The end of growth
"Economists insist that recovery is at hand, yet unemployment remains high, real estate values continue to sink, and governments stagger under record deficits. The End of Growth proposes a startling diagnosis: humanity has reached a fundamental turning point in its economic history. The expansionary trajectory of industrial civilization is colliding with non-negotiable natural limits. Richard Heinberg's latest landmark work goes to the heart of the ongoing financial crisis, explaining how and why it occurred, and what we must do to avert the worst potential outcomes. Written in an engaging, highly readable style, it shows why growth is being blocked by three factors: resource depletion, environmental impacts, and crushing levels of debt. These converging limits will force us to re-evaluate cherished economic theories and to reinvent money and commerce. The End of Growth describes what policy makers, communities, and families can do to build a new economy that operates within Earth's budget of energy and resources. We can thrive during the transition if we set goals that promote human and environmental well-being, rather than continuing to pursue the now-unattainable prize of ever-expanding GDP."--Publisher's website.
Stats for nerds
2recommend
5mentions
2people
2013–2016years
40% recommend60% neutral
Mentions per year
What Hacker News says
- "China aims to have 100 gigawatts (GW) of wind power capacity by 2020, and the nation’s leaders plan to expand installed solar capacity to 20 GW during the same period. These are truly astonishing goals, and, if China even comes close to accomplishing them, it will become the world’s renewable energy leader. But there is a problem. Total Chinese electricity generation capacity is 900 GW currently; with seven percent [GDP] growth, that means the nation’s electricity demand in 2020 will be something like 1800 GW. Wind and solar together would supply less than seven percent of that. The only thing likely to boost that percentage much would be a dramatic reduction in growth of energy demand to, say, two percent annually."
I like this from The End of Growth (2011) by Richard Heinberg.
As much as the numbers are incredible we are really undermining the amount of energy produced by fossil sources.
Similar problem with nuclear.
Are we really on the exponential road to sustainability? I hope so.
- On the price of oil: for a long time, and certainly when I was studying economics back when dinosaurs still roamed the Earth in the late 1980s, the line was that as resources became scarcer, market prices would increase. Julian Simon certainly argued for this. But then, he's an idiot (well, now a dead idiot).
A more interesting and accurate view is argued by Gail Tverberg of "Our Finite World" blog (also "Gail the Actuary" at The Oil Drum): oil prices are constrained between the minimum supply cost imposed by extraction costs, and the maximum demand price based on use value. There are a number of analysts who've cited a price ceiling between around $80 and $115 (my money's on the higher end), over which, if prices rise (because of extraction costs), the global economy tanks.
Another way of looking at this is by considering the productivity of energy on a $GDP/barrel basis -- you can compute this by taking national oil consumption and dividing by GDP -- Wolfram+Alpha allows this easily. The present world price is around $110/bbl and has been reasonably stable there for the past few years. In the US, that barrel produces around $1000 of GDP (though there's a fair argument that this is the result of outsourcing more energy-intensive activity). For China and India the number's closer to $450 - $500/bbl.
Which means that between the oil cost of $110 and the economic value of $450 is all the value that India can access from that oil.
They might be able to increase this through efficiency improvements, but practically, increasing the price of oil means foregoing the previously economically viable activities which produced a low but positive benefit. Or, in other words, raising the cost of energy is an inevitable damper on economic output.
Yes, fracking's seen a transfer of energy use from both coal and oil to natural gas, where such substitution's been possible, but NG supplies are distinctly limited, and I've posted the total reserve exhaustion dates based on present consumption, growth trends (which "years of supply" arguments always leave out), and proven reserves. The dates aren't far off (I can't see my post from this page, but it was ~2030 - 2050 as I recall based on 2.7% to 2.2% growth -- not all that distant). And we don't have an option beyond gas (other than coal, which is suicide from a climate perspective) that we can simply dig out of the ground.
I find any predictions of peak gas made prior to 2009 extremely suspect, as they don't take account of extraction from shale oil fields.
Fracking doesn't produce new gas finds, it increases what can be extracted from known ones. As with peak oil, the story with peak gas is that the biggest discoveries are behind us: about 40 years ago during the 1970s. Fracking is only increasing the rate at which we're extracting a nonrenewable and finite resource.
