaire Raj: a Journey through India’s New Gilded Age).
Modi government’s tutelage of Ambanis and Adanis is an open secret. Kerala challenged Adani’s bid for an airport lease is. A state minister said last year that Adani winning the bid was “an act of brazen cronyism.”
Threat of elimination of traditional markets
Farmers who could earlier sell grains and other products only at neighbouring government-regulated wholesale markets can now sell them across the country, including the big food processing companies and retailers such as WalMart.
The farmers fear the government will eventually abolish the wholesale markets, where growers were assured of a minimum support price for staples like wheat and rice, leaving small farmers at the mercy of corporate agri-businesses.
Is farmers’ fear genuine?
The farmers have a logical point. Agriculture yield less profit than industry. As such, even the USA heavily subsidies its agriculture. US farmers got more than $22 billion in government payments in 2019, the highest level of farm subsidies in the last 14 years, and the corporate sector paid for it. The Indian government is reluctant to give a permanent legal guarantee for the MSP. In contrast, the US and Western Europe buy directly from the farmers and build their butter and cheese mountains. Even the prices of farm products at the retail and wholesale levels are controlled by the capitalist government. In short, not the principles of capitalization but well-worked-out welfare measures are adopted to sustain the farm sector in the advanced West.
Threat of monopsonic exploitation
The farmers would suffer double exploitation under a monopsony (more sellers less buyers) at the hands of corporate sharks. They would pay less than the minimum support price to the producers. Likewise, consumers will have to pay more because the public distribution system is likely to be undermined as mandi (regulated wholesale market) procurement is would eventually cease to exist.
Plight of the Indian farmer
The heavily indebted Indian farmer has average income of only about Rs. 20000 a year (about Rs. 1666 a month). Thousands of farmers commit suicide by eating pesticides to get rid of their financial difficulties.
A study by India’s National Bank for Agriculture and Rural Development found that more than half of farmers in India are in debt. More than 20,000 people involved in the farming sector died by suicide from 2018-2019, with several studies suggesting that being in debt was a key factor.
More than 86 per cent of India’s cultivated farmland is owned by small farmers who own less than two hectares of land each (about two sports fields). These farmers lack acumen to bargain with bigger companies. Farmers fear the Market Support Price will disappear as corporations start buying their produce.
Modi sarkar is unwilling to yield to the farmers’ demand for fear of losing his strongman image and Domino Effect’. If he yields on say, the matter of the farm laws, he may have to give in on the Citizenship Amendment Act also. Fund collection in some foreign countries has started to sustain the movement. As such, the movement may not end anytime soon. Unless Modi yields early, he would suffer voter backlash in coming elections. The farm sector contributes only about 15 per cent of India’s $2.9 trillion economy. But, it employs around half its 1.3 billion people.
Brighter Future Waits Ahead
Our footprints on the sands of time are about to be washed up by the next wave. We need to set out new paths, urgently, after all, the real power of wisdom not hidden in knowing it all; but in not knowing enough. Because whatever we may think of our mastery of our own crafts is in reality achieving ‘mastery’ as an acknowledgment of arriving at a point of not knowing enough therefore continuous hunger and craving to search for bigger answers. Otherwise, just a few experts would have been enough for the world. Observe how after two millennia passed, we still have not figured out achieving grassroots prosperity, diversity, tolerance and equalities.
Only if our new wisdom understood will we advance or else stay lost at the beaches. Our new world of today needs new words, new vocabulary, and new narratives to allow correctly knitting the tapestries of our miseries and equally weaving strong and fit enough sails for the coming stormy winds of tomorrow. Muffled in the old-fashioned terms of the past, the double-sided, agenda-centric language used today, already lost its authenticity. Today’s language mummified in bandages of political correctness, already tombed intellectualism and spoken words into deprivations, while whatever enunciated as rehearsed acts via teleprompters is still undecipherable by the global populace. Realities now demand change to honest words to assemble new narratives, to calm restless citizenry to deliver its truthful meaning in bold progressions.
