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« Happy Birthday Charlie and Abe | Main | The End of Growth »

February 16, 2009

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AndrewC

Dr. Mobus,

I can't agree enough George! I was wondering the other day, if it would make a difference if policy were enacted to use different and abolish the old metrics then perhaps people would start to function along different economic paradigms? http://en.wikipedia.org/wiki/Gross_National_Happiness

I think Memmel's comments a while back at theoildrum,have an interesting perspective on real wealth. I like the furniture analogy. http://anz.theoildrum.com/node/4260#comment-375994

I worry that basing our economy on strictly energetic inputs, could falter in two ways.

1. I'm not sure that pricing based on energy could account for negative externalities such as pollution, overfishing. Also a cost that has to be considered is a risk price mechanism accounting for the marginal risk of degrading a resource, pollution ect, that might cause some sort of calamity. i.e Monocropping may be more efficient and the better idea in energetic terms but the risk of relying on a single strain of crops for food, can have disastrous consequences, i.e irish potato blight. What is to keep us from cutting down every last tree that will lead to a great than 1 energy ratio?

2. Also, the way society and the world is today, it seems we are heading towards the net energy cliff which I suppose in an energy based currency would just be a hyperinflation crash? Perhaps this is a system better based on renewable energy sources, for the people of the future?

I'd love to hear your thoughts George. Keep up the blogging!

Regards,
Andrew

George Mobus

Hi Andrew.

I'm not advocating anything 'strict' just yet. Just trying to recapture the relationship between money and energy that provides a more solid basis for judging value.

WRT: externality pricing. One approach would be to consider the amount of energy required to mitigate or compensate for damages. For example we have a pretty good idea what kind of work it would take to filter particulates and chemicals out of effluents. The energy required to accomplish this work can be computed. The main problem with our current system is that we have trouble assigning prices to externalities and then enforcing the charges (my wife does ecological accounting research and has actually seen this problem for refinery operations; the only mechanism that anybody has come up with to date is a punitive fine for failure to comply with the rules). An energy-based cost and an Ecos accounting system -- where we assign accounts to natural ecological services and companies and people are charged for using those services -- might be workable. Instead of a fine, companies would simply pay the Ecos for its service. Perhaps a UN or UN + nations transaction management system would fit the bill. It will take some research and details worked out.

As for #2. I agree. My thoughts here are for how we reorganize civilization after a crash of the current system makes it completely clear that we need a better way to organize and control work.

George

Neven

"It would allow market regulatory mechanisms to assure no excess profits are charged."

Thanks for another insight!

Sudeep Bhaumick

as always i agree wholeheartedly...

but the thing that struck mi was that there is a sense of calm in this post of yours...

i don't honestly know how much longer we have. i wish for some more time. it would be great to hear your thoughts on how things could be managed better. keep posting.

i would just like to thank you any ways and best of luck...

George Mobus

Sudeep,

To be honest, I am not thinking so much about salvation as salvage -- what do we do to reorganize society after the crash and purge of failed ideas (and ideology). My version of hope is that someday there will be a small population of wiser humans that begin to reorganize and learn from our mistakes. I'm just trying to envision what a more sapient set of principles might entail.

If I seem calm, it is because I have essentially accepted the inevitability of nature's way and that evolution is the only real solution to long time scale problems.

As sung by the rock group Kansas: "All we are is dust in the wind."

This attitude need not devolve into existential angst (what is the purpose of life????) It is actually a more holistic view of progress than, say, current concepts of economics!

George

sanket shrotriya

what is the meaning of 'wheel of wealth' in an economy?
please give me perfect answer or perfect reference as soon as possible

George Mobus

Sanket,

I am afraid I do not know this term. Nor, I'm afraid, are any answers I might give going to be 'perfect'. Sorry.

George

Nici30mW

[Edit Note: I have removed this comment. It did not have relevance to the topic and appeared to be a spam advertisement. GM]

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