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« Does Anybody See an Alternative to Obama? | Main | Are You Witness to the Beginning of the End? »

July 11, 2011

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Andy

article in a very good fit to be read so as to add new knowledge

step back

George:
Good one.

Absolutely love it that you are willing to take on sacred cow subjects like "Jobs: what are they and who creates them?"

More interesting in the Question Everything Universe is: "Economists: what are they and who creates them?"

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On an off-topic note: it seems that this Monday James Kunstler has gone schizoid in his ClusterF*** post. He is correct that America is partying in a like-there's-no-tomorrow mode just like Casey Anthony apparently did. But why he has it in for Nancy Grace, that I don't know. Hey, she's just creating a "job" for herself like everybody else does in this Land of the Free (from the laws physics) and the Home of the Brave (and oft' fatally foolish as well, like that guy in Texas who jumped the rail to catch that baseball this week and fell to his death: one flash in the pan moment of glory and then a D'oh oh Wiley Coyote moment an instant later)

Wheelerlucas

off topic long time lurker who who has a question about population thinker Russell Hopfenberg author "Human Carrying is Determined by Food Availability" and "Genetic Feedback and Human Population Regulation". Written other stuff with a David Pimental. Do these two have a valid position on population? Would love to read your take if it not too much trouble -- please not too much math as am basically innumerate sorry to say but love your blog and believe I get a great deal out of it.

Bill Hicks

An even better title for this post would have been, "Peak Oil = No Jobs," which sums it up very succinctly.

Great job. I've been trying to express this thought in my own writings but haven't been nearly as successful.

Gavinthornbury

Here in England, there was once a general consensus that high quality formal employment was a scarce resource. Therefore, it had to be rationed to one per family, the family breadwinner. I can remember in 1973, when my newly married wife was asked re-apply for her job in a bank as a married woman. This consensus - that mainly one income families were a better than a mixture of two income and no-income families - ended in 1975:
http://en.wikipedia.org/wiki/Sex_Discrimination_Act_1975

Probably due to then current beliefs about the final end of resource scarcity.

gavinthornbury

Sam

George,
As usual, I agree with about 95% of what you have to say, but I want to play devil's advocate just a bit, because I think your argument could be served by elaborating on one point.

You mention that "The net energy available to the economy is now shrinking and by my estimates has been in that mode since the late 1970s." You go on to add (paraphrasing) that this in turn raises costs prohibitively because all work requires energy, which we have less of on a net basis. Fair enough.

But why do you fear that now we are on some inevitable decline where no reversal is possible. Much of the world has experienced tremendous job growth since the late 70s, even during this period of declining net energy. And oil prices have been high before, and we've come out of it through opening up supplies (through political or geological breakthroughs). Why can't we rely on new sources of oil, additional efficiency gains as well as greater investment in energy production as a share of the economy (even for lower EROEI sources like shale gas or biofuels) to keep the gravy train going? Why is it about to stop? Can't we simply take some bankers, train them as petroleum engineers, and let them drill baby drill? Even if there is a lower EROEI, we could still have more energy in total.

Although the above is rather facetious, it tries to ask the question, why now? I happen to agree, that given the planet's demographic and resource crises, that something major will happen soon. Perhaps not nearly as soon as you do, but within a couple decades nevertheless.

But then again, I tend to be a bit of a pessimist. Those of Krugman's mindset who read this post (if only you would be so fortunate...) would likely ask what is so damn special about today that we're headed for economic and societal collapse in the near future? We're finding new sources of energy all the time, and the United States can still sell bonds to pay for the jobs programs Krugman proposes, which can use the energy we find to create tangible outputs like infrastructure. Your argument to why now may be explained in other posts, but a quick primer on your views here (or link to another post) might be good to make this piece even more instructive.

