The Real Work: Four Things We Can't Afford to Get Wrong | Frankly 159

Nate Hagens (0:00)

Hello. I should be giving an update on the situation in the Middle East, where the USA is continuing to commit slow motion economic and geopolitical self-destruction. Saudi export capacity is crippled by the Ansar al-Ataq's. Diesel in the USA is $6, approaching $7, and rising. The Strategic Petroleum Reserve emergency oil caverns are hitting new lows. Global bond yields are breaking out due to inflationary expectations. Certain motor oil products at Costco have purchasing caps and limits and the like. But instead, I feel compelled to look two or three steps ahead at what the real work is for us now. If we look not at the headlines, but at the systemic implication for coming years and decades. Because the real work is complex and intense, this will be a bit of an intense and raw episode. Though in some ways review, but hopefully clarifying and hopefully helpful.

The reason I do this work is that I deeply care about the delta between society's cultural expectations and institutional plans for the future, and the encroaching biophysical and ecological reality. And the gap between those is large and widening.

I don't know how I ended up here, but what I want to do now is educate, inform, inspire, shine a light on the real paths ahead of us instead of the cargo cult, high status, comforting, grandiose narratives that are popular in the mainstream media. I feel that with what I know, with who I know, and now with this small platform, we can at least in some small way help steer the future away from the current default. So what does that specifically mean for the work needing to be done now? I've said before, what we face is not a problem with a solution, but a predicament with responses. Problem is something you solve and move on from, a predicament you live through. And how we live through this one is going to matter enormously. So the question of the work ahead is really a question about responses. And I think given the biophysical and ecological logic of the system science story I've put together over the last 25 years, it boils down to four core categories of work that emanate from the logic of the Great Simplification. This isn't the only work that needs to be done, but this is the work that isn't being done at large scales because our culture is blind to see this particular configuration. So to summarize the situation, and viewers here have been long aware of the core logic, so I will be brief. We are a social species, an apex predator that spread out across the world, and once hierarchy and surplus became prominent, that snowballed, and we started to mine historic caches of oil and gas and coal and non-renewable minerals at high quality, high quantity, and scale.

All these combined with machines turbocharged our global economies, our expectations, our civilizational complexity. But now, we are reaching a phase shift in that story, and there is an economic and financial cul-de-sac ahead of us, where our paper and digital claims are starting to meaningfully exceed our biophysical and ecological means. I believe some sort of deflationary depression is now inevitable, whether in five months or 15 years. And such a fiscal depression is very different than saying, we don't have enough stuff. It's saying that our financial claims on what we believe we have will at some point have a wily coyote reconnection date with what we really do have. And this is likely to manifest first in the global bond and then currency markets, where even as things get scarcer and raw material and commodity and energy prices go up, our inability to keep pace with that in real productivity and real GDP will at some point, and my guess is probably sooner rather than later, though central banks will probably have an answer to the next financial crisis, but maybe not the one after that will reach a too big to save situation. We'll cause a financial system to cascade downward, a la 1929, aka a deflationary depression. So the first of the four categories of the real work is, when that happens, we help society to bend and not break. Bend is a strained continuation of inter-conductivity and social contracts. Break is a form of collapse. And the coming event I'm describing is not systemic collapse, per se. It is the overlay of our financial architectures taking a significant haircut and the resulting complexity and supply chain risks that ensue. This almost happened in 2008, and again, almost in 2020 And to forestall that, we used some of our remaining bullets in the form of central banks becoming the buy or last resort for the whole credit system. Too big to fail guarantees, artificially low interest rates, the bazookas that paper over our physical and social problems, and the trust in those, and the number of times we can use them, is finite. So, how do we maintain connectivity even in and eventually in my analysis, a lower material throughput world in the face of 10,000-mile supply chains, instantaneous global letters of credit, cheap global energy, effectively relative to the past, global peace, functioning currencies, immediate transactions. How do we navigate partial failure of those integrated, mutually contingent set of advantages without a break? Because a break means we don't just drop 10 or 20% and then climb back to new highs, as has been the historical pattern. It means we're kicking out several rungs of the ladder that brought us this far in the first place. Because of the underseas internet cables and the surgical gloves we import from overseas, and the fertilizer made in Trinidad and Tobago, and the 30,000 unique products in every single grocery store, and all the things we assume will be here tomorrow because of intricate, complicated supply chains based on credit, currency, and cheap energy. So the work to bend towards a lower throughput, simpler world is, among many things, re-localized, re-regionalized supply chains, especially for basic goods, food and medicine, and spare parts that don't depend on a six-continent journey. And the work is also expanding your social capital where you live, meeting people near you, left, right, rich, poor, old, young, because those bonds will pay benefits in almost all future scenarios. And communities and watersheds doing scenario planning ahead of time, which builds trust among the people charged with thinking about these things, and invites imagination and creativity before they're sorely needed. And Goldilocks technology tools and innovations that get us 80% of the human benefit with 20% of the resources. Sodium batteries, less efficient than lithium but cheaper and with raw materials far more abundant. Things that can be maintained and repaired locally without a global just-in-time umbilical cord. And advanced policy, working now on the interventions that seem too radical but are going to be necessary in the not-too-distant future and building constituency on those things ahead of time. We've talked a lot about these things before and I will increasingly interview experts on these things to take a deeper dive into the various fronts through these Frankleys. And of course, the reality is that no one who believes that future is going to be shinier than the present is going to work on these things. Which is why this platform and the Global Scout team of people sharing this story to others who start working on it around the world is important, I think. Because people who can see what is coming respond with agency and creativity and shared meaning instead of panic.