All Will Be Fine!
Economic collapse simply cannot happen to Europe
You all know this feeling running under the title ‘this cannot happen to me’. During normal times it does have a certain usefulness to it, protecting one from falling into panic and overreacting all sorts of possible problems. It also makes life look smooth and easy by making one believe that someone somewhere will take care of things, so one can continue with Business As Usual forever. ‘The sky is not falling — it didn’t fall last time either — so all you Chicken Littles just shut up and get back to work.’
Needless to say, this feeling has devastating effects in face of a real disaster — be it a car accident, a natural disaster, or a stock market crash for that matter. Thomas E Drabek, author of the book Human system responses to disaster: an inventory of sociological findings (1986) coined the term for this phenomenon and called it normalcy bias. It is one of many cognitive biases, which leads people to disbelieve or minimize threat warnings. According to its definition (with my emphasis added):
Normalcy bias is a psychological state of denial people enter in the event of a disaster, as a result of which they underestimate the possibility of the disaster actually happening, and its effects on their life and property. Their denial is based on the assumption that if the disaster has not occurred until now, it will never occur.
Sounds familiar? If not, Wikipedia cites a number of examples:
As for events in world history, the normalcy bias can explain why, when the volcano Vesuvius erupted, the residents of Pompeii watched for hours without evacuating. It can explain why thousands of people refused to leave New Orleans as Hurricane Katrina approached and why at least 70% of 9/11 survivors spoke with others before leaving. Officials at the White Star Line made insufficient preparations to evacuate passengers on the Titanic and people refused evacuation orders, possibly because they underestimated the odds of a worst-case scenario and minimized its potential impact. Similarly, experts connected with the Fukushima nuclear power plant were strongly convinced that a multiple reactor meltdown could never occur.
Normalcy bias takes place not only in the face of an immediate danger, where you have only seconds to react, but in many cases years before disaster strikes. Examples include, but are not limited to: people buying high value property in flood zones, near tectonic rifts, or in Florida which is already in the process of turning into a salt marsh thanks to a long predicted sea level rise.
I would argue, however, that this bias is currently besetting our entire society, especially the well-to-do class, in the West; who simply cannot grasp the combined effects of resource depletion, pollution, climate change and the cyclical rise and fall of civilizations. I would also argue, that the higher one’s up in a given social ladder, and thus the more one has to lose in case of a sudden fall, the more one tends to be lured into the trap of normalcy bias. To think otherwise would be just way too terrifying. Therefore one might even start craving for the comfort this bias provides: constantly looking for reassuring signs that things are back to normal — ‘the new normal’ — that everything will be just fine, while constantly downplaying or even denying the ever more worrisome signs.
If you count yourself among the group I’ve just described, I have bad news to you. This is the very same phenomenon which beset the folks living in the now late Soviet Union. People collectively wove a magic spell around themselves normalizing just about everything — even the most craziest idea — just to protect their peace of mind. Just to pretend, that collapse simply cannot happen to their country.
A brilliant Russian historian, Alexei Yurchak, who was writing about what it was like to live in the last years of the Soviet Union called this spell people fell under: hyper-normalization. According to Adam Curtis, a British documentarist:
What he said, was that in the 80s everyone from the top to the bottom of Soviet society knew that it wasn’t working, knew that it was corrupt, knew that the bosses were looting the system, knew that the politicians had no alternative vision. And they knew that the bosses knew they knew that. Everyone knew it was fake, but because no one had any alternative vision for a different kind of society, they just accepted this sense of total fakeness as normal.
Does this ring a bell? You know: senile, corrupt elites looting the system and having no alternative vision other than even more interventionism, more centralized control, more weapons, more sanctions, more austerity…While denying that taking away 10–15% of the energy supporting all economic activity can easily end the whole ordeal in a complete financial collapse.
For me, watching The Long Emergency unfolding in front of my eyes, and being fully aware of at least some of the reasons why it is happening, normalcy bias is a ballistic missile — driving home the idea why collapse happens “unexpectedly” and “suddenly” for most folks living through it. As I keep telling for more than a year now: the collapse of this civilization is already well underway for plain old reasons rooted in physics, geology and history.
As the fundamentals supporting prosperity and growth (cheap energy, plentiful resources and social cohesion) slowly wither away, they will leave us with nothing less than a long and bumpy descent back into a preindustrial era — bottoming out in a ‘dark age’. An age, out of which new, but materially much less affluent societies have a chance to arise.
