No Matter Who Wins


By Nate Hagens – Director, Energy and our Future

Modern elections—despite their social and political importance—have become more like sporting events than referendums around ideas. We so intensely identify with our partisan tribe, that we focus on the slogans, the rooting against the ‘other guy’ and other us-vs-them dynamics, and often lose sight of the issues, the context, and how ‘winning’ for our country (and world) might actually be influenced by our choices.

We are inherently tribal, after all. Of all of our inherited ancestral heuristics, defending our (historically small) tribe and ostracizing/rooting against the other tribe is one of the strongest human universals. In fact, perhaps humans’ best quality – cooperation and collaboration – was a byproduct of the strong unity born out of common threats, accessing surplus, and tribal warfare. We cooperate – for the good of our group – and for tens/hundreds of thousands of years, this meant survival.

Fast forward to November 2020, USA and the four year inflection point where half the country is rooting for Joe Biden and the other half (roughly) for Donald Trump – in our minds we know this election is an important guidepost for our collective future, but we approach this week with similar temperament and behavior as a Packer/Viking pre-game tailgate.

We are now in the liminal space between our nation’s long history and uncertain future.  Facts and expertise matter less by the day. Emotions and tribal affiliations rivet our attention on the ‘cars’ instead of focusing at the road ahead of us. Later this week 50% of our population will be elated and the other 50% will be angry. And most of both camps will be variously: righteous, anxious and uncertain, and perhaps violent.  This, along with the various trivia of Democrat and Republican victories and defeats will be the hyper-focus of our media.  But below, in no particular order, is a look at some of the critical guideposts of the next 4 years along the winding road of our collective future that – as colleagues, citizens and neighbors in the United States of America, we’ll have to navigate with each other – no matter who wins the election.

COVID 19- Spilling into 2021

As I wrote in March, the ‘cure’ (lockdowns) for COVID would be worse than the disease in aggregate impact.  Though death rates were perhaps overblown, the virulence -and ‘long COVID complications’ were not. Various vaccines and treatments and protocols will be developed but the worst months may still be ahead of us. This virus may or may not ultimately have a cure, but either way COVID has permanently redirected the vascular system of the human superorganism, explained below. No matter who wins the election, the Coronavirus will still be with us. And we’ll have to respond in creative ways.

V vs K

Economies tanked in the 2nd quarter and – on the backs of stimulus and central bank support – roared back in Q3.  Through July 31, 2020 -when direct stimulus ran out – the US government was responsible for fully 25% of our national wages.  While the professional class (and tech companies) are experiencing a sharp V recovery, many hourly workers, small businesses, retail, leisure, transportation, restaurants are seriously struggling.  Many people are hanging on via donations and loans from friends and family and ‘food insecurity’ is becoming widespread. The conventional thinking is that in either a Democratic or Republican ‘sweep’, considerably more stimulus (aka borrowing from future to consume today) will arrive. If, there is e.g. a Biden win and the Senate stays Republican, continued government stabilization of the economic patient will be in jeopardy, and many systemic risks ensue.

But headline GDP statistics aside, the pandemic has widened already large disparities between the haves and have nots. The COVID recession is the most unequal one in US history. As we recover – or don’t – distribution of resources within our population is going to be a critical issue – (more on this below). At some point if the have nots have nothing, they may be forced to take from the haves – or do without. No matter who wins the election we are going to have to find ways to support the weak, the vulnerable and the unemployed. And I expect these will number in the 10s of millions.

Ideology, Memes and Icebergs

If you haven’t been asleep, traveling or drugged these past few years, you’re aware there is a growing movement pointing out the racial, social and economic injustices of our current system. This is in large part because there are considerable racial, social and economic injustices in our current system.  But fairness was never the objective built into our cultural goals or institutions – we optimize for (economic) efficiency, not fairness, nor for resilience. The situation is this:  various demographics now quite vocally (and reasonably) want a larger share of the economic pie, but the pie itself is about to shrink, which is something few are aware of – and don’t like to hear/think about.

