Planet saved … in Brisbane!

I’d think it was quite easy to over-state the significance of this, in light of the recent election. Why is this agreement not hilariously doomed on our side, and why expect compliance on the other?

@Asteele, surely Brett’s point is:

We know the US Congress has often sabotaged these kinds of agreements when they were from a different party to the president. Hence that has to be considered pretty likely to happen again this time…

And I think it’s sadly worth considering that scenario.

As humorously noted by the Reverend Doctor William Barber if the congress of the United States thought it to be the idea or initiative of Barack Obama they would not pass a kidney-stone.

I share the concerns expressed above, but am optimistic this at least COULD be a good thing. Someone said something once about expecting the worst…

Don’t let the Republican propagandist (he has a very long history at Kleimans’ blog) define the story line. The Republicans don’t have the ability to prevent this, and in any case the recent election did nothing to change the underlying logic (e.g. the leverage in one house to block anything is the same as the leverage in two, and there is nowhere near a veto-proof margin for doing anything as destructive as the denialists want.)

Like others, I see a certain irony that Brett Bellmore, libertarian, takes on the role of sober realist, while John Quiggin, economist, is the starry-eyed optimist.

The Keystone XL pipeline issue will rear its ugly head very shortly and I would be shocked if Obama does not allow himself to be rolled. I don’t attribute much to the partisan dynamics of Reps v Dems — the consensus intuition of politicians and public alike remains that energy = jobs and growth; growth is good, pollution and environmental loss is the price “we all” must pay for “good jobs”, and so on. That intuition is prior to any other political possibility.

The intuition, which I imagine is necessary for the world to stop short of 450 ppm, would have to support both a radical transformation of the energy basis of the economy and a radical reduction in the economy’s energy use.

The intuition we have — the pro energy growth intuition, which greets cheap gasoline as good news — is built into the experience of every day life for a lot of people. I get that some of the optimism is based on the idea that conservation and solar and electric cars can generate a countervailing experience, supportive of a pro-environmental, pro-restraint intuition.

I’m just not sure that we’ve really confronted the cheap economic high that oil and gas can still deliver like heroin to the addicted, nor have we come to grips with the very real requirement that we reduce total energy use, from any and all sources, period, and the constraint that would require.

> Don’t let the Republican propagandist (he has a very long history at Kleimans’ blog) define the story line.

He actually does it — he said earlier — because he “loves to argue” but his family don’t like that so he has to find random strangers to “argue” with.

… but since he’s not hugely responsive when errors of fact are pointed out to him “arguing” isn’t exactly the word, is it: he only enjoys the shouting part. “Bullying cock-head” seems to be more accurate.

Discussion forums are “commons” and accordingly have to be regulated, because otherwise someone will graze too many sheep. And at the end of the day if people won’t regulate themselves — and in the general case they won’t — then they need to be regulated: what, after all, is the ban toolkit for if not this situation?

Fucking give Brett the arse already.

I agree that a lot depends on the next presidential elections in the US.

It’s much more about what other elected representatives can do to eviscerate/ignore such agreements.

I think it’s quite easy to overstate this. This is basically just a big New Year’s resolution. As ever, the problem will be the United States, where planning more than five minutes into the future is virtually against the law. I’ll be surprised if this gets any farther than did Jimmy Carter’s energy initiative or George W. Bush’s Mars program.

The Onion nails it.

China Vows To Begin Aggressively Falsifying Air Pollution Numbers.

… while China has already taken steps to misrepresent its air quality, it will steadily expand its current deception and begin distorting data in a variety of new sectors, such as grossly overstating its level of investment in solar, wind, and other renewable energy sources. “China is strongly committed to the goal of claiming its greenhouse gas output has been cut in half by 2030. We will work tirelessly to exaggerate, manipulate, and in many cases flat-out lie about the amount of pollutants Chinese factories and energy plants release into the atmosphere. That is our unwavering pledge.” At press time, Chinese officials announced that the country had already met its goal.

We *could* `trust but verify’.

21: Americans want the environment to get better, provided it doesn’t cost them anything, like higher fuel costs.

In 2004, Elizabeth Economy reported that the entire PRC had fewer environmental regulators than were employed in the New York state Department of Environmental Conservation alone. That excluded EPA regulators in NY (i.e., federal employees) – just state. For a country of 1.3 billion people, the second largest economy in the world. Admittedly this was ten years ago, but still.

Can someone remind me? The Democrats didn’t make doing something about climate change their signature issue during the recent elections, did they? If so, I hadn’t heard about it.