Richard Heinberg and Gail Tverberg are two sources I'd strongly recommend for more on what the actual dynamics are.
http://www.ourfiniteworld.com (her "getting started" links are a great primer)
http://www.postcarbon.org/ Heinberg's published numerous books, The End of Growth covers much of the economic impact, Snake Oil addresses oil and fracking specifically.
- There are multiple problems with Gates's predition, but two of the biggest are these:
1. Growth in real economic wealth is very strongly tied to growth in real resource consumption. The master resource is energy, but numerous other resources are in tight supply, with a critical set being "bauxite whose production peaked in 1943), copper (1998), iron ore (1951), magnesium (1966), phosphate rock (1980), potash (1967), rare earth metals (1984), tin (1945), titanium (1964), and zinc (1969)" (from Richard Heinberg's The End of Growth[1])
I've explored the concept of decoupling in greater length using Wolfram+Alpha data to show the relationship between energy use and GDP for the G8 nations plus China, India, and Brazil, as well as global growth, in the periods of 2000 - 2010, 1990 - 2012, and 1980-2012 (not all data available for all periods, though the 2000 - 2010 data are complete for all nations analyzed). While there's some sign of very weak decoupling of energy and GDP growth, principally in Japan and the USA, for global GDP growth, there's a very strong relationship between GDP and energy usage, and both have been increasing. With limited exceptions, global per capita energy use has also been increasing.
http://www.reddit.com/r/dredmorbius/comments/1vlksg/economic...
2. The second major problem is that the so-called Demographic Transition which Gates and Hans Rosling like to trumpet is little more than a largely unexplained phenomenon observed in some but not all data series. Tom "Do the Math" Murphy, UCSD physics professor, has specifically looked at this with regards to oil states, and makes the observation that "surplus energy makes babies"[2]. This is significant for two reasons: it means that the demographic transition isn't being observed in all countries, and it means that population growth, and hence domestic energy consumption growth, is highest in the major oil exporting nations. Growing domestic consumption means reduced availability of energy for export markets -- a phenomenon known as the "export lands model". Other research suggests that the causality link between development rates and birth rates is less clear than popularly portrayed[3].
I could bore (or terrify) you with numerous other challenges: flat or falling agricultural productivity, EROEI deficiencies in virtually every non-fossil energy alternative, pandemics risks. There's a reason I don't get invited to parties much .... But I think these two will do.
While I have respect for some of Bill Gates's work (and I'm by no means an uncritical fan of his), his optimism here seems misplaced and founded on a very incomplete portrayal of the situation.
____________________________
Notes:
1. Sources: http://minerals.usgs.gov/ds/2005/140/ and http://www.culturechange.org/cms/content/view/597/2/
2. "The Real Population Problem" http://physics.ucsd.edu/do-the-math/2013/09/the-real-populat...
3. "Revisiting demographic transition: correlation and causation in the rate of development and fertility decline." http://www.iussp.org/sites/default/files/event_call_for_pape...
- There are multiple problems with Gates's predition, but two of the biggest are these: 1. Growth in real economic wealth is very strongly tied to growth in real resource consumption. The master resource is energy, but numerous other resources are in tight supply, with a critical set being "bauxite whose production peaked in 1943), copper (1998), iron ore (1951), magnesium (1966), phosphate rock (1980), potash (1967), rare earth metals (1984), tin (1945), titanium (1964), and zinc (1969)" (from Richard Heinberg's The End of Growth[1])
I've explored the concept of decoupling in greater length using Wolfram+Alpha data to show the relationship between energy use and GDP for the G8 nations plus China, India, and Brazil, as well as global growth, in the periods of 2000 - 2010, 1990 - 2012, and 1980-2012 (not all data available for all periods, though the 2000 - 2010 data are complete for all nations analyzed). While there's some sign of very weak decoupling of energy and GDP growth, principally in Japan and the USA, for global GDP growth, there's a very strong relationship between GDP and energy usage, and both have been increasing. With limited exceptions, global per capita energy use has also been increasing.
http://www.reddit.com/r/dredmorbius/comments/1vlksg/economic...
As I write this, I'm listening to a news story that the IEA has announced that US oil consumption, flat for years, is up 2%
http://www.marketplace.org/topics/world/rising-demand-oil-gr...
