Tuesday, November 27, 2007

Collapse Advice

My premise is that the U.S. economy is going to collapse, that this process has already begun, and will run its course over a decade or more, with ups and downs here and there, but a consistent overall downward direction. I neither prognosticate nor wish for such an outcome; I just happen to see it as very likely. Furthermore, I do not see it as altogether bad. There are some terrible aspects to the current state of affairs, and some wonderful aspects to the post-collapse environment. For example, the air will be much cleaner, there will be no traffic jams, and people will have plenty of time to devote to their children and to people within their immediate community. Wildlife will rebound. Local culture will make a comeback. People will get plenty of exercise walking around, carrying things, and performing manual labor. They will eat smaller and healthier diets. I could go on and on, but that is not the point.

Since such a scenario might seem outlandish to some people, I would like to sketch out why I find it entirely plausible. There is an ever-increasing amount of mainstream media attention being paid to the looming energy crisis. At this point, very few people still argue that there is not a problem with the energy supply, immediately for natural gas, eventually for oil. There is also a viewpoint, which is ever more closely and persuasively argued, that what we have to look forward to is a permanent energy shortfall, which will cause economic and societal dislocations that will be monumental in scope, and will transform the patterns of everyday life. The current, consumer-friendly economy would be no more, replaced with a subsistence economy characterized by a good deal of privation and austerity.

This viewpoint is usually served up under the rubric of “Peak Oil” - the all-time global peak in the rate of extraction of conventional crude oil. The connection between the inability to goose up oil production beyond some already icecap-melting number, and the immediate trotting out of the four horsemen of the apocalypse, is not immediately obvious. But apparently the U.S. economy is a sort of pyramid scheme, based on nothing more than faith in its growth potential, and can only continue to exist while it continues to expand, by sucking in ever more resources, particularly energy. Even a small energy shortage is enough to undermine it. So Peak Oil is hardly the problem – it is the foolish notion that infinite economic growth on a finite planet is possible. Collapse can be triggered when any one of many other physical limits is exceeded - drinkable water, breathable air, arable land, and so on – and so the limit to sustained oil production is only one of many physical limits to growth.

I do not feel the need to argue for the inevitability of a permanent energy crisis, not only because others have already done so quite persuasively, but also because it involves arguing with people who do little more than shout slogans. The slogans that are heard most often range from the simplistic “There is plenty of oil!” to the ideologically hidebound “The free market will provide!” to the somewhat more nuanced but technologically implausible “Technology will provide!” to the perennially hopeful but unrealistic “Other sources of energy will be found!” There is even the refreshingly irrational “People have said that oil would run out before, and they were wrong!” repeated endlessly by Daniel Yergin, an oil historian who believes that history repeats itself endlessly, even the history of nonrenewable resource extraction. Facile notions of this sort will remain popular for some time yet, but I feel that it is already quite safe to start ignoring them.

It bears pointing out that most of us would prefer to remain blissfully unaware of any and all such arguments and notions, perhaps choosing to concern ourselves with topics less likely to depress our libido. Awareness of topics of global import is certainly not compulsory, and may not even be beneficial. Why worry about disasters we can do nothing to avert? Why not just enjoy our day in the sun, come what may? Also, large groups of people can be dangerous when panicked, and so I do not wish to panic them.

As for the few of us who are concerned, my message to you is a cheerful one, because I believe that you can still exercise some measure of control over your destiny. So, if you want some help thinking things through with a positive attitude, read on. If not, do not concern yourself unduly. Instead of reading this, you could lift your spirits by going for a drive, or going shopping, or taking a nap. Rest assured that these are all good things for you to do, the nap especially. Rather than you being menaced by some issue of global importance, any number of other unpleasant eventualities could bring about your untimely demise, on which you should likewise refrain from dwelling morbidly. Your participation in this program is optional.

The first step in this program is admitting that what is looming on your horizon is economic collapse – that the economy, as you are used to thinking about it, will cease to serve your needs. You will not hear about it on the evening news, and there will be no signs in shop windows that read “Out of business due to economic collapse.” The traditional array of experts will be on hand, claiming that prosperity is just around the corner, and offering this or that short-term fix, which, for all we know, might even work for a little while.

