Water and Sewer Costs, our Economy, and Huge Surprises: Bah Humbug.
In about the year 2000, I calculated that the average residential property in Canada was being under-taxed by about $1500 per year, just to provide the money that would have been needed then to pay the “infrastructure debt” hiding under our streets. That number was so far from what people have come to think is a bearable tax burden that municipal politicians just nodded and moved their lips when the issue of funding water and sewer came up, even though they knew about the infrastructure debt levels.
The result of governments everywhere behaving that way is that very little of that infrastructure debt has since been dealt with anywhere in the country, and the facilities have aged further, while the value of the dollar has declined. Eventually the piper will have to be paid, and he has been charging compound interest — like everyone else.
Is anyone up for a completely different way of funding municipal (and provincial and federal) infrastructure, such as a progressive tax on the wealth of those who have stolen the money we used to have available to spend on such things? Per capita GDP in Canada has increased by 50% since 1960. Money available to repair the infrastructure we built so easily back then has declined almost to zero. The math says, “Hmm… Might be theft at work here.”
Every economy in history that has allowed the owners of capital to insist on the right to be paid a compounding return at the expense of all other economic, social and environmental needs has failed, because eventually 100% of the productivity of the economy must be paid to the capital owners, with nothing left to fund the infrastructure and society that make the economy function. This has always taken the hubristic fools at the top of economic pyramids throughout history completely by surprise.
Human beings are notoriously rotten at seeing and reacting to exponential events, which is what a pyramid economy is. When the last and fatal economic doubling happens, the paces of the economy, and of the social and environmental destruction it causes, accelerate so fast that it looks like an explosion. This is the real history hidden behind the “great man” or “barbarian hordes” narratives that have been used to explain (or perhaps excuse) why economies like the Roman Empire failed.
The legitimacy of paying rent to capital ahead of all of society’s other needs is so imbedded in our thinking that we can’t imagine an economy without such a rule and its inevitable consequences. It’s like water to a fish.
We live in the richest society that has ever existed, but we got there without realizing that we occupy the top of the largest and fastest-growing pyramid scheme in history; it doubles in size every 14 years. Have you told yourself that you are poor? Think again. We are so insulated by our affluence that we don’t actually have the knowledge we need in order to understand and manage what is about to happen.
On the other hand, there are people paying attention. Economic analysts at Price Waterhouse Coopers have calculated that by 2030 all of the world’s productivity will be owed to capital, at which point the economy will collapse. Other analysts who have reviewed the PWC calculations feel they are too optimistic, and favor a date closer to 2025. “Other analysts” include the CIA, military security experts, and analysts working for pension funds and the world’s big banks.
A few years ago, pension fund actuaries calculated that business as usual would result in a decline in pension fund value beginning in 2020, leading to a final value of zero by 2050. The toxic effects of “business as usual” have sped up since then. 2030 is certainly in the ballpark.
We just passed an emblematic milestone: 1% of the world’s population now owns 50% of the world’s wealth. Graphing the rate at which this shift in wealth distribution occurred produces an exponential curve. By 2030, the projected inequality of wealth distribution looks completely absurd. I expect the PWC analysts are not surprised.
Remember that the PWC analysis, and the others, do not include the effects of global warming, the destruction of agriculture, “peak everything,” or the social corrosion and instability caused by rising inequality. Their predictions come simply from the math of business as usual. Considered in the context of the other forces we can see being unleashed, the PWC estimate does seem optimistic.
For the above reasons, I suggest that the 30 year water and sewer rate projections might be seen as a bit imaginary.
Those who don’t understand history are doomed to repeat certain aspects of it. Those who do, are doomed to watch the others.
Given how little difference my rants have made to the trajectory of global economic and environmental collapse so far, I will now abandon ranting for another 15 years or so, and return to doing cool stuff. Peace be with you. For the Time Being. (It’s a Zen thing.)