Loudly enunciated are our acceptances of our victory and defeats or we stay silent to our deceptions. There is a brighter future ahead, indeed, but firstly, if we only accept for a moment that our previous attempts on grassroots prosperity creation were failures of sorts, suddenly pandemic recovery appears meaningful. If we also accept our previous trajectory of economic development spanning the last decade was somewhat hit or miss on targets, suddenly, new horizons appear. If we accept also that all our power-skills and rich-knowledge almost maxed out, suddenly brighter futures start to appear. Because, only when we discover a window, find some empty spaces tumble into voids, and chasms new things start to pour in, new ideas flourish, the processes start as enlightenment for new discoveries to commence. No matter where we stand on this earth, a new world has once again brought us on crossroads to face new transformation for brand new adventures
Our limitations on our performance are true measurements to qualify us to enter the cockpits. Historians will recognize this pandemic recovery as a very special moment; declare this era as a small blip in the course of human endeavor and a glitch that ‘possibly’ corrected the role of government administration to allow far more talented and upskilled citizenry at helm to advance. One: The corporate leaderships of technology companies acquired extraordinary smarts many times more powerful over what their own top national political leadership team displays and thus unable to tackle any technology sides of the economy. Two: Digitized and technologically advanced vertical sectors across 200 nations and 10,000 cities shut out national political leaderships and local institutional administrators as obsolete and unprepared to deal with the required speed of response and execution and therefore losing future control of the national economic drivers of national economy in global jurisdictions. Frequent flyers know a lot about flying city to city but definitely are not certified and qualified pilots to fly jumbos around the world. The power play of the digital economy once enters the ocean of platform economies of the world will become extremely specialized, therefore, unless prepared, nation-by-nation, top political leadership and government agencies will lose grip on all such technology advancement games and become simply spectators. Study crypto-currency deployments, Space travel and satellite transportation, AI and trading games, Jack Ma and China over ruling financial sectors as a start.
Our mobilization of hidden resources and talents are proof of what we just learned coming out of fog. For the first time in 100 years, globally speaking, a new world emerges; The pandemic has already prepared the humankind to rediscover “the meaning of life” the purpose of “co-existence” while to the poor of the world “re-learn to survive” and to the rich “re learn to create common good”. Is pandemic germinating our entrepreneurial intellectualism? Is this the kind of transformation humankind has been waiting for over a century? Why is futurism calling for futuristic literacy?
Our billion hungry every night despite two millennia past, we must show our resolve or our negligence will destroy us. The poor of the world; in neglect, misery and almost buried alive, Millionaires anxiously digging their own graves, now exhausted, Billionaires digging deeper to find their own legacy if any and Trillionaires buying up heavens in the clouds to block other voices. The Towers of Babylon going half empty, displaying signs of ‘vacancy’ fires of hell at the base only provide gentle warmth to the upper celestial floors of luxury living. Where sweetness is missing in the bitter medicine of our times ignored but candies alone will never cure; the message in the bottle found on the bloody beaches tossed but the noise of fakery drowns us all. Imagine, if we compressed the last two millennia in two minutes. We just evaporated at the last second. Universe did not even notice.
Wondering, what was the possible message in that bottle, if any?
Kickstarting the U.S. Economy: A Rebound or Further Inequity?
The global economy has seen its fair share of peculiarity in recent years; much attributed to the developing economies rather than the stable sovereigns of the world. However, the wave of the pandemic has toppled the conventional trend unlike ever before. Whilst the developing economies gain traction, the European economies are crumbling under the whelming pressure of the pandemic.
The US economy, however, is on its track to rebound at nothing but an accelerated pace that is optimistic as it is sinister. Forecasters have been predicting an economic boom post the pandemic for months yet the claims were rebuffed as overly quixotic. The economic boom is on cards that could contract the surging unemployment rates and could even push the economy towards a prolonged growth trajectory.
