is the title of a small story in  the N.Y.Times today, and quotes Gristmill's Ryan Avent, but the gist (grist?) is that the new right-wing tactic is to say that mitigating global warming will be worse than global warming.  This has been building for quite a while.

But if the main argument against doing something is that it will be worse for the economy than doing something, we may have just as big or even a bigger problem than a few scientists insisting that global warming is not happening: we may have a large chunk of the economics profession fighting sustainability, and they have much more power and reach than the global deniers do.  So I think it is critical, as Michael argues, to learn how to attack their arguments.

I tried to lay out a few ideas concerning a new way of looking at economic growth in a recent post, but it should also be understood by readers that the actual theory of economic growth, as taught by economics, is on very shaky ground.  It is basically a backwater; in fact, Nicholas Stern once said of growth theory, that it has, however, been a popular topic for those involved in formal
economic theory only for short periods, notably from the mid 1950s to the late 1960s

So it is rather ironic that economists should use the growth argument to argue against global warming strategies (anyone interested in the gory details of neoclassical growth theory problems can look here.)

So, I would definitely agree with Michael's point, We need not just an ideology but a formal theory that can not only cope with reduced per capita impact but can target it.

BTW, even as "economists" are cartooned here as co2-emitting monsters, the Harvard University economics professor Greg Mankiw celebrates another backer of the carbon tax.

My sense of the compelling economic story for growth is that it creates new jobs. Recession (bad) = lower job growth to accommodate the population. Not-recession (good) = annual growth of GDP (stock market or your favorite surrogate). People believe it. Bernanke believes it.

From there some, maybe most, economists argue it also creates demand for products, which in turn creates creativity and entrepreneurship. The virtuous cycle (ala Friedman, "The Moral Consequences of Economic Growth").

So any theory (ideological or formal) will need to address how reduction in consumption will not cause loss of jobs and reduction in improvements in life (of course it will need to explain how not having humongous widescreen wall TVs contributes to a better life).

Coming up with such a theory will be a great challenge testing the intelligence and creativity of Homo sapiens, or what I have called our cleverness (I have renamed the species Homo callidus, man the clever). I think, as I believe Jon does, that the model for such a theory must come from the natural world - from ecology - and understanding how a dynamic steady-state energy flow system might sustain humans within the fabric of the ecos. I'm betting in advance that it will involve a whole lot fewer people on this planet, but that is yet another problem to solve.

Neoclassical economists, as a rule, find it hard to admit that their domain of study is a subset of a larger system, the ecosystem. Of course there are a growing number of economists who are questioning the basic assumptions (we just had a posting from Costanza, et al.) that fail to acknowledge this fact. Progress is being made in understanding reality by these efforts, but as long as the general public (you know the people that can vote and sometimes do) believes that growth is good, the politicians will believe growth is good, and thus the economists (who are hired by the politicians or bankers - one and the same?) will think growth is good.

It's a daunting task to redefine what is good and what is bad. Especially when through much of history what is now bad was actually good!

George
http://www.questioneverything.typepad.com

George Mobus, Associate Professor, Institute of Technology, University of Washington Tacoma, and Professional Student for Life

and we keep getting more conspicuous per capita consumption, seemingly endless increases of production capabilities, and skyrocketing human population numbers worldwide, just as we are getting now, then it appears to me that the family of humanity will soon have to confront colossal global challenges, ones that will "dwarf" all of the problems in our time, including global terrorism and the present global problems posed by "the four horseman of the apocalypse."

Steven Earl Salmony, Ph.D.,M.P.A.
AWAREness Campaign on The Human Population
http://sustainabiltysoutheast.org/

You know, it just struck me ... saying "economists" oppose environmental action is like saying that "environmentalists" oppose wind farms.

You can find examples, certainly, in either case - but you avoid rational discussion when you use those examples to caricature, build stereotypes, or unroot yourself from the real world.

When Bush's former chairman of Council of Economic Advisors supports (and promotes) a pigovian tax, such as a tax on gasoline or a more broad-based carbon tax ... what the heck?

How much fantasy is there in this "high priest" stuff?  I think a lot.

In the original DeSmogBlog post, Murgatroyd was taking the exact quote from the second to last paragraph here: http://ap.google.com/article/ALeqM5imWhKGmZBsBlyG5-14qU25 ...

