The horizon is not so far as we can see, but as far as we can imagine

2015 in Review

It was an “interesting” year, a year which clarified much.

Economically, this was a year of slow down and continued oil price collapse. China’s slow down is the core cause of all this, exacerbated by the insistence on austerity in Europe and to a lesser extent in the US. Many pretend austerity hasn’t been imposed in America, but it’s just been less austere than Europe.

Accelerating inequality has continued to undercut demand. There is too much investment supply in the world and too much money, though calling it investment supply is misleading; it is mostly money which seeks returns without wishing to create a new company, road, or product.

On the good side of the equation, renewable energy continues to drop in price, with coal now being underpriced by solar.  Battery prices are dropping and the process of moving from hydrocarbons to renewables continues. This is undercut by the collapse in hydrocarbon prices, but that will only slow it down.

The mass switch to renewables should have happened years, or rather, decades ago. It would have been more expensive then, but the mass market would have pushed prices down sooner and it would have been a far better way to spend money than on things like the Iraq war or Japan’s insane pouring of far more concrete than the Japanese islands could ever need.

Neo-liberal orthodoxy and the power of entrenched interests, however, would not allow for the massive subsidies necessary to make renewables and energy saving cheaper than hydrocarbons–indeed, subsidies flowed mostly to hydrocarbons.

The price of this will be some rather large number of people dead. I’m guessing the marginal cost is two billion dead or so. The Paris accords are all very nice, but they are too late and unenforced. The hothouse gasses in the air now are sufficient to release methane from northern Russia, the polar seas, and various other sources.

We are past the point of no return on this, and 2015 simply confirmed its inevitability.

A number of significant technologies are coming on line. Blockchains, electric cars, VR, and reusable rockets. Electric cars and reusable rockets should have happened ten and 15 years ago respectively, but were not allowed–until private companies manipulated the situation so the profits would go to themselves.

Hillary Clinton made an idiotic comment about a Manhattan Project on cryptography (the NSA already spends an inflation-adjusted Manhattan Project equivalent every 30 months.) But NASA should have been funded so that reusable rockets (an improvement on the Space Shuttle) were created long ago, and hybrid cars (really batteries) should have been being crashed as well.

While such cars would have had lower travel range than we’d have liked, subsidies and deliberate policies making sure that charging and battery exchange stations were built could have made them feasible far before now.

The majority of buildings in the US could have been made energy neutral using technology we had in the 1990s.

This may seem like a long diversion from “2015,” but the point is that, in 2015, stuff that should have happened long ago, that needed to happen long ago to stop catastrophe, finally began to happen in earnest–only because these enterprises are finally profitable for private companies. I’m glad Musk, et al. are creating reusable rockets and electric cars, but these things should have been happening ages ago.

And remember: What Musk and his competitors want is space mining, which they believe will create the world’s first trillionaire. Making space private property, primarily commercial, will make many of our problems far far worse than they could have been.

On the political side of the equation, 2015 was filled with frustration-borne changes. Syriza’s election fizzled into capitulation, in Canada the Liberals (who, despite great photo ops, look likely to govern largely from the center right) came into power based on an appetite for change. Trump took the lead in America’s Republican primaries, with Cruz and Carson coming on strong.  Bernie Sanders is challenging Clinton strongly from the left. In France, LePen had her best showing ever, though it was frustrated by an “Anyone But LePen” vote. Portugal had a strong showing of the left, and so did Spain.

And, very promising, Jeremy Corbyn stormed to the Labour leadership in England on a very left-wing platform.

These are, however, pre-revolutionary, pre-war developments. The old regime is failing, neo-liberalism’s double-down on austerity means that ordinary people are doing badly. The media has lost its stranglehold on the narrative and people are willing to take a run at anyone who looks like they can make the economy better. They do not care, particularly, if that person is left- or right-wing, they will try anyone who does not parse as part of the current regime. (Yes, Trump has money, but he doesn’t parse as a normal politician, at all.)

They will take the left, or they will take the right. In the 1930s, the US got FDR, but France, Italy, and Spain were not so lucky.  Whoever looks likely to “fix things” will get in eventually.

The European project took some hits in 2015 which may prove fatal. It is clear that the current regime in Brussls is anti-democratic and, more importantly, that they will not (and perhaps cannot) fix Europe’s economy. Even more importantly, it is becoming clear that it is impossible for most countries to have healthy economies within the EU and certainly not within the Euro; the policy flexibility, including monetary flexibility, needed is simply not available.

2015 was also the year that the West’s foreign policy failures came home to roost, with a huge influx of refugees into Europe, causing political chaos. This influx is minor in comparison to what Lebanon, Turkey, and other countries in the region have experienced, but a Europe in austerity does not want to absorb large numbers of refugees.

