6 comments

• Comment Link Friday, 22 June 2012 19:25 posted by AndyMMT

  Moray, couple for you to read... the Chris Cook article has proved spot on, just mentions Q2 in the article but in a comment on FTav he actually predicted late may to mid june. The guy is seriously in the know on this stuff.
  
  http://www.nakedcapitalism.com/2012/02/chris-cook-the-oil-end-game.html
  
  Also this at Ftav from IK, in her "scarcity series"
  http://ftalphaville.ft.com/blog/2012/06/20/1052641/scarcity-amid-plenty-oil-edition/
  
  Whole series from her is worth a read as well.
• Comment Link Saturday, 23 June 2012 13:18 posted by Tim Worstall

  PS Tim Worstall doesn't recognise the concept of limits to growth ... http://tinyurl.com/6whr6zc
  
  What a very strange thing to say. With a link to an article where I discuss limits to growth. Meaning that I obviously recognise the concept.
  
  Further, I point out that there are obviously limits to physical growth.
  
  I even point out that economic growth, while not facing those physical limits, is in fact limited by our ability to add value to limited resources.
  
  In what way is a discussion of the limits to growth not recognising the concept of limits to growth?
• Comment Link Tuesday, 17 July 2012 09:00 posted by Michael Miller

  One of the more thoughtful blogs on the implications: http://thearchdruidreport.blogspot.co.uk/.
  
  Written from a "personal economics" point of view.
• Comment Link Friday, 20 July 2012 07:59 posted by Moraymint

  Reply to Tim W's Comment 23 Jun 12
  
  Tim
  
  I think we may be on parallel paths in terms of the discussion about whither economic growth. I understand and, indeed, accept your arguments about adding value by dint of use and, moreover, re-use of resources etc, and that economic growth per se can and will exist in future.
  
  Cutting to the chase, the issue for me is not so much "whither economic growth", but rather what is likely to be the rate and scope of economic growth in the future. I say this in the context of economic growth as mankind experienced it, say, prior to the industrial age and immediate post-industrial age (ie up until about now), and how mankind might experience economic growth pretty much from here on.
  
  For example, research published by the economic historian Angus Maddison suggests that prior to the industrial age, economic growth (and, by and large, population growth) was pretty much "flat": of the order tenths of one per cent per annum. A doubling of economic well-being would have occured every 3,000 - 4,000 years or so.
  
  And then, something happened. Mankind discovered how to unleash 2 billion years worth of accumulated energy in the form of fossil fuels. Suddenly, it seems that access to extraordinary quantities of net energy enabled mankind to double its economic well-being every 50 years or so, and more latterly in half that time again, ie economic well-being doubling every 25 years or so.
  
  So, there appears to be a hard, direct connection between economic growth rates and the availability of net energy. Now if this is the case and mankind is struggling (now) to continue to unleash net energy on the scale achieved over, say, the past 150 - 200 years (the industrial age, give or take a few decades), then the idea that mankind can sustain industrial age rates of economic growth in to the future would seem to be flawed.
  
  It appears to me the our early 21st century lifestyles are critically dependent on economic growth rates of several percentage points per annum; let's say between 2% - 5% per annum which must be sustained reliably. If we can't be sure of achieving this magnitude of economic growth (indefinitely?), I assume that even you would be unsettled, if not alarmed.
  
  The challenge is that if we can't discover ways of unleashing the sort of net energy that we've enjoyed for the past few generations, then the evidence suggests that we could revert to rates of economic growth that sit at/around 1% per annum; perhaps less than that. I do accept that technological developments, borne of the industrial age, should allow mankind to do better economically than, say, the Mayans or the Sumerians or the Romans; obviously.
  
  However, in summary, it seems to me that there might be insufficient mainstream debate today about this critical relationship between net energy and civilisation as we know and love it today - which, by and large, is dependent on rates of economic growth that mankind had never achieved prior to the industrial age. Civilisations have come and gone before. My question is whether our civilisation's insatiable appetite for unprecedented quantities of net energy (aka cheap, fossil-fuel energy) contains the seeds of the collapse of our complex society?
• Comment Link Friday, 20 July 2012 08:20 posted by Tim Worstall

  Maddison, yes, this is Malthusian growth. Advances show up as increases in population not increases in per capita GDP.
  
  And yes, something very strange did happen around 1700. The Great Divergence (Greg Clark and Brad Delong are good on this).
  
  "It appears to me the our early 21st century lifestyles are critically dependent on economic growth rates of several percentage points per annum; let's say between 2% - 5% per annum which must be sustained reliably. If we can't be sure of achieving this magnitude of economic growth (indefinitely?), I assume that even you would be unsettled, if not alarmed."
  
  I'm deeply unconvinced that we are reliant upon such speedy growth. I think we'd like it if we can get it, sure. But I don't subscribe to the rather Marxist idea that capitalism must expand or die.
  
  But the important part I think is here:
  
  "Now if this is the case and mankind is struggling (now) to continue to unleash net energy on the scale achieved over, say, the past 150 - 200 years (the industrial age, give or take a few decades), then the idea that mankind can sustain industrial age rates of economic growth in to the future would seem to be flawed."
  
  It's not net energy. It's the efficiency of resource (ie, all resources, not just energy) use. Technically, total factor productivity. If tfp rises then we can get economic growth, much the same argument I make in the linked piece.
  
  But it's important to note that tfp is by far the largest contributor to economic growth. Bob Solow calculated that 80% of the 20th century's growth in the market economies came from tfp growth. Only 20% was explained by increased resource usage: and yes, that does include increased energy usage.
  
  So, quite happy to agree that energy is a constraint upon economic growth. Just as scarcity of any resource is such. But it isn't use or availability of such resources which are the binding constraint. Not even the important constraint. That's tfp.
  
  After all, who is really going to mind if the 21st century only produces 80% of the growth of the 20th? Living standards did rise by 8 times last century on the lowest possible estimate. Are people going to look back in 2100 and say, Oooooh, what a tragedy, only 6 times this century past?