More interesting, though, is that Jerry Taylor himself showed up to debate the point at DeSmog. I engaged him, and he says some rather interesting things, including: "Privatizing the atmospheric commons is functionally impossible as far as I can tell." and "I do not disagree with you that economists cannot adequately engage in cost-benefit analyses without getting a large amount of underlying information about impact from scientists. And that's exactly what they do. If you read the economic literature on the subject, they all - rather uncritically - accept IPCC predictions about future temperature changes, rainfall patterns, sea level rise, extreme weather events, and so on and then translate that information into economic terms (including the impact on human wellbeing and mortality)."

I just point this out, not to endorse Taylor's prescriptions (I don't), but that he is not quite the "economics uber alles" caricature that he is being made out to be here.

...neoclassical growth theory -- basically, the model of Robert Solow, he of MIT and Nobel laureate fame -- uses a production function, first popularized in the Cobb-Douglas function (by the way, my math ain't so hot, but I think I can follow the general arguments, just don't get past the second derivative, please!).  Anyway, Solow found (in the 1950s) that somewhere around 90% of economic growth cannot be explained by the Cobb-Douglass production function.

That production function is itself based on John Bates Clark's theory of marginal production (yes, the guy they name the prize after).  Basically, that says that you can account for an increase in production -- or should be able to -- by an increase in labor and ...well, capital, another problem, all being prone to diminishing returns.

Now, labor accounts for about 2/3rds of income in the US, and capital for 1/3 (about).  But if you look at graphs of capital and GNP, they pretty much go up together -- which makes sense, you create more machines, you get more product.  But no!  The "beauty" of the marginal product is that everybody allegedly receives that which they contribute to the economy -- in fact, Clark was very concerned to challenge Marx, so it has a familiar ring.  So, as Paul Samuelson once said about this dilemma, we have to stay with marginal product, because it's more "basic", even though it would be much easier to just say that capital correlates with GNP (actually, Bradford Delong has  published about this correlation).

So what's this got to do with anything?  Well, first of all, economists can't explain economic growth, in my humble opinion, which should give pause.  Second, and this is an even bigger problem, they can't really incorporate capital into their models (fixed capital, not circulating capital).  So they can't really model the self-reproducing character of capital, so they can't do things like deal with the exponential nature of growth (for good and bad), and they also tend to ignore the importance of production machinery.  And they also tend to concentrate on lower wages instead of better machinery, because that's easier to work with.

That doesn't mean that the whole field is wrong; but since economic growth is maybe the single most important phenomenon in economics, it's, shall we say, an anomaly.

"In the original DeSmogBlog post, Murgatroyd was taking the exact quote from the second to last paragraph here:" link

The extra '"' makes the paraphrase look literal, but no matter, Taylor's clarifications at DeSmog help us understand.  I guess the bottom line would be this:

I am all for internalizing negative environmental externalities. So are most economists. But their work on this area suggests that the negative externalities associated with greenhouse gas emissions are probably no more than $2 per metric ton - not enough to justify more than, say, a 2 cent increase in gasoline costs. For a review of the literature on that matter, see a recent academic survey by Richard Tol: [link]

He agrees with the tax, it's left to argue appropriate prices per ton.

I think the best answer to a "soft landing" involves rational planning (whether we get an economic collapse or not). That would mean coming up with a fair scheme to distribute and ration carbon. Fortunately some people have been working on these ideas for years (see, for instance, Tradable Energy Quota's). These quotas can be traded, thus producing a market scheme, whereby the energy-lean are rewarded while the profligate are effectively taxed.

Here is a teaser on TEQ's:
Every adult is given an equal free Entitlement of TEQs units. Industry and Government bid for their units at a weekly Tender.

At the start of the scheme, a full year's supply of units is placed on the market. Then, every week, the number of units in the market is topped up with a week's supply.

If you use less than your Entitlement of units, you can sell your surplus. If you need more, you can buy them.

All fuels (and electricity) carry a "rating" in units; one unit represents one kilogram of carbon dioxide, or the equivalent in other greenhouse gases, released when the fuel is used.

When you buy energy, such as petrol for your car or electricity for your household, units corresponding to the amount of energy you have bought are deducted from your TEQs account, in addition to your money payment. TEQs transactions are automatic, using credit-card or (more usually) direct-debit technology.

The number of units available on the market is set out in the TEQs Budget, which looks 20 years ahead. The size of the Budget goes down year-by-year - step-by-step, like a staircase.