Finally, I think what you're getting at here is exposing a philosophy that most people have, but economists (and specifically Keynesians like Krugman) are guilty of. It was Keynes who said that "in the long run, we're all dead." So we should worry about the present and let our kids worry about their present. If the next generation has fewer resources--tough, at least we lived happily and profligately. Thinking exclusively in short time frames is inherently unsapient (nonsapient, asapient??), and yet this is the tendency most of us have, and this is the tendency that I fear will do grave damage to our genus, and likely extinguish many of other genuses on this planet.

John Dlouhy

My introduction to bio-physical economics was through your blog and for that I am very grateful. It is a cogent field of study and I feel a very important one for the future. Several times in your posts you have referred somewhat sardonically to a fossil fuel replacement as a "magical source of energy". Considering that most of the touted energy replacements are completely unviable, I tend to agree with your attitude.

However, for several months I have been following the developments of a new form of nuclear energy which has been demonstrated to a small but well respected group of scientists. It is akin to cold fusion and produces energy by catalytically encouraging the rate of the quantum tunneling of protons into the nucleus of an nickel isotope. The inventor has demonstrated that industrially useful levels of energy are produced and private investment was actually procured a few years ago. A plant for the commercial production of heaters based on this technology is nearing completion and will go into production at the end of October.

The metal in a roll of nickels produces the energy equivalent of 2600 gallons of gasoline. It is estimated that the present world's yearly requirement for energy, about 500 exajoules could be provided by a small fraction of the yearly nickel production. All this with no radiation or other dangerous emissions of any kind. This fits the description of your "magical" source of energy.

Of course I am aware that the claims are contentious (the company does not even use the term "cold fusion") but so far the new process is being noticed by high level scientists, a nobel laureate, the head of a skeptic society and a chief scientist from NASA among them. We are only weeks away from an unequivocal demonstration of a 1 megawatt power plant if the technology is in fact genuine.

I can think of no other event in human history which could have more economic importance in light of what I have learned here on this website. If almost the entire cost of a good or service is its embodied energy, and the cost of energy were to trend toward zero, it follows that the cost of everything would eventually trend to zero. Such unlimited abundance would surely affect the financial system adversely and ultimately require a paradigm shift for the distribution of goods.

It may be premature for you to comment on this just yet, but I believe its unlikelihood is somewhat balanced by its fantastic importance should it materialize. In any event the consideration of the potential of such a discovery would make for a fascinating discussion. I look forward to your response.

George Mobus

Andy,

Thanks.

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Step,

More interesting in the Question Everything Universe is: "Economists: what are they and who creates them?"

Ideologically-driven, sociologist-leaning, but with decent math skills who want to be taken seriously as scientists. Who creates them? Someone with a bad sense of humor.

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Wheelerlucas,

I have not read these works but I am familiar with Pimentel's work in agricultural ecology. He was a student of H.T. Odum's.

I think the main connection between population and food is a circular causality. That is the amount of food and the amount of population are mutually reinforcing through the amplifying effects of technology. Without modern industrial agriculture there would be far fewer people on the planet for the simple reason that it takes food to make human biomass.

We should be careful to not confuse high birth rates or fertility with population growth per se (the highest rates being in the least food producing areas of the world). It is the difference between births and deaths that determine the population size, and death rates have fallen dramatically almost everywhere. When the developed nations supply food aid to underdeveloped nations, they are assuring fewer deaths (particularly child mortality) which is creating the population growth problem in those nations.

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Bill,

How about "Peak oil = declining jobs"?

Of course it is net energy that counts and that peaked some time back.

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gavinthornbury,

Thanks for the comment. One wonders.

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Sam,

Much of the world has experienced tremendous job growth since the late 70s, even during this period of declining net energy.

Consider the kinds of jobs that were being created. Also the shipment of labor to low-energy consumption countries like China compensated for the high energy lifestyles of US labor. So the number of jobs is not a good correlate for the net energy. The same argument is now applied to jobs creation in the US. Most are service/retail/even work-at-home, and these are generally low-paying.

Why can't we rely on new sources of oil, additional efficiency gains as well as greater investment in energy production as a share of the economy (even for lower EROEI sources like shale gas or biofuels) to keep the gravy train going?