I’m not cynical, just curious.

“Climate change is no longer a problem that can be fully solved with lifestyle simplification and energy abstinence, though energy profligacy can always make the problem worse.”

While this is true, it has been true for decades at least. How developed countries have developed has been unsustainable and ghg heavy and so this has always needed changing.

But since governments are being derelict and dragging their heels in this area, people should be making lifestyle choices themselves to reduce their ghg emissions – such as not using airplanes, avoiding driving for public transport and cycling and walking, not consuming animal products, not shopping unnecessarily, not using much energy at home and work, moving to renewable energy sources, divesting from fossil fuel companies and moving from banks/funds that invest in fossil fuel companies etc.

“The IPCC thinks that net human emissions should be zero in 2100. ”

This is not true at all.

The IPCC does not set a limit. It just makes up various scenarios. Only one in the last report is a strong mitigation scenario with a reasonable chance of staying within 2 degrees.

I will show in what follows that emissions will need to be ~0GtC from 2050 onwards.

The global agreement is to not exceed 2 degrees. There is a very limited ghg emissions budget to keep within to reach this goal.

So far as I can tell global zero/negative emissions needs to be in place between 2040-2050.

We had a Knight from the UK talk at university recently about the UK’s goal of reducing 80% of 1990 UK per capita carbon emissions by 2050. And other poor countries would reduce even more.

I said this would not be enough, since I had looked at similar figures before, and besides poor countries would not be pleased about this idea of the UK getting to emit more ghg, especially since all the trouble the UK caused the world with its centuries of imperialism.

Afterwards it was still maintained that this 80% reduction was ok. So I then I looked more carefully at the paper by a uni professor et al I had used for my figures, and also at the IPCC report.

I will copy out what I found about the carbon budget:

The UK per capita carbon emissions in 1990 were 10 tonnes (this might not include air and boat travel or holiday emissions or embedded emissions etc, but we’ll leave that issue aside for the sake of the argument here). A reduction of 80% would leave 2 tonnes of carbon emissions per capita in 2050 (by which time we will have emissions accounting including air and boat travel and holiday emissions and embedded emissions – so 2 tonnes is all carbon emissions together).
…
Since poor countries would not like to be told they have to emit less ghg than the UK for some unsaid reason, to be fair we will let all countries emit this same per capita amount.

The world’s population is expected to be ~9 billion in 2050 — so global carbon emissions in 2050 going by this preferred scenario would be ~18GtC.

So, from 2013’s carbon emissions of ~36GtC the preferred scenario would halve these by 2050 to ~18GtC.
…
Malte Meinshausen et al’s paper says to stay within just a 20% chance of exceeding 2 degrees there is a 890Gt or lower carbon budget from 2000-2050.

There is not a figure for a 100% chance of staying within 2 degrees, so we will have to go with 33% or >50%, and which could be used to directly infer compatible cumulative emis- sions. For a probability of >66% RCP2.6 can be used as a comparison. Combining the average back-calculated fossil fuel carbon emissions for RCP2.6 between 2012 and 2100 (270 PgC) with the average historical estimate of 515 PgC gives a total of 785 PgC, i.e., 790 PgC when rounded to 10 PgC. As the 785 PgC estimate excludes an explicit assessment of future land-use change emissions, the 790 PgC value also remains a conservative estimate consistent with the overall likelihood assessment.”

I looked this up and 1PgC = 1GtC (I do not see why these things are not standardised).

So it seems that the best scenario given by the IPCC to stay within 2 degrees (with just medium confidence sadly) has a carbon budget from 2012 to 2100 of 270GtC.
…
Carbon emissions in 2013 were ~36GtC and as before we’ll say 2014 will be the same.

This leaves 198GtC of carbon emissions from 2015 onwards a total left to emit for a medium confidence chance of staying within 2 degrees.
…

So let us compare these carbon budgets with the preferred scenario of reducing global emissions t0 20% of UK per capita emissions in 2050.

At the moment global carbon emissions are ~36GtC annually. If they stay at this same level until 2050 that will come to 1260GtC emitted over the period 2015-2050. That would greatly exceed our above mentioned carbon budgets.

So let us imagine an agreement in Paris in December 2015 to reduce emissions in line with the UK preferred per capita emissions scenario from ~36GtC in 2015 to ~18GtC in 2050.