For me, what we in Europe experience at the moment is a swift and painful step in this direction. Not the end of the world, but certainly a big leap towards a radically simplified future, with an ever smaller elite tightening its grip on society getting poorer and poorer (1). For others, including my friends, hyper-normalization is a shared reality.
The other day my wife, the kids and I were having a dinner together with a couple and their kids we haven’t met for a long time in person. Amidst the noise made by the children we’ve started to talk about work. Our friend brought up how he had recently landed a plant manager position in a glass manufacturing site producing windshields for automobiles, what a nice (luxury) car he got as part of his benefits package, and how well things are going in general. Kudos. Then he went on explaining how exponentially increasing natural gas and electricity prices are threatening the business he is in, and in the worst case how he might be forced to shut down the entire factory. No surprise here, energy is the economy. No energy, no economy.
However, he continued by saying, that “this not likely, and he is long enough in business to tell, that there is always a commodity whose price were going up for a while, and how businesses handled these previous price hikes successfully.” OK. At this point I decided not to press on the topic any further. It did ring a bell for me though:
“…Their denial is based on the assumption that if the disaster has not occurred until now, it will never occur.”
As an engineer working in the same industry overseeing the sourcing of parts for hybrid-electric vehicles I knew for at last year already that there is a shit-storm coming. I remember, when I told this to my boss back then, he replied that resource prices are not our biggest problem (it was the chip shortage). Now they are. In the meantime that storm has just been upgraded to a category 5 feaces-hurricane headed straight towards the shores of Europe. With an enormous dose of luck it might miss the continent, but judging on its current trajectory things are not looking good.
Hyper-normalization has thus switched to overdrive among the European elites. ‘We just have to survive this winter. OK, maybe the next will be harder, BUT we will find substitutes to expensive LNG. Trust us. Look what a great deal we’ve struck with Qatar! Europe will also do fracking for shale gas, then all will be fine again.’ — just wait for the first tremors under your home… Output from the Dutch giant gas field, Groningen, had to be reduced for the very same reason a couple of years ago. Now, the mining minister of the Netherlands started to talk about reopening the valves as a “last resort” measure:
“If we have to shut down industries which would mean a threat to the safety or health of people, then you get a very fine balance with opening up Groningen,”
A managing director of a German business lobby group chimed in:
“I have no doubt that if the situation in Germany worsens, pressure will be mounted on the Dutch government — not only from Germany, but from inside the Netherlands — to do whatever is possible in the context of Groningen gas production,”
Now, I’ve got really interested whether my house sits on a gas field the government might want to frack open… You know, just in case the German economy would need it.
Missing from the discussion on how to handle the energy crisis in Europe is a plan, on how to manage a long term energy descent. A descent not only to be experienced by Europe, but the rest of the world as well, as oil and gas production nears the end of it’s production plateau and starts its long slow decline presumably somewhere during this decade. With or without fracking.
I wonder how long the hyper-normalization of this energy and overall resource decline with all its resulting conflicts, supply bottlenecks, volatility and the rest can go on. I wonder when — if ever — will we start talking about long term mitigation plans, instead of normalizing ever crazier ideas to keep economic growth alive for just a year, just a quarter, just a month longer.
Knowing that as much as 70% of the people are prone to fall for normalcy bias — standing baffled in the middle of an unprecedented crisis — I sincerely doubt that this will ever happen. With its energy intensive businesses already fleeing the continent (2), I’m afraid that Europe will end up much like the Titanic: whose captain kept denying that the ship can be sunk by those puny icebergs and gave orders to go full steam ahead.
Until next time,
(1) Bear in mind, that this is a perfect recipe for social unrest. As we have seen in Italy and Sweden, we might quickly end up with populist right wing governments, but as I suspect they will not be able to drive any meaningful change. It looks increasingly likely that we will see mass protests by next spring, when natural gas storage would have been drawn down with no hope to fill it up again — resulting in further price hikes, blackouts, job losses and all sorts of misery for the everyday people of Europe. This situation also carries a significant risk of the Euro and Pound Sterling loosing much of its value, possibly bringing about hyperinflation — not seen in Western Europe since WWII. You know, just because it hasn’t happened for a long time, it doesn’t mean it cannot happen again…
(2) If you have a hunch that the Inflation Reduction Act in the US — which has been accepted just at the right moment — was at least partially intended to accommodate European energy intensive businesses leaving the Old World, then I’m sure it’s just your fantasy. This is just a ‘coincidence’ — nothing to see here.
Image credit: Pixabay