I have this written before, and I will say again: We are in a pre-war, pre-revolutionary period. Such periods can last a long time, sometimes decades, so this doesn’t mean “War and Revolution tomorrow,” but it does mean that the conditions are now in place. Ideological control, generally, and media control, specifically, are failing, repression is on the rise, the majority of economic gains are going to a handful of people, the majority of the population feels like they are losing economic ground and are willing to try new types of politics–including what amounts to fascism. The international regime is breaking country after country, destroying them physically, destroying their economies, and so on. Failed states are proliferating.

2015 confirmed this in spades. Every attempt to pull back from the brink (such as Syriza in Greece) was rebuffed.

So, repeated disasters have failed to change neo-liberal economic policy, and neo-conservative foreign policy; repeated warnings about climate change have led to an inadequate response, and 2015 confirms that we will continue to stumble towards multiple catastrophes.

The best hope resides in sensible parties on the left, by which I mean something quite different from what the media does.  Corbyn is not a radical. He is a 1960s liberal, a post-war liberal, with a side of environmental understanding and an appreciation for the harms inflicted by racism and sexism.

There are some more radical experiments being conducted being performed in small batches, around concepts like instituting basic incomes and changing how money is created. Those may lead to a more significant change of the political economy going forward and are what I would truly fear if I were an oligarch (money creation more than basic income–an improved dole doesn’t really threaten them.) We shouldn’t get too excited by this, yet. Canada performed an experiment in basic income in the 1970s, for example.

The real dangers in the world are increasing. For the first world, this doesn’t mean “Islamic Terrorism,” which has never been an existential threat; it means political and economic instability at home. The people one should fear most are almost always one’s own leaders, both political and economic, rather than foreigners, and this remains true.

I’ll write more about what the future holds, those shoots of hope that are visible, and what we can do about it in the New Year.  In the meantime, I hope my readers all had good 2015’s personally, and that 2016 showers you with prosperity, health, and happiness.

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Why Inequality Is Intrinsically Bad


  1. And, very promising, Jeremy Corbyn stormed to the Labour leadership in England on a very left-wing platform.

    Unfortunately he and his very left-wing platform doesn’t seem to be connecting quite so well with the general voting public. In a democracy, to make a difference you have to win the election and #jezwecan is not showing any signs that this is going to happen.
    Most his supporters effort so far appears to be going into marginalising the social democrats in the party(now to be known as “Red Tories”) and stunts rather than producing meaningful policy. Once the purge has been completed expect a fight to the death between the Trotskyites and the Stalinists of what remains of the Labour Party.

  2. Ian Welsh

    It’s way to early to say who will win an election held years from now.

  3. V. Arnold

    In the meantime, I hope my readers all had good 2015’s personally, and that 2016 showers you with prosperity, health and happiness.

    You can’t be serious. For me 2015 was pretty good; but I got the fuck out of the US in 2003.
    My brother and sister on the other hand are trapped as wage slaves and likely will never be able to retire, and I think they represent the majority of USians. I’m 70, my sister is 65 and my brother is 61. They won’t leave for whatever reasons, as is the reality for most USians.
    The fact is the US is dying (and you know it) and the ugly thing about collapse is that it’s a long, protracted process extracting maximum pain and suffering.
    It might not be so bad if this were a natural deterioration, but it’s not; it’s calculated, unrelenting warfare against the bourgeoisie, which is you and me…
    The irony is; even if “they” win (which they will); in the end “they” lose…

  4. marku52

    Great article. Makes me glad I support you in a small way. A couple of typos, tho. If you want to delete this comment feel free.
    4 para “entrenched interes”
    17 para “they do no care”
    next to last para ” ones own leaders”

    BTW, what is a Blockchain?

    Keep doing great work in 2016. All the best.

  5. Ian Welsh

    Even in bad times, some people do well. I said “I hope”, not “I expect”.

    Added a link on blockchains, but they are the underlying tech which makes bitcoin possible.

  6. Ivory Bill Woodpecker

    Anyone who tries to pay me in digital funny money will need to find another wage slave. 😆

  7. \”Economically this was a year of slowdown and continued oil price collapse. China’s slow down is the core cause of all this\”

    Western media speak endlessly about China\’s \’slowdown\’, of course. But China\’s economic growth is not slowing down. It\’s accelerating at 6.5-7% a year.

    It\’s also growing much, much faster than it was ten years ago. Twice as fast, in fact.

    In 2005 it grew by $500 billion and Western media called this pace \’unsustainable\’.

    In 2015 it grew by $1 trillion and Western media called it a \’slowdown\’.

    Go figure.