First we are simply not finding new sources of oil that could be expected to replace what we have had. The new finds tend to be pretty small. And the ones that are of any notable size are in hard-to-reach places that will require more costs to develop, namely more energy invested so lower EROI. We can't depend on what we are not getting.

Although the above is rather facetious, it tries to ask the question, why now?

I am not trying to pin a date down. But what it boils down to for me is the rates of these processes and exponential growth. I, like many others in the limits to growth universe, pay attention to growth rates in supply (of net energy in my case) vs. growth rates and demand expectations in consumption, especially with a continuing to grow population.

I have written about these in past posts. Basically I track a number of factors, paying attention to the rates of change (acceleration too) and find that they collide in the near future. I also think that many of the actual economic conditions we see globally are symptoms of the crash already starting.

Thanks for thinking about what could improve the argument. Hope this helps a little.

---------------------------------
John D.,

I am always hopeful for a breakthrough even if I cannot envision what it might be. Of one thing I am convinced unshakably and that is that nothing we can come up with will defy the Second Law of Thermodynamics. So that is always the standard test in my mind for any new claims.

While I would hope that some wonderful source of energy could be discovered so as to prevent what I see as a mass tragedy for humanity, I still have to be concerned with how wisely humanity would use such a source. If we simply breathed a sigh of relief and went on consuming profligately (so as to create more jobs) then we would not have learned anything and the Ecos would still suffer at our hands.

Also, we need to keep in mind that all work results in heat dumping. With the use of enough energy, we could still pollute the atmosphere and oceans with waste heat - similar to the heat island effect in cities now.

George

Oji

I'd like to suggest a few things.

1. Consider net energy per capita as a measure of work/production, rather than just net energy alone, as per capita captures the prod. possibilities and consequent std of living.

2. Consider sinks, not only sources, in your economics as ecology model. Sinks filling up creates a greater drain on energy for disposal, treatment, etc..
Industrial capitalism is linear, and, thus, doomed.

3. What do you think of using energy as a measure of economic account (ie, money)? It would encourage work that not only conserves energy, but that produces energy as an outcome, since energy production could then be 'spent' as wealth. It's also backed by something tangible, like a specie currency, but not quite as beholden to all the geopolitical and geological problems of specie. It also opens up the possibility of individual entrep. and independence (for small landholders, for instance) rather than a nation of people doing each other's laundry (services).

If you've posted on these already, I apologize. Only just found your blog-- and glad I did!

Bruce

Oji, is your perspective informed by, or is it similar to, the following (Technocracy, energy distribution card, Zeitgeist Movement [resource-based economy], Rotering's "Needs and Limits", steady-state economy, etc.)?

http://mkinghubbert-technocracy.blogspot.com/

http://surepost.com/igdtech/technocracy/pdf/THE_ENERGY_DISTRIBUTION_CARD.pdf (A rational [too rational?] system of unit of account measure in net energy terms vs. the current debt-money price system.)

http://www.technocracy.org/ (Don't let the presenter's dated wardrobe dissuade you from watching the video for content, as the information is highly relevant, if not more so in today's context.)

http://www.thezeitgeistmovement.com/The%20Zeitgeist%20Movement.pdf (Resource-based economy, including a net energy-based medium of exchange standard.)

http://www.youtube.com/watch?v=3Ngs-tOybJc&feature=channel_video_title

http://members.shaw.ca/needsandlimits/videos.html (Frank Rotering's alternative to capitalism.)

http://vimeo.com/13029324

http://www.thevenusproject.com/

http://steadystate.org/ (Daly's steady-state economics.)

Clearly, the internal logic of what most refer to as "capitalism" is flawed, as perpetual growth of population, resource consumption, profits, and sufficient levels of capital accumulation to keep the system going is impossible on a finite, spherical planet; and it is most especially true in real per capita terms.