Let’s unpack this using an overused analogy – the Titanic.  On the Titanic were 3 classes of passengers – First Class, Second Class and Steerage (or 3rd Class).  You can imagine the conversations, hopes, dreams and concerns of the various people on that ship over a century ago.  And, history tells us that the tragedy did not befall each class equally – 39% of 1st class passengers perished, 58% of 2nd class and 76% of steerage passengers drowned.  The same demographics exist today and are probably having similar conversations within and between groups, focused on maintaining status, moving up in class, or demanding better conditions.

And then there is someone like me – shouting (to all 3 classes) that we just hit an iceberg and need to use science, discourse, reason and planning to find the best solution to navigating evacuation, lifeboats and a new course. You can imagine the reaction – indeed you see it in the news and in your town hall meetings. The ‘first class passengers’ publicly decry that there is no iceberg that technology would never allow the ship to hit an iceberg let alone sink (but privately they are looking to ‘lifeboats’ aka gated communities and the like). The second class passengers are scrambling like mad to ingratiate themselves to the first class passengers to get crumbs of surplus lest they slip into steerage. And the steerage passengers – a full 50%+ of American society today have 2 common responses: 1) “Ok sure there may be an iceberg, but we need to solve our more immediate concerns like our current unacceptable living/working conditions, because we’ll drown from those before any freaking iceberg” (they have valid points) or 2) “Ya right, an iceberg -that is just another story by elites and governments telling us what we have to do and taking away our rights and freedoms”.  The difference now (vs on the actual Titanic) is that the steerage class (economically) houses both the far left and the far right, effectively creating additional ‘iceberg’ conditions within the ship itself. The people in ‘steerage’ can’t easily process that in addition to their current challenges, society ALSO has hit an iceberg (see below).

The point here is that the narratives (and religions) that make people feel good are often not based on reality. Which makes discussing, planning and responding to ‘the iceberg of the 2020s’ a very difficult task.  The key will be to acknowledge the moral failings of our economic and cultural past while simultaneously acknowledging and planning the lifeboat situation. That’s a difficult thing for a human mind to do.

No matter who wins the election we will be faced with multiple non-overlapping memes and explanations for the upheaval that is coming.  Our plight is biophysical (biology and physics) in nature but will be blamed on class, race, politics, and ideology. Navigating this is going to be exceedingly difficult.  A new captain can change the morale and surround himself by great minds to make the best civic decisions, but he/she cannot change the fact that our economy and culture has hit an iceberg.

The Zombies are Coming

The central bank purchases and guarantees of various offerings of debt has turned the financial system into a digital Rube Goldberg machine. One of the externalities is that – while the economy was suffering from an exogenous shock from COVID – public companies used the FED bond guarantees to raise cheap debt.  For instance, Boeing – a company who arguably will come out of the COVID crisis with worse business prospects due to less demand for planes – nearly doubled its long term debt because it could do so at low rates (the bonds being guaranteed by the FED).  This means Boeing – and many other companies – will emerge from this crisis with both lower revenues and higher debt loads, putting them at risk of becoming ‘zombies’. Zombie companies are those whose profits are not enough to pay their interest payments – and they need to take on even more debt (or get direct aid from governments) to stay solvent.

Yes – it’s true stock markets are near all time highs. But this too is a distribution (and expectation) problem. Going into Q3 earnings, the five largest S&P 500 stocks (AAPL, MSFT, AMZN, GOOGL, FB) were expected to grow 3Q sales and EPS by +13% and +1% while the other 495 stocks in SP500 are expected to have a -5% revenue drop and a -24% drop in EPS.

Some great companies. Lots of zombies. No matter who wins this election, we (and the rest of developed world) are going to face a large and growing number of bankrupt and insolvent companies.  Stimulus will help – and is critically necessary – but isn’t a long-term solution. And, as the government takes on more and more of this burden, it too risks zombification.