I will be very generous and cut emissions more strongly earlier on in the scenario and decrease annual global emissions starting in just over a year’s time in 2016:

Imagined Global Emissions Scenario 2015-2050:
2015-2016 = 36GtC p.a. = 36GtC over the period
2016-2020 = 30GtC p.a. = 120GtC over the period
2020-2030 = 25GtC p.a. = 250GtC over the period
2030-2040 = 22GtC p.a. = 220GtC over the period
2040-2045 = 20GtC p.a. = 100GtC over the period
2045-2049 = 19GtC p.a. = 76GtC over the period
2049-2050 = 18GtC p.a. = 18GtC over the period

This emissions reduction pathway to 20% of 1990 UK per capita emissions by 2050 would add up to 820GtC over the period 2015-2050.

But — our budgets for 2 degrees range from a scant 198GtC to 398GtC.

Therefore this scenario of reducing emissions to 20% of 1990 UK per capita emissions by 2050 would have an over-shooting of carbon emissions of either 622GtC or 422GtC.

Further – how would we reduce emissions from 18GtC in 2050 to zeroGtC in 2051? That would be too great a reduction to be possible in one year – so the overall over-shoot in carbon emissions would be even greater than 422-622GtC.

…

So — Now let us go back to our budget instead of the UK’s preferred scenario.

We have 198GtC to 398GtC to emit.

As I am not a scientist I cannot say why there is a 200GtC difference between these figures, but I think it might be that the IPCC figure states it is just for fossil fuel carbon emissions, but maybe Malte Meinshausen et al look at carbon emissions from all sources including land use. Lower figures are less risky, but you do need to include carbon emissions from all sources.

I will make up scenarios for each, as an example of how the decreasing of emissions should go.

Malte Meinshausen et al Scenario of 398GtC Carbon Budget from 2015 onwards
2015-2016 = 36GtC p.a. = 36GtC over the period
2016-2020 = 20GtC p.a. = 80GtC over the period
2020-2030 = 15GtC p.a. = 150GtC over the period
2030-2040 = 8GtC p.a. = 80GtC over the period
2040-2045 = 4GtC p.a. = 20GtC over the period
2045-2049 = 2GtC p.a. = 8GtC over the period
2049-2050 = 1GtC p.a. = 1GtC over the period

Emissions 2015-2050 come to 375GtC. So with this scenario from 2050-2100 there remains 24GtC left to emit – which equates to a very small annual allowance of 0.48GtC p.a. carbon emissions from all sources from 2050-2100.

IPCC Scenario of 198GtC Carbon Budget
2015-2016 = 36GtC p.a. = 36GtC over the period
2016-2020 = 15GtC p.a. = 60GtC over the period
2020-2030 = 5GtC p.a. = 50GtC over the period
2030-2040 = 3GtC p.a. = 30GtC over the period
2040-2045 = 2GtC p.a. = 10GtC over the period
2045-2049 = 1GtC p.a. = 4GtC over the period
2049-2050 = 1GtC p.a. = 1GtC over the period

Emissions 2015-2050 come to 191GtC. So with this scenario there remains 7GtC left to emit from 2050-2100, which is an annual allocation of 0.14GtC p.a. until 2100.

As you can see from my two scenarios above – even with with my very sharp cuts to global emissions between 2015 and 2050 (I here cut much more sharply than other scenarios I have seen) — the remaining carbon left to emit from 2050-2100 is so little as to be to all practical purposes zero p.a.

ZM, as far as I can tell you have done the sums correctly, and they are bleak. My “zero by 2100” comment was based on this recent item in the news: http://www.rsc.org/chemistryworld/2014/11/climate-change-report-ipcc-zero-emissions

Which on closer reading was actually “emissions below zero” by 2100 — i.e. active interventions to remove CO2 from the atmosphere on top of drastic emission cuts. I think this is achievable though ambitious in technical terms. I’m much less optimistic about the social dynamics required to implement the technical program. My best guess, as opposed to my most hopeful, is that humans will blow past every milestone identified by the IPCC and arrive in dire, uncharted territory next century.

Agreements about targets are only cosmetic in the absence of any practical programs to achieve them. While some aspirational agreement is a positive development, it may well cause Republican opposition in the USA to ratchet up a notch and thus cancel out any concrete benefit.

I think my working of figures in my comment above was around about correct.

I have now checked with a report from the Tyndall Centre about staying within 2 degrees since they are very reputable and Kevin Anderson is committed and only takes trains even when he goes to China nowadays.

http://tyndall.ac.uk/sites/default/files/gca_tyndall_cicerosideevent_5combined.pdf

The graph on page 92 shows just above ZERO GtC annual global emissions by 2050, just as my figures above suggest needs to happen.