An economy collapses one person, one family, one community at a time. First, the dreams evaporate: the future starts looking worse than the present, and ever more uncertain. Then people are forced to withstand ever greater indignities and privations, which they tend to accept as their personal failings. The resulting stress causes them to experience a variety of physical and psychological symptoms. Our pride, our habits and expectations, and our unwillingness to adapt, can kill us faster than any physical hardship. But eventually something has to give, and even if life does not get any easier, one morning we wake up, and not only has life all around us been transformed out of all recognition, but everyone we encounter recognizes that times have changed. And we realize that none of this is about us personally, and feel better.

I feel qualified to write on this subject because I had the opportunity to observe an economic collapse firsthand. I did some of my growing up in the Soviet Union, and the rest in the United States. I have visited Russia repeatedly, on personal trips and on business, during the years of Perestroika, the ensuing collapse, and the lean years of the 1990s. I feel equally at home, or, on occasion, lost, in both places. Unlike most Russian émigrés who witnessed the collapse, I was fascinated rather than traumatized by my experiences there, and have not tried to blot them out of my memory, as many of them have. Also unlike most émigrés, I know quite a lot about the United States, its society and its economy, see its fateful weaknesses, and care about what happens here. When peering apprehensively into the unknown, it is useful to have as your guide someone who has already been there. Since no such guide is available, you will have to make do with someone who has been someplace vaguely similar.


The main use of oil in the United States is for transportation. Once the crisis gets underway, there will be much less transportation available, of goods as well as of people, at any price, exacerbated by the lack of public transportation infrastructure. The U.S. Gross Domestic Product turns out to be almost strictly proportional the number of vehicle miles traveled, and this implies that large reductions in the availability of transportation will translate into similar-sized reductions in the size of the economy overall. A few years on, roads and bridges will start falling into disrepair, making travel slow and difficult even when enough fuel for the trip can be found. People will be forced to stay put most of the time, perhaps making seasonal migrations, and to make use of what they have available in the immediate vicinity.

To see what that will be like for you, all you have to do is to give up driving; not cut down on driving, but sell your car, and refuse to ride in one on a regular basis. If this forces you relocate, or to switch jobs or careers, you should probably do so now. You will be forced to do so, when everyone else tries to do it at the same time. I sold my car a few years ago, and my life got better, not worse. Now I work within bicycling distance from home. I am physically fit because I ride for at least an hour a day, and I am saving more money than I was before because I do not have the expense of keeping a car. If you have children that ride the school bus to school, assume that the school bus will not run any more. You might be able to work out a home schooling arrangement, or find another school closer to home that the kids can walk or bicycle to.

Food and Clothing

Consumer society, as it currently exists in the United States, is propped up by the still relatively cheap and accessible energy, and by the fact that the Chinese, and other nations, are still willing to dispense goods to us on credit. This credit is secured by the promise of future economic growth in the United States, which is already being whittled down by the high energy prices. Thus, the energy crisis will in due course translate into a consumer goods crisis.

Therefore, as part of your exercise, assume that every supermarket and big box store is out of business, driven bankrupt by the high cost (and low availability) of diesel, electricity, and natural gas. Shop only at the local farmer's markets, small neighborhood groceries, and thrift stores. Buy as few new things as possible: trash-pick what you can, and repair items instead of replacing them. Learn to grow or gather at least some of your food. To buy staples such as rice, travel into town and buy them in bulk from small immigrant-owned groceries – you can be sure that these will be around even after the supermarkets are gone.


If your lease or mortgage requires you to have a full-time job in order to afford it, find a way to change your living situation to one that you can keep even when there is no more work. If you can cash out your equity and buy a place that is smaller, but that you can own free and clear, do so.