Jon,

First, I just wanted to briefly comment on your statement upthread regarding "growth theory" as only having been of interest for short periods, particularly the 1950's and 60's. I suggest that it has continued to be a key area of investigation, by Paul Romer, amongst others. http://en.wikipedia.org/wiki/Paul_Romer#Dominant_theme
So the theory has actually become more robust and rigorous. I would recommend David Warsh's 2006 book Knowledge and the Wealth Of Nations: A Story of Economic Discovery for a (light on math) journey from Adam Smith through Solow to the present, if this is an area of interest - looks like it is.

The reason that I mention this is, again, that it not going to be that easy to simply topple "growth theory" from it current acceptance.

But back to your history and question regarding  Solow's residual. I think I agree with you. For centuries the economists had expected to diminishing returns to capital, labour and resources at the aggregrate- as well as the micro-level. The search for this "dark matter" is much of the story in Warsh's book.

It may seem somewhat underwhelming that Solow determined that it was "technical progress" that explained the "dark matter", but it is germane to the discussion here for two reasons.

First, they regressed the actual performance of the economy with and without proxies for "technical progress", and found that the residual had explanatory value. Pretty powerful stuff, IF true, because it not only frees you up from diminishing returns on theoretically finite labour, capital and resources, but actually suggests that accelerating returns could be possible... Hence the increasing policy emphasis on productivity and technical leadership over the ensuing years...

Second, since the "technical progress" is manifest primarily in the labour and capital, and since it is "technical progress" that is the key to growth, the resource part of the production function is basically dropped right out. The Cobb-Douglas equation itself only accounts for labour and capital, and technical progress. Presumed human ingenuity in resource substitution, resource discovery, etc., basically allows resources themselves to be ignored as required variables in determining economic output. For some, like Julian Simon, that goes as far as to imply "Similarly, the quantity of copper that will ever be available to us is not finite... given the problem of the economic definition of "copper," the possibility of creating copper or its economic equivalent from other materials, and thus the lack of boundaries to the sources from which copper might be drawn." Uh, we are going to create the basic element copper from what exactly??? But I digress... Although that is not all that different to what Paul Romer said in the link above...

To me, there are two glaring problems. First, the complete abstraction of the models so that there is no material throughput (from natural resources to waste), no accounting of increasing entropy, etc., just the labour and capital inputs - it is divorced from reality. But there it is, nonetheless!

But secondly, back to that regression. What if there was another explanation for the "dark matter" effect. In fact, Ayres & Warr have done similar regressions - basically using their concept of "energy" (they refer to it as "exergy", and basically they are distinguishing energy available to perform useful work)... They find that absolute levels of exergy used in the economy is equally capable of explaining the the "excess growth" that Solow explained with "technical progress"... This is not a trivial point of contention. It would imply that the economy has basically been getting a free ride from "exergy", while at least part of the benefit from "technical progress" has been overstated.

So, anyway, I think I am agreeing with you that there are serious problems with neoclassical economic growth theory in dealing with a finite world. I noticed that in Gore's Nobel acceptance speech today he quoted Orwell: "Sooner or later a false belief bumps up against solid reality, usually on a battlefield." I think that AGW and possibly peak oil are going to force a serious rethink, and you will start seeing energy and entropy start to enter into orthodox economic models. But like I said earlier, we don't have the luxury of waiting for an overthrow of economic thought while we need to get policies implemented in the next few short years.

Economists "measure" (they don't really measure anything) flows of "goods" in "markets." Of course they ignore that the primary driver of the flow of goods is "money" and money is a convienently agreed upon fiction. They invent it. It has no tangible reality excluding a dataset declaring it's there.

Wouldn't solar power work great if you could just invent a few megawatts just before you hooked your panels up to the grid? Economists get to invent money that way and throw it at the markets.

As far as energy flows go full employment is always possible, simply measure the EROI of various tasks and make sure there's a surplus at the end of the day. A quick calculation shows that eternal "growth" on that basis is locally and ultimately impossible. There's a budget and we have to live within it.

OR ELSE.

The economists think that we can somehow "buy" our way past climate change with their fictional money. The physical universe just doesn't work that way.

We need a monetary system based upon energy exchanges. When you add surplus energy to the system you get credits, when you consume energy as food, electricity or goods those credits vanish permanently.