2. The second major problem is that the so-called Demographic Transition which Gates and Hans Rosling like to trumpet is little more than a largely unexplained phenomenon observed in some but not all data series. Tom "Do the Math" Murphy, UCSD physics professor, has specifically looked at this with regards to oil states, and makes the observation that "surplus energy makes babies"[2]. This is significant for two reasons: it means that the demographic transition isn't being observed in all countries, and it means that population growth, and hence domestic energy consumption growth, is highest in the major oil exporting nations. Growing domestic consumption means reduced availability of energy for export markets -- a phenomenon known as the "export lands model". Other research suggests that the causality link between development rates and birth rates is less clear than popularly portrayed[3].
I could bore (or terrify) you with numerous other challenges: flat or falling agricultural productivity, EROEI deficiencies in virtually every non-fossil energy alternative, pandemics risks. There's a reason I don't get invited to parties much .... But I think these two will do. While I have respect for some of Bill Gates's work (and I'm by no means an uncritical fan of his), his optimism here seems misplaced and founded on a very incomplete portrayal of the situation.
____________________________
Notes:
1. Sources: http://minerals.usgs.gov/ds/2005/140/ and http://www.culturechange.org/cms/content/view/597/2/
2. "The Real Population Problem" http://physics.ucsd.edu/do-the-math/2013/09/the-real-populat...
3. "Revisiting demographic transition: correlation and causation in the rate of development and fertility decline." http://www.iussp.org/sites/default/files/event_call_for_pape...
- What's particularly ... peculiar ... about economics is the degree to which specific elements of it have been so vigorously adopted, promulgated, and defended by certain sectors.
I'm still digging into the history behind Ricardo, but briefly:
- He was an ideological opponent (though apparently close personal friend) of Robert Malthus. Malthus strongly criticized Ricardo's theories, and repeatedly questioned their inclusion in the Encyclopedia Britannica, suggesting they wouldn't stand the test of time.
- Malthus himself became strongly criticized by Ricardo's supporters. Much of that present criticism focuses on Malthus's writings on population, though these largely focused on the poor, and expressed a viewpoint not much different from Ricardo's. But by focusing the attention here, Malthus's own criticism of Ricardo is distinctly underrepresented. Compare this with Helen Keller, whose notability to most people is her role as an advocate for the rights of the disabled. Her actual attentions during her life were in support of socialism. For some reason, that message doesn't make it into elementary school texts....
- Ricardo's principle work was his theory of rent, which focused attention on landowners and laborers, suggesting that capitalists would be left wanting in allocations of wealth.
- Ricardo's own wealth came from stock speculation and banking. He later bought a parliamentary seat, according to Toynbee (I'm not sure how unusual a practice this was at the time), and used his MP position to advocate for his political economy (as the study was called at the time) views.
- Ricardo's papers and letters were collected by John Ramsey McCulloch, and subsequently bought by Lord Overton, another banker. They're now hosted by a number of largely libertarian-leaning organizations including the Ludwig von Mises Institute and Online Library of Liberty.
Again: my working hypothesis is that much of economics is more a too for justifying allocation of resources to benefit a specific class than a dispassionate study of a system. Not a unique view by any means:
https://en.wikipedia.org/wiki/Rajani_Kannepalli_Kanth
Rajani Kanth's major philosophical theories include:
a) that Ricardian Economics was merely policy advocacy in theoretical guise,[2][16][17][18][19][20]
b) that Economics is the crown jewel of the hegemonic ideology of Modernism,[2]
c) that European Modernism, whose derivates are capitalism and socialism, is the real grey eminence that has crafted the alienated misery of our epoch ...
John Kenneth Galbraith has some similarly damning comments:
Leading active member's of today's economics profession...have formed themselves into a kind of Politburo for correct economic thinking. As a general rule --- as one might general expect from a gentleman's club --- this has placed them on the wrong side of every important policy issue, and not just recently but for decades. They predict disaster when none occurs. They deny the possibility of events that then happen.... They oppose the most basic, decent and sensible reforms, while offering placebos instead. They are always surprised when something untoward (like a recession) actually occurs. And when finally they sense that some position cannot be sustained, they do not reexamine their ideas. They do not consider the possibility of a flaw in logic or theory. Rather, they simply change the subject. N one loses face, in this club, for having been wrong. No one is dis-invited from presenting papers at later annual meetings. And still less is anyone from the outside invited in.
(Quoted in Robert Heinberg's The End of Growth).
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