Pay particular attention to how difficult a place will be to heat; do not assume that heating oil, natural gas, or large quantities of firewood will be available or affordable. Also, pay very close attention to the neighbors. Are they people you know and trust? Will they help you? Do not assume that there will be police protection or emergency services. If you live in an area with a history of ethnic strife, how sure are you that you will be able to find a common language and make peace with everyone there, even people whose culture and background are vastly different from yours?

Know where to escape to in case your primary residence becomes unlivable, either permanently or for a time. Your arrangements might be as simple as a friend's couch, or a campsite that you rent by the season, or some land where you know you can camp, or an unused farm, ranging all the way to an alternative residence somewhere else in the world that you can relocate to.


If you have or foresee significant ongoing medical needs, staying in the United States will pose a unique set of problems; you might even consider seeking refuge in one of the many countries that provide free basic and emergency medical care to their entire population. The United States is a very special case in having made basic medicine into a profit-making industry rather than a social service. The medical system here has become a parasite, bloated and ineffectual. The doctors are saddled with unreasonable regulations and financial liabilities.

When it comes to medicine, almost any country in the world will be better than one that is full-up with unemployed medical specialists, insurance consultants, and medical billing experts. In Belize, which is quite a poor country, I received prompt and excellent free emergency medical care from a Cuban medic. In the U.S., in similar circumstances, I had to wait 8 hours at an emergency room, then was seen for five minutes by a sleep-deprived intern who scribbled out a prescription for something that is available without a prescription almost everywhere else in the world. Then there ensued a paper battle between the hospital and the insurance company, lasting for many months, over whether the hospital could charge for a doctor's visit on top of the emergency room visit. Apparently, in U.S. emergency rooms, doctors are optional.

There are specific steps you may be able to take to avoid having to depend on the medical system. Do whatever you can to be in good health, by getting enough sleep and exercise, and by avoiding unnecessary stress. Avoid processed food and junk food. If you do not feel well, get plenty of rest, instead of medicating yourself and attempting to keep to your schedule. Unless your life is in danger, try to do without maintenance regimens of prescription drugs, keeping in mind what will happen when you lose access to them. Be sure to have a living will that allows your family to have control of your medical care. Look for alternative medicines for symptomatic relief of minor complaints.


For several decades now, the U.S. Dollar has been able to keep its value in the face of ever larger trade and fiscal imbalances largely because it is the currency most of the world uses when buying oil. Other nations are forced to export products to the United States because this is the only way for them to gather the dollars they need to purchase oil. This has produced a continuous windfall for the U.S. Treasury. This state of affairs is coming to an end: as more and more oil-producing nations find alternative ways of doing business with their customers, trading oil for Euros, or for food, the U.S. Dollar erodes in value. As the Dollar drops in value, the price of an ever-increasing list of essential imports goes up, driving up inflation. At some point, inflation will start to feed on itself, and will give rise to hyperinflation.

If your immediate thought is, “Hyperinflation in the U.S.? Impossible!” then you are not alone. A lot of people have trouble thinking about the possibility of hyperinflation, economists among them. Hyperinflation, they say, requires the government to emit vast amounts of money, which, being a good, prudent government, it simply will not do. But this government is drowning in red ink, and will do what desperate governments have always done: opt for inflating its debt away rather than defaulting on it, to retain at least some spending ability in the face of a collapsing tax base and dried-up foreign credit. The people at the Fed do have to be kept fed, after all.

Alan Greenspan, Chairman of the Fed, has voiced the viewpoint that since oil expenditure is such a small percentage of the overall economy, increased oil prices will have little effect on it, and, of course, he is right. I am, however, still a bit concerned about lower overall quantities of oil, regardless of the price, because these would result in less economic activity. What I would like Mr. Greenspan to reassure me on is, How is a small national economy going to be able to support a big national debt? By the way, I have an idea: print some money.

Others who doubt the inevitability of hyperinflation point to the weakness of trade unions, and say that workers in the U.S. are too badly organized to bargain collectively and secure cost of living adjustments that would propel the economy along an inflationary spiral. These people seem to feel that the workers will somehow continue to be able to work even as their entire paycheck disappears as they buy gasoline for their daily commute. They remind me of the proverbial farmer who trained his horse to stop eating, and almost succeeded, but unfortunately the horse died first. Those who have work that needs to be done will have to make it physically possible for someone to do it.

