Peak Growth?

David Roberts has an excellent conversation with…well he’s got voices in his head (Smith and Daly) having an internal dialogue over a very important question: Can we keep growing the economy in light of finite resources such as peak oil, peak soil, etc. or should we take measures to halt growth to save the planet?

Read the whole thing, because it’s not only hilarious it’s also really smart, and both voices make some good points.

Now, as an anti-Malthusian, anti-central planner I am much more on Mr. Smith’s side. Smith grabs this chart from some storage box in Robert’s digital brain:

capitalism

Smith argues that capitalism and democracy have led to the greatest exodus from human suffering we’ve ever seen. Turning our back on that legacy would be bad news:

Liberals need growth even more than conservatives do. They have to overcome status quo bias. Social psychology and history both show that people are more inclined to be generous, more likely to care about the disadvantaged, during times of shared prosperity. If we want to spend on clean energy, health care, infrastructure, and innovation, we need money — tax revenue. For that, we need growth.

Demographic trends reveal the same need. There are more and more old people, fewer and fewer young people to pay for their health care and pensions. This is exactly what Biden was warning the Chinese about when he made his inartful comments on their one-child policy the other day. Unless countries want to sink into a pernicious spiral of higher taxes and lower productivity, they need … growth.

Daly counters:

Here’s your problem. You think capitalism is limited only by human ingenuity, which is unlimited. You believe that Man Will Overcome.

And so, if soil’s being depleted, tweak the market to reflect that — raise soil prices. Price carbon. Price air and water pollution. Make sure the price of commodities reflects their externalities and watch the machine whir into action. The price signal goes to thousands, maybe millions of potential innovators at once, spurring them, through some mix of greed, ambition, and devotion to purpose, to devise solutions. Voila!

You think capitalism is a conceptual engine, that it transcends any physical substrate. As long as it incorporates correct information about relative value, it can continue growing in perpetuity.

But consider: What if the rocketing growth of the last 200 years has had much more to do with the physical substrate than you imagine? What if we’re just uncommonly clever primates who figured out how to unlock the power of fossil fuels? If that’s true, if our economies are mere subsets of the global ecosystem, utterly dependent on it for steady supply of resources, and we’re about to overshoot its carrying capacity, then … we might just go back to shivering in the dark.

As I said, the whole thing is great – lots more charts and videos at the original.

But Roberts does leave out some important points. For instance, higher-density building and increased walkability could reduce not only carbon emissions, but need for fossil fuels and cars and all sorts of things, while not really curtailing overall growth. Indeed, all that money saved on transportation costs could go right into eating out and entertainment and so forth. So you get growth in different sectors, rather than no growth at all.

Keeping population down is a good idea if you live in a country that’s starving. In a developed country it’s practically suicide. Growth, including population growth from having kids or incoming immigrants is an almost-undisputed economic good.

Not to sound like too much of an optimist – because resource depletion does keep me up nights, too – but I do think innovation and green technology and new ways of crafting our cities, our transportation infrastructure, and so forth, will do a better job overcoming this obstacle than any sort of central planning.

The pernicious Malthusian argument has been taken to its furthest logical conclusion in China. But stifling population growth through central planning is wrong-headed. Education and prosperity will naturally keep population growth at stable levels.

Right now, subsidies of fossil fuels and fossil fuel industries are hurting efforts for mass transit and green tech innovation to take off. We don’t need more central planning or lower growth, we need smart problem solvers working together across the entire globe to solve these very big problems. Governments can help or hinder this effort. I think it would be a shame to preemptively curtail growth, stymie innovation, and turn the lights off long before the show is over.

There’s no one right answer to this conundrum, but I think we can work toward a more efficient infrastructure and use a mixture of markets and incentives (such as carbon taxes, end to subsidies, investment in mass transit) to tackle the problem over the long-haul.

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51 thoughts on “Peak Growth?

  1. It’s really good to see this article get more attention–it definitely deserves it. As you say, I think both voices make good points, and I’d certainly agree with you about increasing density and using market signals to internalize costs and increase efficiency.

    That said, I would probably come down on the side of “our extraordinary growth these past few centuries is due to fossil fuels”. Looking at that graph, you can see the takeoff by the mid-19th century, but it’s not clear to me that even the US or Western Europe in 1850 were notably more capitalistic than, say, the Roman Empire (I’m far from a history buff, so please correct me if I’m wrong). The difference, instead, is that the 1850s had coal. What happens when we run out of the easy energy–when we’ve eaten through the seed corn–frankly worries the hell out of me.

