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I'm always a bit weary, when people rely on physics or rigid math to derive economic conclusions. In this case the author assumes causation between energy produ

• skimpycompiler 11y ago
  He obviously added the efficiency to the pot. But energy use is one of the main factors of growth. That is one of the reasons why newly emerging economies from the third world feel like their growth is mutilated by all the requests for reducing carbon emissions. Same reason why China decided to completely ignore the environmental effects, if they had fewer energy sources, their growth wouldn't be as gigantic. It's quite interesting what will happen with India and with countries of the African continent. When they start enjoying their increased standards of living, they might want to use more energy, currently they are just a tiny speck of the world energy use.
  • matt4077 11y ago
    China has actually become quite concerned about the environmental effects of their energy use. Not global warming so much as pollution, but the effect is the same: they're investing heavily in alternative and nuclear energy. Independence from fuel suppliers, becoming the #1 manufacturer of solar arrays and the fact that alternatives are rapidly becoming cheaper are also factors. Maybe some of the now-emerging countries skip the oil/gas/coal phase entirely and go directly to renewables, in the same way that Africa skipped the landline and the traditional banking in favour of mobile phones and apps.
    • sa1 11y ago
      Alternative and nuclear energy use is still energy use. It may not create the same pollution as coal or oil, but that doesn't affect the arguments from the article. Growth of energy use is unsustainable, and that may mean economic growth is unsustainable.
• jacobolus 11y ago
  Friendly note: you probably meant wary.
  • jevgeni 11y ago
    Oh, thanks. :)
• danbruc 11y ago
  So what does the size or growth of an economy fundamentally measure, i.e. how do you quantify the size or growth of an economy without resorting to money at any point? This should help seeing things way clearer than thinking about how to grow an abstract amount of money.
  • icebraining 11y ago
    There are a few suggested alternatives, like https://en.wikipedia.org/wiki/Genuine_progress_indicator https://en.wikipedia.org/wiki/Genuine_progress_indicator
• peterashford 11y ago
  i'm always wary of the tendency of economists to assume that no laws of nature apply to economies.
  • vixen99 11y ago
    Of course they apply but how and to what extent? CO2 is a GHG and we expect some warming in relation to its level. Where is the empirical data unambiguously linking CO2 production and levels to Anthropogenic global warming? Currently we are talking about endless massaged data from various sources generating a global composite temperature of +0.28 C (about 0.50 degrees Fahrenheit) above the 30-year average for August in an El Nino year. http://wattsupwiththat.com/2015/09/11/global-temperature-report-august-2015/ http://wattsupwiththat.com/2015/09/11/global-temperature-rep.... Moreover - http://notrickszone.com/2015/09/09/spiegel-slams-sorrowful-state-of-climate-science-communication-reports-hardly-trustworthy-arrogant-scientists/#sthash.yvfvJx9C.dpbs http://notrickszone.com/2015/09/09/spiegel-slams-sorrowful-s...
  • jevgeni 11y ago
    Well, I find it difficult to imagine, what laws of nature would apply to economics? The best and most resilient example I know is the Black-Scholes equation - a framework to model option prices - based on a heat diffusion equation. Thing is, now it's never used with its original assumptions, but rather with a bunch of fixes. Oh, volatility isn't constant as we thought, let's add stochastic volatility. Oh, stock pricess are fat tailed and don't behave according to a geometric brownian motion, let's add discontinous jumps. Not to mention, that nobody uses historic volatility anymore. A hack of hack of a hack. So much, in fact, that the original elegant theory has just become a sort of convention, how everybody does their calculations. I really don't understand the argument that laws that have been proven to work in one domain should work in another. I think it's a kind of quantitative mysticism.
    • emodendroket 11y ago
      OK. Imagine there are no more fossil fuels tomorrow. Is the economy going to keep chugging along, unaffected by this change?