Put the Carbon Back

Isn't it a matter of bootstrapping and evolution. Or emergence if you like and selection for improvement. Three ingredients go into work (useful): free energy, matter arranged to permit dissipative flow through (or with sufficient degrees of freedom to allow those arrangements), and intelligence aimed at doing the arranging of matter so as to improve the efficiency and effectiveness of the work accomplished. By intelligence I don't mean intentional a priori design (you know, like in 'intelligent design'). I am talking about the capacity to learn patterns and then the fortuitous exposure to some serendipitous arrangement that happens to work better. More a matter of discovery and then exploitation through 'affordance'.

The history of machine development has been one of   (usually) step-wise improvements in functionality, efficiency, and esthetics. Even modern engineers advance designs by incremental improvements rather than imagination followed by quantum leaps.

But there would be no impetus to evolve machines unless all three factors were present and available. Harold Morowitz pegged it though with his famous saying: "It is the flow of energy through a system that acts to organize the system." Human intelligence is the result of biological evolution toward higher information processing capacity. Culture is the result of meta-biological evolution as the availability of free energy (first fire, then agriculture, etc.) was increased through exploiting stored energy sources, fossil fuels just being the most accessible high-potential source. The whole process of evolution (more intelligence and more machines) is one big positive feedback loop, but only as long as there is a net potential between the energy source and the energy sink that exceeds the storage capacity of the current system (e.g. dissipation yet to be found, so to speak). When the system is fully dissipative, that is when it achieves a steady-state dynamic, things stop developing (at least in physics!) That could happen because we've had long enough for the system to evolve or because the energy flow is turned down.

The latter is my worry. The reduction in free energy portended by the peak oil phenomenon will put a lot of those machines to rest (and rust). Fewer machines means fewer people since we are now so fully dependent on those machines.

We have to find a way to power down (Heinberg) or relax (Tobis) gracefully. But before we can even begin to work on that we have to convince people that that is our course of action. We have to convince people (and economists that still believe) that growth is now NOT A GOOD THING, even though once long ago it might have been. That one worries me too. Intelligent as our species is, I have serious doubts about its claim to wisdom. And I suspect it is the latter that will be required.

George

George Mobus, Associate Professor, Institute of Technology, University of Washington Tacoma, and Professional Student for Life

To start by answering the initial rhetorical question, no, economists aren't always right. But then again what group of people are? In fact "economists" are a pretty diverse lot these days (Just a few weeks ago I turned down an invitation from Daniel to attend a Cato event on the grounds that I didn't think I could behave myself amongst that crowd). And asking that question doesn't make you a Marxist, although, for the record, Marx himself was an economist.

With that being said, I'm not really sure what the problem with growth is. Or with a cost/benefit approach to decision-making. It's human nature for people to try to maximize their own welfare. Now you can certainly haggle over the metrics we use to define welfare. Some economists, such as Richard Layard, have been advocating that we monitor/maximize "happiness" instead of economic activity. Or you might contend that economists ignore or poorly measure certain costs which cause them to overstate well-being. But if this is the case, it seems to me that the rational solution is to try to better incorporate these factors into our decision making process, not to simply abandon rationality and planning altogether.

Perhaps your question is instead more focussed on this idea of physical limitations? The question was posed, "Is infinite growth of some meaningful quantity possible in a finite space?" I'll try to take that question as as literally/ seriously as possible, and leave all the entropy stuff to the likes of Sagan and Hawking. Economic growth can occur two ways. We can either use more stuff or we can use the stuff we have more efficiently. Now, in some limit, the former is bound by the physical constraint you posited. Yet it is in precisely these instances that the tools of economics are most useful. By pricing finite goods, people are forced to internalize the value of their scarcity, which prevents undesirable resource depletion. In fact, that's the lesson my blog, Common Tragedies, is named after. Without markets, the only possible long run outcomes for finite, rival resources are exhaustion abstinence, both of which provide zero utility. The latter form of growth, which you might think of as a metric of evolution, is however theoretically infinite. The combination of natural selection and human learning allows people to get better at performing life's tasks over time. Assuming, as I said above, that you've got the proper metric, it's the promise of growth, the belief that each generation will be better off than the next, that defines both individual and societal action.

If you're not addressing one of these issues, I'd have to say the comments would amount to some combination of nihilism, pessimism and laziness. The point is that people are going to act in their own self interest (in the loosest possible sense of the term). Now you may point out that they're doing a poor job of that, but simply telling them to act a certain way, without providing any evidence that this is true or means by which they could do demonstrably better, is not a viable approach to public policy. The Stern Report measures costs of climate change against growth because real people, not just bankers, care about growth and see it as a proxy for their welfare. Again, GDP might be an imperfect proxy, and some important costs might be ignored, but the solution is to better define our aims, not to simply stand still.