Looking at the graph the line is well below the 18GtC in 2050 of the UK (and elsewhere) preferred 80% of 1990 emissions cut.

The Tyndall Centre report says:

“Avoiding dangerous climate change” (stabilisation at 2°C) remains a feasible goal of the international community just
… with economic (oikonimia), but not financial (chrematisitc), benefits” p. 100

“For Annex 1 nations 2°C mitigation requires:
Approx. 10% reduction in emissions year on year, i.e.

40% reduction by ~2018 (c.f. 1990)
70% reduction by ~2024
90% reduction by ~2030″

The UK Committee on Climate Change first report p.xiii & 7 (2009/11) says:
“To keep … global average temperature rise close to 2°C … the UK [must] cut emissions by at least 80% … the good news is that reductions of that size are possible without sacrificing the benefits of economic growth and rising prosperity.”

But the Tyndall Centre shows we need to go beyond these cuts to cuts 10%p.a. to stay within 2-3 degrees

Economists say
” Mitigation >4% p.a. [is] incompatible with growth? … at least according to Stern, IAM economists, et al”

So Tyndall Centre researchers say
“…dangerous climate change can only be avoided if economic growth is exchanged, at least temporarily*, for a period of planned austerity within Annex 1 nations…” (Anderson & Bows 2011)
*until low carbon energy supply is widespread

Tyndall Centre says targeting high emitting socio-economic groups to lower their emissions at this time is most important, since large proportions of people in the world have lowish emissions

‘& we know who the high‐emitters are,
so tailoring policies towards them should be easier?
– Climate scientists
– OECD (& other) academics
– Anyone at COP (with a few exceptions perhaps)
– Anyone who gets on a plane once a year
2°C mitigation is principally about the short‐term; i.e. now to 2025 … so is mostly about the few not the many
Mitigation is a consumption and not a population issue!”

I suppose the difference is that pi isn’t 3, while CO2 isn’t, objectively, a “pollutant”, which I take to be a substance you don’t want in the environment at ANY level. Rather, it’s a substance that has to be present at some minimum level for life to continue, too much of it is bad, and somewhere in between there’s an optimum. Unfortunately, the laws the EPA is charged with enforcing aren’t a good fit for that sort of substance.

The big problem you get into with legally labeling CO2 a “pollutant”, is that, while doing so might be within the EPA’s current discretion, what gets done after that isn’t discretionary, and isn’t practical, either.

At least not if we’re not going to massively build nuclear plants.

For most polutants we “have to” accept minimum levels, as a practical matter, though we’d prefer no lead at all in our environment. For CO2 we NEED minimum levels. There’s an optimum. There is, though some people don’t like it, a dispute over what that optimum is.

I’m saying the law the EPA is enforcing isn’t a good fit to substances which have optimum levels other than zero. Which is why the EPA went to court to be allowed to not enforce the law as written. (Man, that happens a lot these days…)

“There is, though some people don’t like it, a dispute over what that optimum is.”

There is not really much of a dispute , except if you mean by lying scoundrels or the unfortunate people who have been taken in by their lies.

The pre-industrial climate was for around 7,000 or 8,000 years (the duration of human agricultural civilisation) the most stable and friendly to agriculture. Current ghg emissions are moving the climate away from this.

The main disagreement is whether 350ppm which we have passed is the safe point, or we can go to 2 degrees/~450ppm which is the agreed upon international limit (although current policies without revision will take us to 4-6 degrees).

Main thing, though, is that we have avoided making interpersonal comparisons of utility.

John Q:
There is something called a Bern somethingorother that gives several fits for how much CO2 stays in the atmosphere as a function of time. One can take an emission profile and convolve with that function to get an estimate of how Co2 will evolve with time. The fact that ~45% is currently being absorbed is primarily a function of the fact that concentration has been rising rapidly, and the short time horizon sinks are catching up. If you cut emissions 55% to get instantaneous equilibrium (ignoring seasonal variation), within a few years ocean update would noticable slow, and concentrations would continue to rise. For any century scale length of time we have to cut emissions almost a hundred percent to stabilize.

The problem with making a big deal out of 2C, is the probable fact that once it seems unachievable, then the urge to “we can’t fix it, party on dude” grows.

Omega Centari: “The problem with making a big deal out of 2C, is the probable fact that once it seems unachievable, then the urge to “we can’t fix it, party on dude” grows.”