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    • Dan, I’m not a huge history buff myself but I would like to rebut your roman example strongly. There were a great towering pile of things that the Romans did not have that we have developed today that any modern functioning economy requires mostly in the fields of philosophy, knowhow and economics. It’s important to remember that Rome was sitting on fossil fuels all over the place, Europe had heaping mounds of fossil fuels and Rome controlled a lot of the Middle East and all of North Africa as well. They had the fuel, they just didn’t know how to use it nor did they have the economic and political understanding to use it either.

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      • I maybe didn’t make my point clearly then. What I was trying to get across is that the fossil fuels are a necessary component of the awesome growth and development we’ve seen over the last 200 years or so. The know-how is needed as well, which is why Moses didn’t wander the desert in a dune buggy, but it’s not sufficient without an easy source of energy. Within a relatively short timeframe (less than a century?) we’ll have the know-how but not the energy (unless we really get our act together on nuclear power, or make a balls-out drive for renewables and efficiency, or both).

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        • Hmm yes I suppose I get that. But beyond the tech the Romans simply didn’t have the same social or economic institutions necessary for a modern economy. They were slave holders, for instance, and rabidly non-egalitarian to boot (suggest the idea of men being equal to a patrician and a beating would probably be the lesser of your problems). Government in the Empire was near pure authoritarian and spending on all forms of infrastructure was pretty much entirely at the whims of each succeeding despot. Even if they had the tech for fossil fuels they would not have had a society that could sustain a modern economy in my opinion.

          I agree with you sort of on the energy. I mean we have the energy already; about a fifth of our electricity comes from nuclear right now roughly. That isn’t going to dry up or vanish and given modest time it could be increased a lot even with only current tech. I think where I part company with you David Roberts is that I am skeptical that “peak oil” could occur abruptly enough to make a nuclear ramp up impossible and I don’t think that market forces will be insufficient to prompt a conversion to nonfossil fuel tech.

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      • Rome didn’t use fossil fuels (which they both knew about but also understood) because they had slaves. Even a steam engine is merely a horse[power] replacement. Rome built up a society based on subjugation of “lesser” peoples and enslavement of them. Hitler wanted to copy them and for a time succeeded.

        Only the high cost of human capital leads to our tremendous levels of automation. The interesting thing is the compound effect you get when you couple high automation with very cheap labor as we see in China. Entire factories get built over there for a fraction of what they would cost here (not just the equipment that goes inside, which might still be expensive but the brick and mortar building that houses it). Unfortunately how much /junk/ do we really need? What human capital coupled with high energy inputs and great automation are building today is mostly /junk/ that will be clogging a landfill tomorrow. So the more important question is, what gets to be built, and why?

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        • Your point about the ready availability of slave labor is well-taken. As a quibble, I’m not sure that it’s accurate that the Romans understood fossil fuels to be a reasonable fuel for either heat or work; so far as I know they weaponized oil in the form of pitch for ballistae (and later, Greek Fire) and might have burned some for light, but since they didn’t really have the ability to refine the stuff all that well, it wasn’t that useful to them.

          I bet their metalsmiths could have put together an internal combustion engine, though, if they could have come up with a spark plug or its equivalent. They had watermills that ran on camshafts, and once you can figure out how to make the pistons go boom when you want them to, the camshaft is all you need to turn the boom into work.

          Interesting to think about what could have happened if they’d figured out how to refine the oil and get flints small enough to be useful.

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          • Burt, I’m not going to claim they were ready to build Ferrari’s. :)

            We know they used radiant heat for their floors, and the way they did this was by burning wood in what we would consider the crawl space below the living area. But that crawl space area /also/ housed the slaves. They cut wood to burn, but could have burned coal or pitch (tar) they had found and documented. They did use the tar for their ships and their buildings but figured out how to make better cement and changed everything.

            Scary to think what would have happened if they’d figured out internal combustion. On the other hand, according to Science, they fell because of Climate Change. Alburtimus Gorimus must have warned them but they just didn’t listen. Or back then the climate could change all by itself. ;)

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  2. I loved his conversation but oddly enough I think he overstated the severity of the situation. Certainly when I ponder peak oil etc I don’t see us ever going shivering back into the dark. In the worst case scenarios I can imagine some utterly horrible things that would ensue, wars, famines, that’d bring global populations down to more sustainable levels but I don’t see a return to the dark ages in the cards. I think that David Roberts, oddly enough, favored Daly even though Daly didn’t come out well in the debate. If Smith had included, for instance, discussion about fission in the question of energy for instance I think it would have been an utter rout in favor of capitalism. I mean the fact of the matter is that we do have a functional alternative to fossil fuels for our greater energy requirements that is feasible even at current levels of tech (and actually holds incalculable promise beyond that). It’s more expensive than fossil but what isn’t?