The economic recovery is evident from the jump in retail sales all over the US: levels anticipated to bloom further amidst speculations of a hefty aid package advocated by president Biden. Moreover, the FED has predicted a growth of 4.5% in the US output; the highest predicted level of GDP growth in over two decades. The optimism is matched by the leading economists, likes of Goldman Sachs putting a word in their perspective: ‘We [US] are very likely to get a very high growth rate’.
The budding confidence in the economy is majorly linked to the rollout of vaccines. Albeit slow-paced, the vaccination drives are striving hard to meet targets set by the authorities. Coupled with the shift in the government, the national focus is primarily etched in the campaigns to ensure timely inoculation before the virus strikes again.
However, the inoculation would grip over the country for most of the year 2021, keeping the natural order of the country at bay. The economy, thus, is bolstered by Federal aid packages; pouring trillions of dollars in rental packages and unemployment benefits. The resulting is a pile of surplus disposable income which awaits an opportunity to be expended. Given the mounding pressure of recession and health crisis cumulated over the yesteryear, the income would be sufficient enough to suffice under the newfound rental and mortgage reliefs purported by the federal government. Combined with free public transportation, the added monetary value could be utilized as soon as the country bounces back from lockdowns.
The surplus income could further expand if congress approves the magnanimous aid package proposed by the democrats under the plan of president Joe Biden. As vaccinations continue to immunize the population and income blooms within common households, approaching summers could prove to be a haven for the US economy to shine bright. Peak demand for hotels and transport is expected in the second and third quarter of 2021; unemployment is predicted to level down to 4.1% due to surging demand for labour in the HoReCa sector whilst simultaneously kickstarting the dormant business of airlines and smattering of other means of transit.
Even the most experienced economists, however, have pitched reservations to the envisioned rebound of the US economy. The prime facet impeding that prospect is the intermittent campaign of vaccination. The inoculation has been slower than expected and the adverse effects of the jabs have instilled a fear that threatens to further stall the efforts to vaccinate the population. With the ensue of new virus variants in California and irregular vaccination drives, the expected recovery could defer to late 2021 and even 2022. This could make the US vulnerable to the 3rd wave of Covid as per the pattern of cases observed last year.
The political standoff is another factor that could push economic prosperity into despair. The simmering tensions post the impeachment trial of Donald Trump have surfaced over the last two months. The demarcation in the senate is as clear as it has ever been over decades and even the split in the republicans has brewed post the acquittal of Trump. Both parties locking horns this early casts a confusion that stood out in the recent energy crisis in Texas; the federal and state governments bumping heads whilst the state drowned in stark darkness and bitter cold. This disparity paints a bleak picture for the United States given Mr. Trump could stir more instability with the prospect of running the election again in 2024.
The escalating oil prices also indicate a tough road for nearly the entirety of the manufacturing sector of the economy along with any lucrative opportunity to the airline industry in the forthcoming months. As the world still reels from the pandemic, the crush in the oil supply from the US has rendered the valuation at high levels; a contrast to the plummeting prices just last year. The Brent index has surged more than 28% since December 2020, pushing the prices up to as high as $66 per barrel. With the forecasts expecting Brent to further climb up the trajectory and the subsequent production crunch from Russia and OPEC members, oil prices could rise up and beyond $70 per barrel. This price surge, as a result, could convert the booming economy into hyperinflation since the US would continue to rely on imported petroleum until it regains the economic traction to be self-sufficient again. Thus, the pilling income could transition into sky-high prices post the pandemic.
Mirroring the recession of 2001, while the economy started to expand within a year, the unemployment rates remained high for the better part of the decade. Drawing parallels from that period, while the growth is projected to touch the 5.8% mark later in the fiscal year of 2021, a congruent projection could not be made on the front of economic recovery. Although high inflation has never been an issue for the US in the past, unlike the developing nations, sluggish recovery in employment, brimming tensions in the political arena, and irregular inoculation rates could widen the gap of wealth in the country. Inequity, thus, is inevitable as an opportunity cost of growth at the expense of an inflating economy. The affluent strata of the society would reap the benefits much more rapidly than the working class. Whether it would be of long-term virtue or despair: time is the deciding factor for the common citizens of America.
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