Finally, I'm going to assume that your comments were in only in reference to the developed world. I think most of us would find it pretty hard to tell the third-world that this is it. No more growth. We're coming in for a soft landing.

And in re: Perhaps there is some level of economic activity beyond which life gets worse?

Perhaps, but I think only in the context of my comments above, whereby people aren't properly internalizing costs (ie there are negative externalities or intertemporal disconnects). Or in the context of forced labor. These things aside, in a free county, if we observe a growth in economic activity it's because people think it will improve their lives. Other than that, why would people continue to work/produce?

In sum, I think there's a lot of room to address the types of concerns you have within the framework of economics. Though the tools of economists may be imperfect, I don't think we should abandon rational decision making and the pursuit of progress, however imperfectly defined, just yet.

Rich Sweeney
http://commontragedies.wordpress.com/

your blog looks very interesting.  I've  been looking for "left"leaning economics blogs, and MaxSpeaks seems to have sort of disappeared, maybe, although I'm not sure if you would appreciate the word "left".

I thought this was interesting:Without markets, the only possible long run outcomes for finite, rival resources are exhaustion abstinence, both of which provide zero utility

There is another possibility, which I'll call the Barry Commoner solution, because he brought it up: you can ban certain activities, or goods.  Basically, when it comes down to it, cap-and-trade and carbon taxes will eventually have to work their way to a ban of carbon dioxide emissions (not completely to be sure).  Banning things is a government function, not a market one.

However, I must say that here at Grist, David Roberts and others seem to be very "Pigovian", in theory at least, that is, they think that if things like pollution (think coal) and carbon dioxide were properly priced, most of the planet would be well.

I don't think markets can handle everything.  I don't think they can handle constructing a public transit system, for instance, or zoning lands for, say, organic farming, vs. suburban sprawl or factory farms.  In other words, markets are not good at designing the economic system as a whole, looked at as a set of infrastructural systems (energy, transportation, water, communications, housing).

I also found the term "intertemporal disconnects" interesting, I suppose that that refers to the failure of markets to deal with long-term problems.  And this is indeed the big problem.  I have argued that there are good kinds of growth and bad kinds of growth; obviously we can't keep destroying ecosystems, depleting oil and other resources, and heating up the planet.  So incentives inshmentives, it may be necessary to simply put limits on various kinds of "growth" which are really not even growth at all, but the drawing down of assets (usually natural, but sometimes manmade).  Drawing down assets should not be considered growth.

"Can wealth grow infinitely in a finite space?"

If Apple's growth pattern holds, the library of congress will fit within your iPod in a decade or two. [link]

The senses in which that is "wealth" are sure to be explored.

I have been working on a screed regarding the evolution of hierarchical control systems that might actually be cogent to this thread (subject). To whit: market mechanisms are a part of the operational-level (feedback and exchange) of a complex autonomous, adaptive system. An example is the homeostatic mechanisms in living organisms. Coordination is part of the tactical/logistic level in animals (where short-term and long-term adaptive control is needed). Biological example is the limbic system and hind brain nuclei (augmented in early mammals and birds by the cerebral cortices). These sub-systems are responsible for the primary interfaces with the environment (tactical), obtaining resources, and setting optimization policies for the optimal distribution of those resources internally (logistical).

Overall goal setting and monitoring is done at the strategic (planning) level. In biology that is represented by the prefrontal cortex in more recent mammals and particularly in primates.

The evolution of these systems in biology has followed a bottom up development. From pre-biotic cooperative processes thought to be implicated in the origin of life, through an early biotic establishment of coordination (autopoiesis), through the development of motion control and foraging requiring both reactive control and a layer of deliberative control, through the elaboration of adaptive anticipatory control in higher animal forms that engage in non-stationary environments.

There are a lot of details not covered here, but the hierarchy and its emergence/evolution in biology is well established.

But what I think is interesting is the way this same evolutionary progression may be playing itself out in cultural evolution with respect to market mechanisms providing the beginnings of coordination-level control and governance (haltingly and not very well done) providing the planning or goal-setting level. What are policies if not strategic plans? It seems that market true believers (read libertarians) think that market mechanisms alone can not only coordinate most efficiently but also substitute for the goal-setting level of control. I suppose it relies on the wisdom of the crowd to let plans emerge from the mass choices.