• notahacker 11y ago
  Several of the commenters below the article do a pretty good job of pulling the article apart because its assumptions simply aren't very good even when faced with today's data (and in the case of aircraft efficiency, are simply wrong). It's so well established that growth in energy use and population have slowed sharply in the industrialised world, and that energy use per unit of real GDP is falling sharply that any argument based on the assumption of constant, exponential rates of growth that doesn't address these points is utterly facile. His assumption that "a certain, finite fraction" of the population must be engaged in agriculture also seems to overlook the fact that this fraction has fallen sharply over time, and has plenty of scope to continue doing so. The assumptions fundamentally aren't reasonable; they're considerably less reasonable than Malthus' arguments that economic growth could never outpace population growth in the first place, which were at least written just before world per capita output started to accelerate. If economics isn't a hard enough science, then getting physicists to do the theorising instead doesn't seem to be helping ;-)
  • danbruc 11y ago
    Then just view it from a different angle - there is only a finite number of people on the planet, they have finite lifespans, they can only consume a finite amount of stuff.
    • notahacker 11y ago
      A finite physical amount of stuff doesn't mean that people won't pay ever increasing amounts for stuff marketed as "better", which is all the growth that's needed for real economic growth patterns to continue, even if "better" requires the same or substantially less energy usage. It's probably a failure of imagination to assume that even the rich nearing the limits for stuff we want to consume too. The amount of GDP spent on healthcare is rocketing in developed nations, not all of that's all down to predatory companies and over-regulation, and it's perfectly rational for people to continue to spend ever-increasing amounts on factors which most significantly impact their quality of life. I also think we've barely scratched the service of what can be done there in future...
• netcan 11y ago
  That's the nail on the head. Once you start getting into these sorts of assumptions about trends and correlations, you really have to have a good understanding of all these inputs. They are all suspect to different degrees across different time horizons and scenarios. What you really have when you put together these predictions is "Given A,B,C & D, this Y is likely to be whatever." That only works when you understand A,B,C & D quite well and keep them in your head. It's also bait for our biases and grand worldviews. I had this massive argument 10 years ago with a politically active friend on the left. He was/is a sort of modern socialist-environmetalist. He brought up exactly this energy-gdp correlation and was extrapolating a log way into the future. It also played into his general sense that GDP growth is an unbecoming central goal for a society and that economic progress is at odds with the environment. It's not a nonsensical perpective. That correlation is relevant. But, you need to get into the subtleties. Even the concept of "economic growth" is an abstract thing. GDP as a measure of economic output is becoming less and less useful metric. Wikipedia consumption contributes nothing to GDP. Some kid torrenting game of thrones contributes nothing to GDP. These things have value, but monetary exchanges are not good proxies for them. Even within the "energy intensive manufacturing" paradigm, an iphone's utility-to-energy cost ratio is a funky thing to try and fit in to the GDP concept which ultimately uses money to measure value. A 2015 iphone is worth more than a 2010 iphone. You can see this if you try to sell one and if you could go back to 2010 in time with a box of 2015 iphones you would see it as well. But beyond that, trying to do price adjustments (which are the basis of "keeping interest rate constant") on a rapidly developing technological product puts you in the weeds. This complexity is exactly why these correlations and trends are interesting They cut through the messiness. I think we should still do this. But… you need to treat these in the same way you'd treat Kurzweil's theories. Interesting, but built on a lot of unknowns. Too many to make you too confident.
  • DanielBMarkham 11y ago
    Yep. Kurzweil's theories are very similar. Also the Drake Equation. Great for late-night BS sessions, and maybe a fine thing to put some faith in -- but it ain't science or logic. "...I had this massive argument 10 years ago with a politically active friend..." Reminds me of a similar story. Worked with a guy many years ago who was a double major, math and physics, I think. Brilliant guy. At the time, he assured me that now was the time to get in the market and bet on oil prices going higher. Peak oil was here! Shortages and chaos were upon us. I pointed out that peak oil had been called many times over the years. It was doubtful we were on that exact spot. In fact, some economists have even said that anything you can dig out of the ground is bound to go down in prices as extraction technology continues to mature. He countered by showing me a study from the U.S. Defense Department (I believe), it showed that yes, indeed, oil was going nowhere but up. I pointed out various examples of this type of thinking failing in the past. He pointed out that things can't continue on forever. Draw a trend line. There's no way that line can continue. Does this discussion sound familiar? We agreed to disagree, and I promised him that I would wait a few years and email him. We would revisit this discussion. Several years passed. Oil was not through the roof. In fact, IIRC, it was about in the same spot as it was before. So I emailed him. I asked him how he felt about his earlier assessment. I did not get a reply. Since then, of course, we have the advent of fracking, and the clear possibility that the U.S. is going to end up as a petroleum exporter, at least for a while. Faith is a fine thing. Heck, I'm a singularian, although I think we're looking at 300-500 years. But it's very important to be cognizant of those things you take on faith. Otherwise you end up having these long discussions in which your main defense is just repeating something along the lines of "science!" or "math!" over and over again.