That virtually all of our major economic, financial, economic, political, and social institutions exist on the basis of perpetual growth of population, resource extraction and consumption, debt-money supply, private investment, production, profits, employment, incomes, and tax receipts, one can argue that collectively we are utterly ill-equipped to even admit to the end of growth resulting from falling net energy per capita, let alone have contingencies designed to adapt to the thermodynamic limits we face.

My own personal experience in discussing the larger issues with those on Wall St., gov't, academe, and business ranges from cluelessness, denial, and hostility to blue-sky techno-optimism and various schemes to profit from the zero-sum situation with little regard for the implications for the larger society's prospects.

I wish I could be optimistic about the prospect for an alternative, but I see only emotionally driven human apes competing for scarce resources, security, and social status, led primarily by narcissistic sociopaths in the top positions of the gov't, corporations, mass media, the clergy, and academe, most of whom have been thoroughly conditioned to worship the false god of debt-money wealth, who presides over the Temple of Mammon on Wall St.

IOW, there are too many of us on the planet, and the price and wealth and income distribution system will eventually determine just how many too many are in the decades ahead.

Thus, Nature, with a little help from "the haves", will
determine what are the long-run levels of population and net energy and standard of material consumption in per capita terms for us human apes; and I suspect that population and material consumption will not coincidentally follow the decline in per capita oil production of 75-80% or more over the course of the century ahead.

Oji

@ Bruce,

Thank you for all the links. I am passingly familiar with most of these, but not an 'adherent', per se. I try to avoid ideologies. Did not know of Hubbert's connection to technocratic philosophy, however, was familiar with his role in the Peak Oil scene.

Thanks again.

ken

The U S government pulls in billions of dollars in royalty's and fees from gas oil and minerals it's thrown into a big pot (the general fund) where it's lost in tax breaks and give always for the rich and corporations. While our infrastructure goes to hell they off shore jobs and robotize production while sitting on trillions of their own money. The money that comes from those fees and royalties should be used to rebuild infrastructure and create jobs, it's our money. There's plenty of cash but the greedy fat cats have their claws firmly around the governments throat.

Bruce

Ken, I deeply empathize with your point of view; unfortunately, it is not "our money", as all "money" is debt-money lent into existence by banksters and incrementally borrowed and spent (and taxed) via increasing dissavings as a share of private GDP by the federal gov't, which is owned by the banksters; therefore, all of "the money" that matters is not that of the bottom 90%.

In my experience, when one actually understands what "money" is (the Fed, banksters, politicians, and rentier-parasites don't want you to know what it is), there is a profound epiphany that occurs in one's consciousness. Most people's response is a fatalistic realization that what one earns in wage/salary terms is already spent, and s/he will never accumulate any surplus debt-money savings/capital; and the logical extension of this realization is that one will become utterly dependent upon de facto insolvent federal gov't elder transfer programs in late life; and that person is invariably a member of the working class, which we have been conditioned to think during the peak Oil Age era to perceive as "middle class".

The top 0.1-1% use the gov't as they would personal staff, attorneys, therapists, physicians, tax advisors, nannies, private security, pilots, yacht captains, et al., to protect private capital and the privilege that accrues to concentrated ownership of same.

History is rather instructive in this context: The wealthiest top 0.1-1% will not yield their power and privilege to the working-class peasant masses or professional middle class; they would rather see the system collapse than give an inch, fearing, of course, that they are outnumbered 90-100 to 1.

Thus, there is no "reform" possible by way of the ballot box or economic system when the rentier-parasite owners have bought and paid for all of the rule makers, gatekeepers, and enforcers.

It is now only a matter of how much and how long the professional middle-class (the next 2-9% of households by net wealth and income below the top 0.1-1%) can withstand the threat to their own privilege and socioeconomic status from the discontent and agitation of the bottom 90% working-class masses.