  8. Ian Welsh

    Ah. For example:

    As for GDP growth, here’s a nice chart, choose 10 year.

    And these are the official figures, which are, ummm, dubious.

  9. EmilianoZ

    Giovanni Battista Caproni: Is the wind still rising?
    Jiro Horikoshi: Yes sir, it sure is.

    The wind rises. Miyazaki, 2013.

    Le vent se leve. Il faut tenter de vivre.

    Le cimetiere marin. Paul Valery, 1920.

    It is hard living when the wind will uproot anything we may want to build. But it is a wind we fully deserve, a wind we sowed with our own hands through our stupidity, our apathy, our petty little greeds.

    The great injustice is that the boomers did more than anyone else to sow that wind, but it is mainly the subsequent generations that will do the reaping.

    Whatever is left for us to live, let us live with dignity and compassion. And let us never forget who gave us that wind.

  10. RIQ

    Could you speak to efforts at “changing how money is created” is future posts, in particular any local/regional efforts to do so? Take care!

  11. Ian Welsh

    Iceland is considering changing how money is created, though they have not done so yet to my knowledge. The vast majority of money is created, as debt, by private banks.

  12. wendy davis

    Another example: “Switzerland to vote on banning banks from creating money; Referendum on radical proposal to give central banks sole money creation power will be held after petition gains 110,000 signatures ”

  13. Creigh

    The way to prohibit banks from “creating money” is to outlaw fractional reserve banking. Simple, but it throws the baby out with the bathwater. Outlawing fractional reserve banking imposes discipline on the supply side, whereas it needs to be imposed on the demand side; regulations on what bank loans can be used for. Basically, limiting their use to productive purposes, not speculative purposes, at least for the formal banking system that is backed by the Central Bank.

  14. Ian Welsh

    In most countries Banks are not limited by their reserves. We no longer have fractional reserve banking, we have something worse.

  15. Creigh

    I think the problem you’re trying to address is the tendency for banks to lend against existing assets (which bids up prices and creates asset bubbles) instead of lending for purposes that expand productive capacity. I’d argue that doing that by resricting the banks ability to expand credit would hurt both purposes, the good more than the bad. A better way to do that is by requiring banks to evaluate creditworthiness by ability to repay, not by collateral value. In other words, discipline on the demand side, not the supply side.

  16. Jeff Wegerson

    What matters is the discipline itself not where it is being applied. At the moment money is not going to where it is needed. When you mention asset bubbles you understand them as places where money is not needed. At the moment money is not going to productive capacities because there is not enough money going to the demand side to buy the produced supply. Banks cannot give money away they must charge interest. But a central government bank could give it away with one hand and as needed tax it back strategically. Inflation is an important signal of bottle necks in the economy. A government can manage economies in ways that profit-driven powers cannot. Free markets cannot exist without management. Without free markets important economic signals are lost.

    Sorry if I am being cliched here.

  17. fnkv

    The great injustice is that the boomers did more than anyone else to sow that wind, but it is mainly the subsequent generations that will do the reaping.

    Fifteen years ago, the faint outlines of a new political constellation were becoming visible; roughly speaking, East Asian conservatives + Western liberals. (The “Anglo-Confucian” zeitgeist that Lapham noted in Vancouver suggested the viability of such an alignment.)

    The West + East Asia is roughly 3 billion people, so on a planet of 7-odd billion this could potentially have provided the basis for a workable international order. The European conservatives seemed at worst neutral toward this possibility, but the American right responded with all the fury of a jilted lover.

  18. fnkv


    The raging conservative “Islamophobia” that appears around this time, and the accompanying preposterous accusation that Liberals were plotting a Muslim takeover, was a displacement of their rage into the general discourse, with the (weakly) rationalisable hatred of Muslims standing in for hatred of the East Asian purchasers of their oil, which was far harder to put an socially acceptable face on.

    The following years saw the costly Middle East wars and the accompanying financial bubble, which garnered America the “veto power” it sought over European and East Asian enterprises while starving the latter of their “excess” capital, which was effectively Hoovered up and burned. A different international order emerged, based on the absolute sway of the American right, with the American left reduced to carrying water for their right-wing masters,

  19. fnkv

    [c’td] and Europe reduced to scraping vassalage. This order, based on the permanent dominance of the West alone, has a core of at most 800 million adherents and so is politically quite wobbly despite America’s crushing force majeure, and thus requires a massive and essentially permanent machine of repression to hold itself in place.

    Thus the 1960s, which might have seemed in retrospect the foreshadowing of a 21st-century hybrid world order, ended up looking like a pointless historical cul-de-sac, and the Boomers became the favoured whipping boy of the ugly new world. Vae victis.

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