There are also plenty of people in this country – the ones who are closer the top of the economic food chain, or just feel like they are – who will pay themselves whatever they require, giving themselves, and those upon whose loyalty they must depend, any cost of living adjustment they deem necessary. They will continue doing so until they are bankrupt. Because wealth is distributed so unevenly, these people make a disproportionately large difference.

Lastly, there is a large group of people who feel that such matters are for economists to decide. But decide for yourself: in March of 1999, The Economist magazine ran an article entitled “Drowning in Oil.” In December of the same year, it was compelled to publish a retraction. Economists are starting to look a bit ridiculous, as their predictive abilities are repeatedly shown to be quite feeble. Moreover, the whole discipline of economics is starting to become irrelevant, because its main concern is with characterizing a system – the fossil fuel-based growth economy – which is starting to collapse.

Perhaps the difficulty in reconciling oneself to such a possibility stems from history and culture, not economics. Unlike the Russians or the Germans, whose historical memory includes one or more episodes of hyperinflation, it is hard for Americans to imagine living in a time when their paper money is not worth its weight in toilet paper. But such conditions have been known to occur. Savings boil off into the ether. People who still receive paychecks or retirement checks cash them immediately, and do their best to buy the things they need to survive as quickly as they can, before the prices go up again.

There are some steps you can take to prepare yourself for life without money. For a time, you might not have an income at all, or an income so meager it will not be enough for even one meal a day, so find out just how little money you need to stay active and healthy. Learn to rely on family, friends, and acquaintances. Find out what you can take from them, and what you have to offer in return.

Perhaps most importantly, assume that your retirement income, whether government or private, will in due course become quite close to zero, and make some other arrangements for your old age. If you have children, start buttering them up now – you will need their help to survive in your dotage. If you do not have children, then think about having some, or adopting one or two. If you do not have or want children, then be sure to have some good friends who are younger than you.

For each economic arrangement involving money, try to come up with an alternative arrangement that does not involve money. For example, if you pay a baby-sitter, try to find a baby-sitter who is willing to work in exchange for lessons. If you pay rent, find a caretaker situation where you pay with your labor. If you pay for food, start growing your own food.

As you are learning to live with less and less money, you will inevitably find that the money system works to your disadvantage. If you have debt, it becomes harder and harder to make the payments. If you own property, it becomes harder and harder to afford the taxes. The money system takes a bite out of everything you do. But this is true only if your economic relationships are monetized – if they have monetary value and involve the exchange of money. As you try to reduce your dependence on the money economy, you will need to invent ways to demonetize your life, and that of the people around you.

Savings and personal property can be transformed into the stock in trade of human relationships, which then give rise to reciprocal flows of gifts and favors – efficient, private, and customized to personal needs. This requires a completely different mindset from that cultivated by the consumer society, which strives to standardize and reduce everything, including human relationships, to a client-server paradigm, in which money flows in one direction, while products and services flow in the opposite direction. Customer A gets the same thing as customer B, for the same price.

This is very inefficient from a personal perspective. Resources are squandered on new products whereas reused ones can work just as well. Everyone is forced to make do with mediocre, off-the-shelf products that are designed for planned obsolescence and do not suit them as well as one crafted to suit their specific needs. A commodity product can be manufactured on the opposite side of the planet, whereas a custom one is likely to be made locally, providing work for you and the people in your community. But this is also very efficient, from the point of view of extracting profits and concentrating wealth while depleting natural resources and destroying the environment. However, this is not the sort of efficiency you should be concerned with: it is not in your interest.

This, then, is the correct stance vis à vis the money economy. You should appear to have no money or significant possessions. But you should have access to resources, such as food, clothing, medicine, places to stay and work, and even money. What you do with your money is up to you. For example, you can simply misplace it, the way squirrels do with nuts and acorns. Or you can convert it into communal property of one sort or another. You should avoid getting paid, but you should accept gifts, and, of course, give gifts in return. You should never work for money, but always donate your time and effort charitably. You should have a minimum of personal possessions, but plenty to share with others. Developing such a stance is hard, but, once you do, life actually gets better. Moreover, by adopting such a stance, you become collapse-proof.