It is this latter that I call into question. I would never advocate putting any of the governance bodies we have seen emerge and tested throughout history so far in charge. Governments constituted of politicians have not proven very effective at setting goals so far. I agree with the libertarians if that is our only alternative. But the way in which strategic control has evolved in the biological world suggests, to me, that there is a form of governance that would be adept at goal setting.

Again, at the meta-biology level there may be yet an evolutionary development of governance that would be efficacious for society. My suspicion is that it will involve a global integration, so the current flurry of globalization may be part of the pre-emergence phase. There is, of course, an example of hierarchical control at the meta-biological level that everyone is familiar with to some extent and that is the modern organization, especially enterprises. There is a well developed hierarchical system of control and coordination in these bodies. Of course they still rely too heavily on human wisdom at the top and, as with examples like Enron, we realize we're not there yet. Nevertheless, we can see that mere cooperation or low-level coordination mechanisms are insufficient for their success. Imagine a company run strictly by an accounting system (logistical).

Anyway, my developing (dare I say evolving) book chapter on hierarchical control systems and their evolution in biology is approaching completion. If any of this topic sounds interesting or you have thoughts you want to share, you know where to find me!

Regards all,

George
http://faculty.washington.edu/gmobus/
http://www.questioneverything.typepad.com/

George Mobus, Associate Professor, Institute of Technology, University of Washington Tacoma, and Professional Student for Life

One aspect left out of the discussion so far is growth of the money supply. Without new capital for investment (and growth in the money supply to repay loans with interest), I do think we would see a lot of urban decay and unemployment. (Presumably governments will resort to Keynesian measures to get us through the current housing bubble burst.)

The question in my mind, as we approach fossil-fuel energy peaks is, will the core role of energy in the economy be recognized by the elites? Will they seek to use the free energy available to us in the next few decades to rebuild a renewable energy grid? Or will industrial society fizzle out as elites decide to fight it out in resource wars?

It's also true that we haven't a clue how fossil-fuel decline will impact technological innovation and economic growth. Heinberg in "Peak Energy" quotes Jonathan Huebner who believes technological breakthroughs peaked in the nineteenth century. But I think it's also true that a new renaissance in education and organizing institutions along democratic lines could bring in new creativity as people come to realize our predicament.

I don't know if I've mentioned this before, and it may not be exactly pertaining to your idea, but you may want to look at the Mondragon Cooperative network in the Basque region of Spain as an attempt to create a more sophisticated governance system that is, obviously, cooperative (I also wrote about it here and here).  The problem with corporations is that their structure is basically the same as the Soviet Communist party -- a self-perpetuating oligarchy at the top, with little opportunity for influence outside the board of directors.  The Mondagon system, and other experiments in employee-ownership-and-control, are examples of democracy at work on the firm level.  But maybe as important, the Mondragon system is anchored by a bank, which serves to start-up new firms and help established ones -- and the finance is kept within the system.

Heinberg in "Peak Energy" quotes Jonathan Huebner who believes technological breakthroughs peaked in the nineteenth century.

How very sad.  That people think this, that is.  Not that it could possibly be true.

For what it's worth though, I'll let you in on how they come to that conclusion ... they build (with some tenuous logic) a "per capita" innovation number.  They then say with 6 billion people that "per capita" innovation has slowed.

To relate this to my eee pc ... peak oilers have told me that the internet will die without energy.  Now I have a computer that runs on tiny amounts of power.  Do I care that there were fewer such innovations "per person" (if that's even true)?  Or am I happy that there are so many innovations per year?

I'm in a hurry, more later ... in particular I wish I could remember the "collapse" theorist who relies on this most heavily, but in the meantime ...

<blockqutoe>So what Heubner describes as a decline in innovation is not, in fact, a decrease in the total number of innovations being developed, but rather a drop in the number of innovations per capita.

from the speculist.  only had time to glance at that ...

Someone going by "Tidal" offers this link to an excellent talk by ecological economist Josh Farley which moves the conversation along a considerable distance in the direction we need to go. Many thanks to Tidal for finding it and Josh Farley for giving it.

mt

This comment pretty much applies to me: I am not the world's most productive coder. Though I'm creative and diligent enough I'm not indefatigable as a coder the way I am as a writer.
Unfortunately I'm paid as a coder (and not as a writer), so I have to limit my efforts in that direction as things stand

The last time I tried a model was in this SVG animation, but you need the adobe add-in (I'm told it's nice to stare at).  I hope to extend it someday; but I'm also thinking about using my database skills to gather US and global data.  The big question: can we create a sustainable economy, and keep 6 (or 9) billion people fed, clothed, housed, and relatively happy, using renewable energy sources, trains, permaculture, walkable towns -- you get the idea.  I'm sure if I get anywhere on this I'll post it, to be sure!  And please feel free to email me if you get any ideas.