John Quiggin: “Agreed. It also strengths the mirror-image position, which is roughly “Unless we adopt my comprehensive strategy for central planning/living in yurts/reducing population by 90 per cent” we may as well do nothing.”

I agree that there would be a problem if 2 degrees came to be impossible to stay within and then everyone decided not to cut ghg emissions at all.

But I think that is some time off still – and the present problem is all these reports that say they have found a great way to cut emissions and grow the economy — except they don’t manage to map a path to stay within 2 degrees even though this is the agreed upon limit.

These reports are much worse than these proponents of universal-yurt-dwelling-to-stay-within-2-degrees (I have never met one of these people myself and am dubious they are having any influence except maybe in Mongolia, and likely not even there these days…) because at least yurt universalists are trying to stay within 2 degrees , not just say we must have economic growth and never mind if it leads to 3-4 degrees :/

I’m more worried about those Yurt Dwellers than about a lousy 2 or 3 degrees on the thermometer. I hadn’t known about them until JQ brought them up. Just think of the trouble they could cause if they linked up with the Welfare Queens in their Cadillacs!

I’ve encountered a few gentle vegan hippies with dreadlocks and pastoral hallucinations from time to time and I must admit I’m not fond of the scent of patchouli. But I was unaware that they wielded such immense political power as to block climate policies that didn’t conform to their ideological preferences.

Must be some high-powered mirror to detect the invisibly powerful presence of such bogeymen (and bogeywomyn).

If those Yurt dwellers can be organized by the second coming of Ghengis Khan, then we are in real trouble.

I also think telling people they have to cut way back is counterproductive. The technology for renewables is getting more cost effective at a petty fast clip. I don’t hink that once the energy transition is over that energy costs will be much higher than today -in fact I think they will be lower. So we might really be able to have our cake and eat it to, we just have to pay attention to redesigning the kitchen before it is too late. The message of having to cutback leads too many people to decide to reject efforts to tackle the problem

“Rather, it’s a substance that has to be present at some minimum level for life to continue, too much of it is bad, and somewhere in between there’s an optimum. Unfortunately, the laws the EPA is charged with enforcing aren’t a good fit for that sort of substance.”

As someone who’s actually practiced environmental law in the past decade I can assure anyone still reading this thread that this is utter nonsense. SOX, NOX and VOCs (sulfur oxides, primarily SO2, nitrogen oxides and volatile compounds) all exist naturally in the atmosphere. These compounds present the exact same issue as CO2 — how much can humans add to the environment without violating the law.

OK, I didn’t respond to Brett Bellmores utterly stupid comment that deserved no reply, and then three other people made reasonable responses.

If I had, would the others have bothered? Maybe from a utilitarian point of view it would have been better if I did. If I waste a little time, and it keeps three good smart people from wasting their time, that might be a plus.

But then, two of them responded after the first good response. maybe it wouldn’t have helped.

The evil yurt people are quite rare. I’ve never met one face to face, only spotted them online. I would see their ilk sometimes on The Oil Drum back in the day. I can’t remember any of them going full-yurtist over AGW, only over fossil fuel depletion.

The most common variant was people who believed that there was no way for complex societies to survive fossil fuel depletion and maintain population carrying capacity. They were planning survivalist “lifeboat” communities, including measures to keep surplus refugees from swamping their boats in the time it took them to starve to death. Bicycles, community, permaculture, and violently excluding the sheeple who ignored Cassandra’s warnings. Some of those people were just darkly pessimistic. Others I suspected were relishing their future “hard choices,” the latter group distinguishing themselves by expressing disappointment at signs that the end of civilization might be delayed.

One time I found a snake’s nest of evil yurters on a very weird reactionary blog. The blog’s premise was that Peak Oil was going to destroy the institutions and conventions that have been wrongly equalizing people since the Enlightenment. A great opportunity was coming up for ruthless white men to kill their rivals and use the survivors without limits or mercy. Their ideal was something like white Haitian planters circa 1750, but with fewer protections for women.

Again, I’ve seen these disturbing ideas online, but they’re extremely rare and marginal threats. Worrying about them in preference to the assholes who want to burn all the world’s coal is like worrying about death by shark over death by car accident.

Yes indeed, I think the evil yurt people are not a big threat. The previous discussion I was referring to on JQ’s blog was more about JQ attacking the misguided community garden people rather than the evil yurt people (ZM may possibly remember it) but I think there’s a worrying trend of attacking potential allies here.

