3 ms·

I wonder what this will look like in a renewable energy world where the cost of energy on the margin drops to the the small operating cost + the principal/inter

by danans 7y ago

I wonder what this will look like in a renewable energy world where the cost of energy on the margin drops to the the small operating cost + the principal/interest on the capital expenditure. We might actually see a reduction in GDP in that case, especially if coupled with ever increasing production efficiency for energy consuming processes. In that case, we might have to re-evaluate how we define "success" to be less weighted for GDP, or include the reduction in fossil fuel externalities in the definition. Could be be best race-to-the-bottom ever.

toomuchtodo 7y ago
New Zealand is a model to follow [1]. As you mention, of course GDP will plummet as renewables and technology act as enormous deflationary forces (good luck Central Banks trying to inflate against those forces). Software is eating the world, there is no marginal unit cost for delivering that benefit to the world. For example, consider what was previously spent across the world on TLS certs that now Let's Encrypt provides to the world for a few million dollars a year. Every opportunity for a Unicorn is an opportunity for a lean, well functioning non-profit to deliver similar consumer excess (or as a Human would say in behavioral econ, "happiness") very inexpensively (another example I love: Watsi.org [2]). [1] https://www.vox.com/future-perfect/2019/6/8/18656710/new-zealand-wellbeing-budget-bhutan-happiness https://www.vox.com/future-perfect/2019/6/8/18656710/new-zea... (Forget GDP — New Zealand is prioritizing gross national well-being) [2] https://docs.google.com/spreadsheets/d/1tZq47h6jg7NX4ddhTS_H8JFVfLZiDbxwwdQD47_ow64 https://docs.google.com/spreadsheets/d/1tZq47h6jg7NX4ddhTS_H... (Watsi.org Transparency Log)
mempko 7y ago
Margins for many of the oil, coal, and gas companies are already negative. The world subsidies those industries to the tune of $5 trillion a year. US subsidies it's fossil fuel industry to about $600 billion a year. In other words, energy is already cheap and GDP is still increasing.
azernik 7y ago
Falling costs of similar goods and inputs are treated as deflation in economic statistics. "Nominal" GDP would fall in that case, but "real" GDP, which is the number everyone cares about, would still rise.

by danans 7y ago

toomuchtodo 7y ago

New Zealand is a model to follow [1]. As you mention, of course GDP will plummet as renewables and technology act as enormous deflationary forces (good luck Central Banks trying to inflate against those forces). Software is eating the world, there is no marginal unit cost for delivering that benefit to the world. For example, consider what was previously spent across the world on TLS certs that now Let's Encrypt provides to the world for a few million dollars a year. Every opportunity for a Unicorn is an opportunity for a lean, well functioning non-profit to deliver similar consumer excess (or as a Human would say in behavioral econ, "happiness") very inexpensively (another example I love: Watsi.org [2]). [1] https://www.vox.com/future-perfect/2019/6/8/18656710/new-zealand-wellbeing-budget-bhutan-happiness https://www.vox.com/future-perfect/2019/6/8/18656710/new-zea... (Forget GDP — New Zealand is prioritizing gross national well-being) [2] https://docs.google.com/spreadsheets/d/1tZq47h6jg7NX4ddhTS_H8JFVfLZiDbxwwdQD47_ow64 https://docs.google.com/spreadsheets/d/1tZq47h6jg7NX4ddhTS_H... (Watsi.org Transparency Log)

mempko 7y ago

Margins for many of the oil, coal, and gas companies are already negative. The world subsidies those industries to the tune of $5 trillion a year. US subsidies it's fossil fuel industry to about $600 billion a year. In other words, energy is already cheap and GDP is still increasing.

azernik 7y ago

Falling costs of similar goods and inputs are treated as deflation in economic statistics. "Nominal" GDP would fall in that case, but "real" GDP, which is the number everyone cares about, would still rise.