His positions may not actually be that far from mine, but I was frustrated by an argument that seemed to arc over me - from someone who was sure economic growth must halt, to an opposing extreme, and someone who put economic growth before all else.

The middle course might be to be a little growth agnostic, to protect the environment, and then if someone figures out a sustainable way to grow ... more power to them.

(I hope folks who fear a decline in innovation followed that speculist link.  That seemed a pretty good answer, and perhaps a pretty good blog, as an antidote to excess pessimism.)

If you go to my research web site you will find two projects that are described in early stages. Pre-NSF proposal, actually. You have to scroll down past the neuro-science stuff I'm working on to get to the CS stuff.

Jon, I think you looked at the modeling project.

Both of these are specified and described more or less. What I would like to do (and I would be far ahead if UWT would let me take on PhD students) is get a code base for these projects and then introduce them into the open source process for further development.  I think there are a couple of good papers in there (for fame and glory), but more importantly I think both projects could be useful to the community of people who can actually tackle solving the global problems we face.

If you follow the links to ConsensUs or SysMod Language you will be able to see the basic descriptions of a couple of (what I think are) cool projects. If I can get some base code (working models) for either of these projects I believe NSF grants are not far behind. Let me know if you have an interest or know someone who might.

George

George Mobus, Associate Professor, Institute of Technology, University of Washington Tacoma, and Professional Student for Life

1. I've argued slightly elsewhere with Michael that scientists need to do science, but that actions need to be informed also by:
engineering
politics
economics [i.e., economics is actually relevant]

But the economics has to be gotten right, i.e., the models must actually correspond with reality in useful ways.  Sometimes this actually happens: we had economics researchers at Bell Labs who did useful things.  I'm increasingly worried that economics models don't seem to match the real world ... but then I'm no economist.

2. We've had some comments earlier about problems with neoclassical economics, and tidal has mentioned Ayres and Warr, of which I strongly recommend one of the studies that tidal alludes to:

Ayres & Warr, "Accounting for Growth: the Role of Physical Work", http://www.iea.org/Textbase/work/2004/eewp/Ayres-paper1.p ...
Using exergy = energy used x efficiency, they make a pretty good case that much of the growth in GDP has come from increasing exergy [specifically, more energy used or better efficiency].

This makes sense to me: subsistence farmers with no draught animals are rarely rich.  A horse, or even better a tractor, helps a lot. [I grew up on a farm.]

Skip the differential equations and look at Figure 8, in which US GDP is compared (most importantly) with the line labeled UB - MSE = 0.9.    The two lines are fairly close, with some extra GDP growth since ~1980, believed to be from extra efficiency & computing.  Using exergy as an input to GDP seems to model it much better than Solow's noeclassical labor & capital.  Put another way, the "Solow residual" mostly disappears.  I could never understand how one thinks one knows what's happening if the residual is bigger than the amount of change explained.

Figure 10 shows the marginal productivities of Labor (~.1), Capital (~.3), and Work (Exergy) (~.7)

The Summary (section 7) is good, ending with:

"From a long-term sustainability viewpoint, this conclusion carries a powerful implication.  If economic growth is to continue without proportional increases in fossil fuel consumption, it is vitally important to exploit new ways of generating value added without doing more work.  But it is also essential to develop ways of reducing fossil fuel exergy inputs per unit of physical work output (i.e. increasing conversion efficiency).  in other words, energy (exergy) conservation is probably the key to long term environmental sustainability."

Anyway, all of this economics actually makes sense to me anyway, but then I'm no economist, and maybe I've misread this.

3. I would claim that if exergy is indeed a big piece of GDP, and if Peak Oil has either just happened (T. Boone Pickens) or will within next 10 years, the part of the exergy increase due to burning increasing amounts of oil is over, and the exergy increase from burning lots of natural gas will be over in a few years.

Fortunately, there is a lot of room for efficiency improvements, even when actually burning oil&gas - see the excellent book by Sovacool & Brown, eds, "Energy and American Society - Thirteen Myths", 2007, and of course, we hope to avoid silly uses of energy, and replace fossil with renewable.