Being a moderately successful simple life person myself – vegetarian who probably feeds myself about half from veggies I grow at home or in the community garden, person who walks or cycles a lot, able to have solar panels which supply more energy than I need except for June-August (Melbourne winter) – and also being a public health researcher who knows this stuff is good for me – I think the simple life actually has a lot to recommend it. I also think my personal emissions are pretty close to sustainable levels.

There’s something behind these random attacks on mythical yurt people and actual community gardeners, and I would like to understand what it is. I feel it would be helpful to the cause to understand this phenomenon.

I hadn’t heard of Ted Trainer before but I’ve seen the type. I have similar negative feelings about Ozzie Zehner, author of Green Illusions. I started reading his work thinking OK, here’s a guy who has spent a lot of time examining renewable energy and isn’t trying to sugarcoat the difficulty of the transition. And then I kept reading and he went off the deep end. When his methodology deviates from that used by e.g. the IPCC he’s just making shit up.

Like this terrible article: http://spectrum.ieee.org/energy/renewables/ozzie-zehner-responds-to-his-critics

Let us merely consider the problem of measuring carbon. The conventional method is a carbon tabulation, which attempts to account for every bit of carbon dioxide that accrues during the use and sometimes also the construction and disposal of a product. But researchers can follow the carbon trail only so far.

Many such studies are not especially compelling, because they don’t hold up to the shorthand cost check that I term the price-tag predicament. The cost of manufactured goods ultimately boils down to two things: natural resource extraction, and profit. Extraction is largely based on fossil-fuel inputs. Profit, in this broad stroke, is essentially a promise to extract more in the future. Generally speaking, if a supposedly green machine costs more than its conventional rival, then more resources had to be claimed to make it possible. A lot of carbon must be poured into the atmosphere to make and charge an electric car.

And as the top comment on the article says:
This is the basis on which to disregard conventional life cycle analysis? Price tags represent natural resource use better than directed study? By this reckoning a coal burning furnace is less environmentally taxing than a propane burning furnace, since thermal coal has a much lower price tag. Don’t try to bamboozle me with “chemistry” or “instrumentation” — I already know the answer from the price tag.

I remember a subset of people from the Oil Drum who used this crooked formulation too. Money is ultimately energy use is ultimately pollution.

I’m reminded of a bit in Red Plenty where one of the researchers has constructed his planning matrix to show that labor is the ultimate source of value, in accordance with Marxist-Leninist science. But he privately realizes that you could arbitrarily designate any part of the economy the “ultimate” part and construct a matrix to reflect that. Labor theory of value, electricity theory of value, iron theory of value, wheat theory of value, water theory of value… Just declare that economic activity is really about one special thing, and prove it by recursively decomposing every activity into “part that goes toward special thing” and “parts that need to be further decomposed until you reach special thing.”

Unsurprisingly, Paul Krugman’s column on Thursday supports the view that this agreement is a significant advance, describing it in the context of the US political/economic situation.

http://www.nytimes.com/2014/11/14/opinion/paul-krugman-china-coal-climate.html

Thanks, Sandwichman. That’s very interesting and rather discouraging. I hadn’t encountered Kaldor-Hicks or the term numeraire before. I have no formal background in economics, so to the extent that I gain insights about economic questions I am almost always rediscovering something I just never learned the name for.

Thornton Hall,

The only comment I wrote with maths was at 29. We are now up to 77. Moreover your comment adds exactly nothing to the discussion beyond being rude to me about maths in a much earlier comment :/

I mean of course “I welcome” above.

Also @74 – like Matt, I think that’s really interesting. Thank you for telling us about that.

I joined in the ridicule of the “yurt” remark, but I find myself increasingly curious about the passion behind the scorn for Ted Trainer and his apocalyptos. Holding Mark Diesendorf up as a standard of credibility set off some alarms for me.

I mean I get what Matt @ 61 was saying about some of the bizarre thinking the prospective decline of civilization can elicit. Peak Oil speculation attracted more than its share of apocalyptos and any prospective end of the world will bring out the perennial millennials.

What I don’t quite get is the alleged symmetry produced by making a big deal out of 2C,
between
1.) [Omega Centauri @ 47:] The problem with making a big deal out of 2C is the probable fact that once it seems unachievable, then the urge to “we can’t fix it, party on dude” grows.
AND
2.) [John Quiggin @ 49:] It also strengths the mirror-image position, which is roughly “Unless we adopt my comprehensive strategy for central planning/living in yurts/reducing population by 90 per cent” we may as well do nothing.