That is, there will be a revolution/re-evolution, but only when a plurality of the professional middle-class households abandon their support of the rentier-parasite oligarchs' multi-decade plunder of labor product and net energy and devise various ways to co-opt a majority of the working class against the oligarchs. Again, this will not occur by way of the ballot box or mass-media manipulation of the swing vote by the corporate media.

But the long-term structural effects of peak global oil production, falling net energy per capita and net available oil exports from oil-producing countries will reduce viable options for all of us, including the top 0.1-1%.

So, what is to be done? I see only one long-term, practical solution: adopting an Asian- and Latin-like communitarian, extended family lifestyle of reduced per capita consumption, cooperation, shared expenses (housing, utilities, auto, food, energy, etc.), mutual aid, child and elder care, etc.

Were Americans to understand just how much our economy is based on perpetual growth of net energy and resource waste, it would eventually become apparent just how little it would cost per capita to live at a socially acceptable standard of material consumption.

Remember the old saying that two can live as cheaply as one? Well, we will learn that two to three could live as cheaply as one, but only if we abandon the submission to the 24/7 mass-media advertising of artificial wants to become needs.

In this context, I can perceive a working-class (bottom-up) movement emerging to encourage a kind of neo-monasticism or beyond "voluntary simplicity" to something like "more for less together". Such a trend will not be an Oprah-like fad to sell books and seminars; rather, it will be a deep-structural phenomenon born of necessity to adapt to a permanent decline in net energy per capita. (George has suggested a means to such an end: http://tinyurl.com/42tpdc4.)

You have surely heard that if one is not a part of the solution, one is a part of the problem, yes? The solutions will not be found in what seemed to have worked during the peak (cheap) Oil Age epoch; rather, we must "adapt" and develop individual and group resilience to the realities of the post-Oil Age, post-consumer, post-auto, post-growth era ASAP. This means that we cannot rely upon corporations, gov'ts, Wall St., pensions (a share of future income streams of corporations and gov'ts that will not be there), and narcissistic, self-interested, mass-media icons of ideological demagoguery.

Okay, on whom can we rely? You. Your family members. Like-minded neighbors and private community-based associations. This is what evolution and selective adaption teaches us: Self-identify and align oneself and one's household with low-entropy (higher net energy per capita ratios to distance), adaptive, resilient local communitarian associations at less than "six degrees of separation".

But it won't be an easy transition, as you will find few who will have successfully blazed the trail for you. Experimentation with low-entropy (and low-paid) approaches is essential to finding the best methods for your particular locality. Utilize your own cheap labor and time to become resilient at a low-entropy level of being, not just consumption. We human apes are utterly adequate to subsist and persist in relative comfort at a fraction of what it costs in terms of what complex, modern civilization (???) requires at US$45,000 per capita, including taxes, price inflation, and COLOSSAL net energy waste.

It will require, frankly, adapting in innovative, collective ways to live comfortably on as little as 2011US$8,000-10,000 per capita over the next 10-30 years.

George Mobus

Oji,

Thanks for the suggestions. It shows you are thinking about what you read here! As you noted, I have covered those subjects elsewhere in my blog. If you want to you can explore the Biophysical Economics category on the left side column.

My first paper in BPE was about using exergy as the measure of value since it is directly coupled to the actual economic work we do.

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Bruce,

Great set of links. Thanks.

I think technocracy was on firmer ground when it came to the technical issues surrounding energy/economy, etc. But, like Oji I always took away a hint of ideology that I couldn't quite warm up to. I was a regular visitor to the Technocracy office in Seattle back in the 70's. Maybe my impression was just due to the attitudes of the old farts (now I'm an old fart!) that manned the office and were eager to 'sell' their ideas. Anyway there is more there to like than not.

I do think Biophysical Econ will provide a less belief-based approach, however. That is why I've hitched my wagon to that horsed.

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Ken,

Alpha males of the species Homo sapiens are pretty much as described!

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Bruce,

Great minds, and all that!

I'm sorry I didn't catch this earlier but I have edited the tinyurl link. You had the period and ) inside the /a tag. Fixed now.


George

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