However, it's not at all obvious that over this next 100 years, that there are going to be huge increases in exergy/person.  Why? Well, oil and gas are going away, and we're going to be scrambling hard to increase efficiency fast enough to stay even.

IF that is true, then all of this "don't waste money on climate change mitigation, because our descendants will be much richer and they can then easily afford to pay for adaptation." is fantasy.  In fact, rather than a big positive discount rate (which many economists claim), or the near-zero discount (which Stern uses), if it turns out that descendents are poorer (even for a while), that's a negative discount rate.

But, as both Stern and Sterner [really] note, discount rates can differ for different kinds of goods.  For example, in 100 years, one can probably have an iPod with a Terabyte of storage really cheap, i.e., those people are rich in what they can buy in some areas.

Unfortunately, consider things that people need:
water [in presence of Ogallala usage, decreased snowpack, saltwater incursion]

food [and with natural gas going away, there 's this problem with some kinds of fertilizer, and with oil going away, it's not going to get much cheaper to move food around from where it's grown, and even trying hard to eat local doesn't go very far in some places.  How does everyone in NYC eat local?  In Tokyo? in London?]

Presumably, the craziness of subsidizing grain [t feed to cows to generate methane with], or to ship halfway around the world] and dumping it into developing economies, thus damaging their ownagriculture (while burning oil to ship it) ... will be over.

housing, which uses exergy to build

and for adaption, in some areas, dikes, seawalls, or rebuilding major infrastructure somewhere else.  All of this is energy-intensive stuff, and depends on steel&concrete or earthmoving, and no amount of cheap iPods helps this much.

Put another way, different goods have different discount rates, and unfortunately, the goods needed for climate change adaptation sure look like they don't ahve a large positive discount rate to me, i.e., I don't expect them to get terrifically more affordable for a while.

8) Now, if we got our act together on efficiency, electrified everything we can, use cellulosic ethanol / algae biodiesel [or whatever works] for the irreducible transport needs, maybe this can be dealt with ... but the frequent assumption that "descendants will be rich, so don't worry" just doesn't seem like a consistent, good assumption over the next century.

-John Mashey

Is that they - and more broadly, the economics-is-king, libertarian leaning philosophers & think tanks - believe that economic futures are modelable.

I saw this with a somewhat heavy heart, because philosophically, I agree with Cato's central premise: that markets should be allowed to work.  But saying that is different from saying how they will work.  And the trouble with economic forecasts is that they're only as accurate as the universe of possible futures they are structured to contemplate - and a good case can be made that any sufficiently interesting economic question is inherently unmodelable - there are simply too many moving pieces to build sufficient complexity into the model.

And even if all those possibilities could be modeled, you still have the problem that the "laws" underpinning economic theory are hardly immutable - as evidenced by the fact that Solow, Tversky and most other recent Nobel prize winners are the kings of their discipline primarily for exposing the failures of economic theory.  And yet, we keep building models based on those flawed theories.  (Odo - cite the Black Swan here if you'd like - it's another example of same.)  

All that said, there is a second, deeper problem with Cato that they chronically confuse the pro-market and pro-business position.  Arguing that shifting federal dollars away from our most subsidized industries implies that the beneficiaries of that shift are non-ready-for-prime-time is inane - but it ripples through too much of Cato's theorizing.

Arguing that shifting federal dollars away from our most subsidized industries implies that the beneficiaries of that shift are non-ready-for-prime-time is inane - but it ripples through too much of Cato's theorizing.

I'm not sure I understand you. Are you saying that Cato is in favour of maintaining corporate welfare? From where do you draw that conclusion? Consider, for example, this really devastating critique of subsidies to the nuclear power industry, "Hooked on Subsidies", written by Peter van Doren and Jerry Taylor a few weeks ago. I love their concluding line:

What, then, should government do to overcome nuclear's economic problems? Absolutely nothing. There is no more to the right-wing case for nuclear subsidies than there is to the left-wing case for solar subsidies.

If the permitting process is broken, then by all means fix it. If plant safety regulations are excessive, then by all means reform them. If greenhouse gas emissions prove to be a problem, then impose a reasonable carbon tax across the board. But once those tasks are complete, the role for government ends.

We like nuclear power as much as anyone else on the right. But friends don't let friends get hooked on subsidies. [My emphasis]

You may disagree with Jerry in not endorsing subsidies for solar power, or for his liking nuclear power, but at least he is consistent in being equally critical of subsidies to both industries.