• hrzn 11y ago
  I don't think that the author assumes the causation that you mention. He says that growth is composed of two parts. One part depends on energy production/consumption and the other part does not -- If you don't like the causation ''energy consumption implies growth'', his theory still holds if you assume that the second part is more important than the first. Because our ability to be energy-efficient is bounded (even if his numbers are imprecise it's difficult to argue against this -- as our stuff cannot be more than 100% efficient), it means that the part of growth that does not rely on energy must take a disproportionate share of the total growth if you look far enough into the future. It precisely seems to me that the assumptions he makes are remarkably minimal.
  • jevgeni 11y ago
    But then you can't make a statement that the growth is bounded, unless you assume that "everything else" is bounded as well. And that's a hefty assumption. I've understood the energy argument as central to the article. Hence the "causation" in my original comment.
• HiYaBarbie 11y ago
  > I'm always a bit weary, when people rely on physics or rigid math to derive economic conclusions. You'll be delighted by Austrian Economics then: http://mises.org http://mises.org They start from some axioms on how humans actually behave, and build everything on top of that.
• dsfsdfd 11y ago
  It blows my mind how far people will go in order to protect the schema which they use to interpret the world. Take a look at yourself, you are bending over backwards attempting to dispute something which is unbelievably obviously true. Unbelievably Obvious. Blows my mind.
  • jevgeni 11y ago
    So, why should I chose energy as a defining factor of global growth and not labour, or other resources?
• emodendroket 11y ago
  > In this case the author assumes causation between energy production/consumption and economic growth. Without increased energy use, vast swathes of the economy clearly could not exist. That is what he spends most of his time proving.
  • crimsonalucard 11y ago
    More like the entire economy wouldn't exist.
    • emodendroket 11y ago
      Some categories (the article mentions psychotherapy, for instance) use very little energy, although they also have output whose value is harder to measure.
• phkahler 11y ago
  >> I'm always a bit weary, when people rely on physics or rigid math to derive economic conclusions. In this case the author assumes causation between energy production/consumption and economic growth. No, the author assumes energy as a prerequisite for economic activity - not a cause. That much is true. There are no significant economic activities that do not depend on energy. The author even suggests that more non-energy activity will be required to sustain economic growth and has a hard time with that.
• crimsonalucard 11y ago
  You're right, except for your statement about the causality between energy and production is more of a Totally Obvious Fact then it is the "assumption" you make it out to be. Almost all of production in a modern economy comes from machines. Machines have been utilized to augment both manual and intellectual capacity. Machines require energy. Therefore our economy runs on energy. Think about it. Why do most people have jobs sitting on their asses typing on a computer instead of searching for food and doing other obvious things related to survival? Because machines are doing the work for us! Because Energy! Let's be real, it's really hard to find an occupation that doesn't involve an energy consuming machine. Take for example: Food. Factory farms, tractors, pesticides all guzzle gasoline like crazy. People assume that if gasoline disappears, you can just start biking to work. The reality is, if gasoline disappears, people will begin to starve. Another example: Big Data and IT. What do you think those servers are running on? Hopes and dreams or Energy? Take your pick. The cities of america are constructed in ways so that the laborer must get in a car and consume a bunch of energy just to get his ass to the location where he actually does work... Our entire infrastructure is built around energy. It goes further then that, our urban infrastructure is built on the assumption that energy is limitless; suburban infrastructure relies on gasoline, once that's gone, so is suburbia. Modern civilization and energy are intrinsically linked. The same way green house gasses and global warming are linked. There is no controversy. Period. In short economic growth is Bounded by an upper limit and that upper limit is indeed energy.
  • jevgeni 11y ago
    In Boolean terms yes. However, a software engineer who writes a hello world program in an hour and a software engineer who writes a ML based high frequency trading algorithm in an hour produce vastly different outputs, but consume the same amount of energy. Energy is a factor of production, just like labour, or commodities, or management. I can take another Totally Obvious Fact and say that growth is caused by the size of educated labour force... Assuming that energy is the defining factor of production either requires justification, or is just an assumption.
    • crimsonalucard 11y ago