A Cul-de-Sac – and Full of Cans

At year end 2019 we were still recovering from the Great Recession -the ‘temporary’ measures initiated in 2008 – artificially low interest rates, too big to fail guarantees, Quantitative Easing, explosion of government debt, expansion of central bank balance sheets, etc. are still in effect a dozen years later. Even with all this, productivity gains have been tiny – and a fraction of earlier decades.

Now, in addition to all this, governments are adding fiscal stimulus – because they must. The little green man behind the curtain – (currently Jerome Powell) is a very capable and good person but he is not superman.  The institution he oversees -the Federal Reserve – is using a giant, and mostly invisible,  magic wand to beam what we might’ve consumed in 2030 or 2040 forward to 2020 (in the process leaving less available in 2030 and 2040).  Modern Monetary Theory tells us deficits don’t matter – but from a biophysical lens they do – when we create money, we do not create the energy and materials needed to pay it back, so adding more and more debt becomes less productive over time – and has limits, both for companies, for nations, and for economic systems.

What happens when either the government decides to stop stimulus (hard to imagine) or the bond market says ‘no mas’ via higher rates? What is the plan by either the Left or the Right (or anyone) for when QE and stimulus combined cannot plug the economic hole for people and businesses? My opinion is that this question will be answered before 2025 – and the answer will be a drop in GDP akin to the 1930s.  Yes, more debt and creative stimulus/infrastructure spending will forestall this for a while, but we will soon face a situation when we can no longer kick the can of growing GDP again to the future. COVID is but a foreshadowing. Money isn’t reality – it’s a marker for the things that matter: built, social, natural and human capital.  No matter who wins the election we have a 50+ year physical/financial bill that’s coming due.


Our Basement Larder, is -Unbeknown to Most – Going Bare

(Charts from Labyrinth Consulting. Assumptions: EIA & Enverus data through August 2020. Sept and Oct guided by EIA tight oil estimates plus Labyrinth estimates for OCS & conventional. Nov 2020 thru Nov 2021 calibrated speculation using to-date tight oil rig count and production correlation extrapolating 2020 ratio average for deep water & conventional production.) 

If you took a poll and asked people what the single biggest casualty was from the pandemic, very few people would respond with ‘oil’.  But no matter who wins the election, US oil production, including shale oil, is about to fall off a cliff, with massive consequences for society. For the setup of our modern way of life, oil is effectively our hemoglobin – and the COVID arrow hit at the heart of the industry as market prices are far below what it costs to extract oil from the ground.  Yet this is all invisible to most people as the media (and economics departments) still conflate price with cost and cost with value.  We were in bad shape BEFORE Covid-19 and now the Red Queen (drilling faster and faster just to maintain static production) has stepped off the treadmill for 6+months – meaning the large underlying decline rates of existing fields are not being offset much by new drilling.  Worse, most of the recent decline in production is because wells have been shut in.  Many of these will never be brought back on line because they cannot meet basic operating expenses and production taxes at current oil prices. In aggregate, US production is so far down -2.28 mmbpd from a 2019 monthly average high of of 12.86 mmbpd.  Assuming rig counts and prices stay roughly where they are (and with no stimulus they may get worse), this implies a level of about 7 mmbpd by late summer 2021 – nearly a 50% drop.  Globally, the reduction in travel, leisure and transport due to COVID effectively squeezed upstream investment- we are down to 72.8 mb of crude and condensate from 84.6 in November 2018, -which date is highly likely to be the all time peak in global production. Note:  this will likely never be recognized as such because there will always be a non-biophysical reason articulated as to why we aren’t getting more oil. E.g. ‘the chinese’ or ‘the environmentalists’ or ‘the war’.)