    And as his commentariate pointed out the premise that resources are finite is, in the big picture, false. The solar system alone contains the necessary resources and generates the necessary energy to sustain an infinitely larger quantity of humans in sheer luxury. It’s just a question of developing the tech to reach it.

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    • > I can imagine some utterly horrible
      > things that would ensue, wars, famines,
      > that’d bring global populations down
      > to more sustainable levels but I don’t
      > see a return to the dark ages in the cards.

      One advantage of living in America.

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    • *Infinitely* larger? really as in we could convert all the current mass of the solar system to human flesh and sustain those people in sheer luxury?

      Look I can accept that humans are able to increase the carrying capacity of their environment for humans. I can even see the argument that we are so good at it that the sun will have died before we reach a real limit but that is still not infinity.

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  3. “Daly: Here’s your problem. You think capitalism is limited only by human ingenuity, which is unlimited. You believe that Man Will Overcome. And so, if soil’s being depleted, tweak the market to reflect that — raise soil prices.”

    errrr. A capitalist wouldn’t say anything like “tweak the market”. A capitalist would say that if there were a perceived shortage of soil, then soil prices would rise all by themselves. And that if the prices rose and stayed high–indicating a true shortage rather than a panic–then alternatives would develop because high prices made alternatives viable (hydroponics, e.g.)

    The free market doesn’t say that everything will be cheap. It says that everything will be as cheap as it can be, which might still be quite expensive.

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  4. There are some facts of the matter about whether we have resources available to keep our way of life sustainable, and they are non-ideological. We can’t know them in their entirety. However, you gloss over population density and the like far too quickly. Our dependence on fossil fuel energy, by even the most optimistic metrics, is enormous and growing. The two swords of Damocles hanging over our heads are whether we have enough resources to meet the need and whether

    Any read of this situation that purports to deal with this situation, skeptical or accepting, is just hand waving. Either we have the resources we need, and the planet can sustain their continued use, or things are going to get very, very dark indeed. Those things are beyond our control, and human life as we know it hangs in the balance.

    People on the Internet have decided that life is fair and that good things go on happening. They shouldn’t.

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    • “Those things are beyond our control, and human life as we know it hangs in the balance.”

      I’m not sure I follow. It seems like this is under our control to a large degree–we can decide how much to favor efficiency efforts, for instance. If you mean “beyond the control of the League”, well, that’s a better case (if so I apologize for the misreading).

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    • I think you cut off your first paragraph freddie.

      Then the second is empty fatalism which of course utterly negates the third. If there’s naught to be done then a decision by the internets that life is fair and that good things go on happening is a perfectly fine outcome for all the difference it makes.

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  5. “The pernicious Malthusian argument has been taken to its furthest logical conclusion in China. But stifling population growth through central planning is wrong-headed. Education and prosperity will naturally keep population growth at stable levels.”

    It’s been a long time since I read Malthus, and I know he’s not as popular around these parts as Hayek or Rawls, but I do remember quite liking what he had to say. Malthus was definitely a liberal, and I don’t remember him advocating any of the central government authoritarianism that you’ve associated with his name here: Malthus specifically referenced how technology could overcome his condition of food production increasing linearly while population increases exponentially, although later critics like Marx would suggest Malthus failed to develop this idea to the necessary extent. Malthus criticized pity-charity liberalism in the sense that it only perpetuated the existence of an underclass. In short, the Malthusian idea in the 21st Century is that unless we maintain our current levels of wealth and technological efficiency to support our swollen population, Nature shall require a massive correction. This actually sounds a lot like your argument here.

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  6. I’m not overly worried about constraints on growth for a couple of reasons:
    1) Negative feedback. When things get scarce their price rises, this spurs conservation efforts, encourages new resource exploration and incentivises the search for alternatives. A resource stock will end up lasting longer than a naive estimate would predict.

    2) Resources are endogenous to scientific advancement. Once upon a time petroleum was a nuisance that fouled the water tables, and uranium was good for little more than adding flexibility to steel or making paints a bit brighter. Naturally there are hard limits (at least everything we know about physics tells us so), but there’s a lot of raw materials in the Asteroid Belt, and the Sun throws out a ridiculous amount. We have time before we have to panic.

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    • More precisely, there will come a point where crude oil becomes so expensive that any enterprising guy (or big oil company if it was of the mind to) would find it profitable to make fuel from renewable sources (and undercut competition) Biodiesel is just around the corner. Just give it 5-10 years and a lot if not most of us will be driving hybrid (electric-biodiesel) cars or even full biodiesel cars.

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    • Quite so Kim; heck I’ll raise and cite the first world in general. The US is one of the leaders of the pack in terms of population growth and it’s just a smidge over replacement level (and much of that is attributable to fecund immigrants).

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