When I really focus on this alleged symmetry, I find I’m not sure what point is being made.

Obviously, we should earnestly want to meet the challenges of this century. But, is it realistic to imagine that we will?

Don’t forget that the “choice” on offer between the sober economists and the alleged yurt dwellers is not between radical simplicity and maintaining current living standards. Oh, no. The choice is between living in yurts and being a hypothetical 10 or 20 times richer (on average) than we are today. Of course “on average” means that it might be only the 1% who are 10,000 times richer and the rest of us who are poorer but… Kaldor-Hicks! It’s a Potential Pareto Improvement because the 1% could compensate the other 99%. Don’t you know?

Except that the supposed Potential Pareto Improvement is not even a potential improvement. It’s a simple accounting error that arises from simply not noticing that public goods (air, water, environmental quality) DO NOT EXCHANGE AT MARKET PRICES. The “potential improvement” is an illusion, the artefact of choice of numeraire, as Kjell Arne Brekke pointed out in the Journal of Public Economics sixteen years ago and as Jean Drèze confirmed in his commentary on Brekke’s article.

By the way, in his acknowledgments, Brekke thanks Amartya Sen and Nicholas Stern, among others, for helpful comments. So you might want to cede this some credibility.

“The numéraire matters in cost-benefit analysis.” Kjell Arne Brekke, Journal of Public Economics (1997) 64: pp.117–123.

Abstract: The choice of numéraire is shown to be important in cost-benefit analysis. When a public good is involved, individual consumers” marginal rates of substitution will generally differ. Thus, the less valuable the numéraire is to a person, the higher the number required to express his net benefit, and the more will his interest weigh in the total sum. The choice of money as numéraire is systematically favourable to those who value money the least, relative to alternative numéraires.

The upshot is that the choice is not between dwelling in yurts and 20 times higher income. The choice is between pie-in-the-sky and throwing out the Potential Pareto Improvement hokum that dwells at the very heart of climate-economy models like Nordhaus’s DICE and even Stern’s more ethically-driven model.

The zombie Kaldor-Hicks compensation criteria was D.O.A. 75 years ago.

ZM @ 82:

I appreciated your reference to Elizabeth Kolbert’s review:

. . . when you tell people what it would actually take to radically reduce carbon emissions, they turn away. They don’t want to give up air travel or air conditioning or HDTV or trips to the mall or the family car or the myriad other things that go along with consuming 5,000 or 8,000 or 12,000 watts.

I suppose that Mark Diesendorf would say we don’t have to give up (much), because we can easily substitute renewable energy for fossil fuels and civilization will continue on its merry course, the cost of renewable energy will fall relative to fossil fuels real soon now making fossil fuels obsolete, increased energy efficiency will enable conservation, and so on. We just have to get on the renewables wagon and stay on it until there’s nothing else, circa 2o50 or 2070.

Does the argument come down to how much energy use in total should be / must be reduced to save human population and civilization?

Bruce Wilder,

I am not sure what Mark Diesendorf says about consumption. His book does say conserving energy will be necessary, as well as adapting to fluctuating supply with biogas turbines assisting. But he was looking only at Australia, and we do mostly light manufacturing now.

He said people have to develop more citizen’s movements. And he thinks a transition to 100% RET cannot happen before 25 years due to social reasons and a shortage of electrical engineers.

He wrote a paper with another person I think on whether a war economy would be a good idea, but I think thought it would be difficult without threat of an enemy.

“Unless we adopt my comprehensive strategy for central planning/living in yurts/reducing population by 90 per cent” we may as well do nothing.”

It’s the central planning bit that I think is more questionable than the living in yurts bit. As I’ve tried to write repeatedly, energy is already centrally planned. No one, in any state that I know of, says “oh, yeah, the magic of the marketplace will provide a new 2000 MW power plant when we need one”. No one who designs a car for mass production anywhere in the world says “Well, who cares what MPG it gets, that doesn’t affect where we can sell it.” In any large country, all the important decisions about GHG generation are going to be implemented at something like 1000 specific facilities. That’s really not too many to keep track of.

all the important decisions about GHG generation are going to be implemented at something like 1000 specific facilities

I guess I am enough of an economist to quibble about that. Everyone who drives a car or truck — in the U.S. there are around 200 million licensed drivers — is making daily decisions that affect GHG generation. Everyone, who lives in a dwelling with fossil-fuel driven heating or air conditioning is making decisions about GHG generation — again, at a guess, over 200 million in the U.S. can have their hands on the thermostat. Everyone, who uses computers, cellphones, the internet, etc — about 250 million in the U.S. — . . .