To label this geologic phenomenon as ‘peak demand for oil’ is the economic equivalent of saying the reindeer on St Matthew Island faced ‘peak demand for lichen’.  Oil is the lifeblood of our (current) economy -peak demand for oil also likely means peak growth for economies (unless massive efficiencies and fuel switching occur very fast).  We probably won’t notice any lack of oil for many years because affordability by citizens will likely decline faster than oil itself (unless massive stimulus and central bank bazookas arrive). Regardless an accelerated retiring of the fossil armies that do most of our work, and create and deliver our modern smorgasbord of goods and services is now on the horizon.

Note: I think the graph from my friend Art may be a bit pessimistic, but maybe not. We face a biophysical gauntlet where the price citizens can afford is getting lower and lower and the price energy companies need is higher and higher.  If governments guarantee high prices to oil companies, or there are other incentives, production might be higher than indicated here – but here is a glaring statistic – if we were to stop drilling in USA entirely we would lose around 40% of our entire oil production in 1 year – we have to keep investing/drilling in more difficult and costly spots to avoid such a decline. (the 1 year decline rates are: Texas 40%, ND is 52%,  Oklahoma 50%,  GOM/deepwater 32% New Mexico 45% – these 5 regions are 80% of US production).

This is not remotely being discussed in our culture.

No matter who wins the election, US oil production has peaked – again -and this time including the tight oil provinces – from the ‘source rock’. This will have….large long term consequences, whether one is left, right or libertarian.


Increasingly I think it’s neither oil nor finance, nor social disruption that is our core risk but declining returns to complexity. Historian Joseph Tainter famously studied how ancient civilizations declined due to the inability of resources/productivity to keep pace with complexity. In today’s world, this can be seen in myriad ways, from the unemployment software in US States being written in COBOL and FORTRAN, to APIs for majority of our medicines made in India and China, to the paint for a Ford truck only made in Fukushima, Japan.

It’s not something we think about, but we all are part of a complex global supply chain. On the way up, using the concept of ‘comparative advantage’ our society outsourced various manufacturing to countries of the lowest cost production – which in many cases meant locations in Asia with cheap labor. COVID gave us a glimpse of the dangerous underbelly of those decades old decisions: almost 200 drugs currently listed as in short supply by FDA, 6 month wait for bicycles, heavy equipment delays etc. This is a separate issue from short term kinks in the supply chain for e.g. ammunition, canned goods, and toilet paper etc. This issue goes to the embedded fragility of a global system based on growth by perpetually relying on import substitution models of production.

No matter who wins the election, with the geopolitical context that is COVID 19 on financial steroids, making sure that important things are made domestically (or regionally) may become an important question.

Other Energy

Humans – during periods of growth – and contraction – self-organize around energy. Oil is central but our entire energy balance sheet is going to be a critical issue in the coming decade. Under a Biden win, various Green New Deal proposals will lead to a massive increase in scale for renewable energy. In many ways this is good news, because it will be good for GDP, it will create jobs, and grow our supply of low carbon energy. But the key problem with what’s coming is the goal is ‘lower carbon energy’ not ‘systemically addressing human futures’. Briefly: 1) renewable energy isn’t renewable, it’s rebuildable and requires vast amounts of non-energy materials, minerals and land 2) only ~20% of (current) energy mix is electricity which is the type of energy produced from most renewables 3) the higher % of RE in our mix the more important back up (NG and coal) will become – and the US is facing an impending gas shortage as US drilling has plummeted. (the largest growth component of supply was the associated gas from tight oil production), 4) the cost of RE isn’t merely adding some solar panels or wind turbings but the full system cost of integrating RE into the grid which will be higher than consumers currently pay, which will weigh on a fragile economy 5) all RE blueprints expect a LARGER economy in the future when (see above) most realistic scenarios using systemic analysis (finance, politics, biophysical inputs) point to a smaller economy.

Still, renewables are our only hope – they are mature, robust and inexpensive vis-à-vis even a decade ago.  The problem will be how to ‘increase renewables to a smaller and more complex system’. No matter who wins the election, we will have to face a more complex and less dependable energy future.