The American justice system favors the educated, the corporations, and the rich, and takes unfair advantage of the uneducated, the private citizen, and the poor. It would seem that almost any legal entanglement can be resolved through the judicious application of money, while almost any tussle with the law can result in financial penalties and even imprisonment for those who are forced to rely on public defenders.

Many people naïvely believe that a criminal is someone who commits a criminal act. This is not true, at least not in the American system of justice. Here, a criminal is someone who has been accused of committing a criminal act, tried for it, and found guilty. Whether or not that person has in fact committed the act is immaterial: witnesses may lie, evidence can be fabricated, juries can be manipulated. A person who has committed a criminal act but has not been tried for it, or has been tried and exonerated, is not a criminal, and for anyone to call him a criminal is libelous.

It therefore follows that, within the American justice system, committing a crime and getting away with it is substantially identical to not committing a crime at all. Wealthy clients have lawyers who are constantly testing and, whenever possible, expanding the bounds of legality. Corporations have entire armies of lawyers, and can almost always win against individuals. Furthermore, corporations use their political influence to promote the use of binding arbitration, which favors them, as the way to resolve disputes.

This state of affairs makes it hopelessly naïve for anyone to confuse legality with morality, ethics, or justice. You should always behave in a legal manner, but this will not necessarily save you from going to jail. In what manner you choose to behave legally is between you and your conscience, God, or lawyer, if you happen to have one, and may or may not have anything to do with obeying laws. Legality is a property of the justice system, while justice is an ancient virtue. This distinction is lost on very few people: most people possess a sense of justice, and, separate from it, an understanding of what is legal, and what they they can get away with.

The U.S. legal system, as it stands, is a luxury, not a necessity. It is good to those who can afford it, and bad for those who cannot. As ever-increasing numbers of people find that they cannot pay what it takes to secure a good outcome for themselves, they will start to see it not as a system of justice, but as a tool of oppression, and will learn to avoid it rather than to look to it for help. As oppression becomes the norm, at some point the pretense to serving justice will be dispensed with in favor of a much simpler, efficient, streamlined system of social control, perhaps one based on martial law.

People have been known to get along quite happily without written law, lawyers, courts, or jails. Societies always evolve an idea of what is forbidden, and find ways to punish those who transgress. In the absence of an official system of justice, people generally become much more careful around each other, because running afoul of someone may lead to a duel or give rise to a vendetta, and because, in the absence of jails, punishments tend become draconian, coming to include dispossession, banishment, and even death, which are all intended to deter and to neutralize rather than to punish. When disputes do arise, lay mediators or councils may be appealed to, to help resolve them.

The transition to a lower-energy system of jurisprudence will no doubt be quite tumultuous, but there is something we can be sure of: many laws will become unenforceable at its very outset. This development, given our definition of what is criminal, will de facto decriminalize many types of behavior, opening new, relatively safe avenues of legal behavior for multitudes of people, creating new opportunities for the wise, and further tempting the evil and the foolish.

As a safety precaution, you might want to distance yourself from the legal system, and, to the extent that this is possible, find your own justice. As an exercise, examine each of your relationships that is based on a contract, lease, deed, license, promissory note, or other legal instrument, and look for ways to replace it with relationships that are based on trust, mutual respect, and common interest. Think of ways to make these relationships work within the context of friendships and familial ties.

To protect yourself from getting savaged by the justice system as it degenerates into oppression, try to weave a thick web of informal interdependency all around you, where any conflict or disagreement can be extinguished by drawing in more and more interested parties, all of them eager to resolve it peaceably, and none of them willing to let it escalate beyond their midst. Struggle for impartiality when attempting to mediate disputes, and be guided by your wisdom and your sense of justice rather than by laws, rules, or precedents, which offer poor guidance in changing times.



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