Meaning and Well-being

One of the silver linings (if you will) of the pandemic is that now a great number of people are personally aware that US GDP/ 330 million does not represent how well we are doing as individuals or as a nation.  The constant media reminders that the SP500 and Dow Jones just made all-time highs is incongruous with most peoples real lived experience (and most of whom have zero money in the stock market). Whether one understands or agrees with the risks of climate change, energy depletion or limits to growth, tens of millions of people are now hungry for living a decent life with access to basic needs, while doing something good and meaningful.  The coming decades – by definition but also by desire – are going to be more about well-being than they are about growing our consumption of stuff.

No matter who wins the election, our nation needs to embark on a deep conversation about what our cultural goal is – we are going to need complementary metrics to the econometric measures quantifying how much energy we burned. What is all this energy for is a question that should be part of our national discourse.

Protecting Heaven

Lost in the discussions of Republicans vs Democrats, stimulus, PPP, COVID statistics, stock market gyrations and geopolitics is perhaps the most important story of all – the state of Earth’s ecosystems and the ~10 million species we share the planet with. They are ‘downstream’ of our elections and financial/economic systems, but none of them have a vote.

I have concluded that natural systems and species futures – for better or worse – are linked to human futures – we have to ‘bend not break’ to have the best outcome for (most) Earth Systems (other than perhaps oceans and very remote species).  I believe humans are not any better or worse than we were 100 years, 1000 years or 100,000 years ago – there are just more of us so our impact is (much) larger and each and every one of us consuming much more resources than our ancestors did. Humans are good at heart but we are biological organisms following cultural goals that have expiry dates.  We have arrived at a ‘species level’ juncture and need to use systems science, reason, discourse, and leadership to navigate a glide path to intact futures.

No matter who wins the election, the state of the natural world needs to be included in our plans and discussions. Unfortunately, it first needs to be included in our values.

Joy, Living, and Goals

The Great Depression, unless you lived in a big city, mostly happened in slow motion. Similarly, unless we’re very unlucky, the events of the coming decade will unfold gradually. We have to take it upon ourselves to civically engage, but also find time to enjoy and appreciate our lives – being alive at this amazing and perilous time.

We all have ‘conditional’ goals, those which rely on something external to us to change in order to succeed. Many of those goals will not get met because external conditions prevent them – perhaps the ‘guy who we didn’t vote for’ winning the election. The key is to also find “unconditional” goals – those which we ourselves can be 100% responsible for. That way we can feel more empowered to reach those goals, which many times can influence the conditional goals in positive ways.  Growing food, spending time with your neighbors, learning a new (useful to the future) skill, mutual aid, etc.  The key for all of us – is to meet the future halfway.

No matter who wins the election, life, and the opportunity for joy, impact, and meaning will exist, perhaps even more so.

The 2020 Election and beyond

So, dear reader and fellow countrymen/women, go vote. But voting is merely the beginning of our civic duty.  Our country will be shaped by how we citizens respond to the challenges ahead of us as much (or more) than it will by which party wins the election.  What am I rooting for?  Rationality, science, civility, discourse, which opens up other potential pathways.  Our culture is capable of much more than guns germs and steel or being an energy dissipating superorganism.

People who practice common decency and respect are by far the majority in our (and other) countries. When matched with perseverance, common goals and prioritizing social capital and relationships, we might just happen upon the glide path to decent futures.  There are 10s of millions of Americans craving having their basic needs met and just doing some good with their lives – they just don’t yet have a roadmap and convening place. Could such a thing be the emergent result of the 2020 election?

Society right now is dancing – and fighting on the roof of an A-frame with the winds blowing hard and a storm shooting lightning at our heads. We need to keep dancing (less fighting) while we climb down to more stable ground.

No matter who wins the election this week we are on the cusp of major change which will require both top-down and bottom up interventions and cultural emergence.   I hope you can play a role.