We live in a complex economic system of distributed decision-making, and its architecture matters to how much energy we consume in its operation. In constraining the behavior of the strategic agents that we all are, what choices to centralize is, itself, a strategic choice. I am not enough of a damn fool to think that we live in a market economy or that a market price for carbon will be a sufficient centralized constraint. A suburban economy centered on automobiles, detached homes and selling stuff to one another over fiber-optic internet may not be a practical architecture going forward. I’m not endorsing yurts as the only possibility, only saying we need to be thinking this through a bit more seriously than the brain-dead economists, who want to sell us insurance against certain catastrophe, to pay off for great grandchildren that they assure us with a straight-face will be 4x to 10x richer and more productive than we are.

Matt @90
The standard Bern model has 13.69% of the emissions staying in the atmosphere for ever. Thats of course a gross simplification as the geochemical process where silates weather into carbonates (absorbing CO2) has a time constant of a few hundred thousand to a million years. So geologically, its really only an instant!

But, mostly I hear people making the equity argument about global warming between current rich versus current poor people, but the bigger equity issue is intergenerational equity. I doubt that in a thousand years time the geographic distribution of rich/poor will look the same as today. Mostly it will be that the vast majority of the victims lifetimes will not overlap with the lifetimes of those who caused the damage.

Bruce, its tougher for individual actions to have much of an impact than things would appear at first. As one of the early adopters of a plugin vehicle, I see that many of the gains in terms of US oil consumption will likely be squandered, as people react to “cheap-gas”, by buying less efficient vehicles and driving more. This price decrease is partly due to decreased consumption (by people like me), and partly due to fracking. The multiplier on our indivdual consumtion changes is often quite a bit less than one, because of supply/demand effects.

Yes, there are hundreds of millions of automobile drivers. There are much smaller numbers of automobile manufacturers. Regulate them. Persuading one big-company executive to do things better is worth a million individually persuaded consumers. Persuading legislators to pass one good regulatory bill is worth a hundred individually persuaded big-company executives. Have progressives totally forgotten how to get results, or are they so demoralized that they’ve stopped dreaming of anything more effective than the gentle persuasion of atomized individuals?

The numbers on North Korea: currently at 3 tonnes CO2 per capita annually. If you reduced that 80 percent, to 0.6 tonnes, a population of 10 billion would emit 6 billion tonnes annually. This is only 1/6 of 2013 emissions, but it is still more than 10 times as much CO2 as natural rates of silicate weathering permanently sequester. If humans manage to stabilize emissions at 6 billion tonnes per year that would be a great improvement on today’s status quo (2013: 36 billion tonnes), but the atmospheric CO2 concentration would continue to rise indefinitely.

Yes, it is a system and the architecture of the system matters, because only the architecture can impose the necessary constraints on individual behavior. I thought I said as much.

I’ll expand on this a little bit. Here’s an article on U.S. power plants. There’s a chart in the middle that shows how much and what kind of power generation has been built since 1940.

So why no coal in recent decades? The article says “They are not economically competitive, mainly because of the high capital expense of modern pollution controls. ” But that’s BS, really. If someone counts the cost of pollution controls into the cost of power from coal, it’s because someone has made the political decision to count the cost of pollution controls into the cost of power from coal. If someone decides not to count the costs of climate change into the cost of power from coal, that’s also a political decision. Actually, there is no “cost” of power from coal. The economics that would determine a market cost are completely dominated by accreted political decisions.

And once built, can homeowners make any meaningful decision about how much of that coal powered electricity to use? No. Houses are built so that they have to use energy within a certain range. The coal plants have been built so that ideally, they’re always on for a certain number of hours per year. It would take extraordinary non-market events to turn them off, and they can’t be turned up that much. Nor can people turn up their electricity use and have a new, major coal plant suddenly appear via market mechanisms — people don’t make investments of that magnitude without governmental assurances.

No One has ever seen an Invisible Hand!

Here’s the latest U.S.

Here’s the latest U.S. energy flow chart. You’ll notice that the household sector (obviously ex transport) accounts for about 11 quadrillion BTUs, of which about 4 quads are “waste”. IOW even if we increase consumption efficiency to reduce waste and improve efficiency in energy production, it’s just a relatively small piece of the puzzle:

http://assets.inhabitat.com/wp-content/blogs.dir/1/files/2014/04/infographic-us-energy-2.jpg

I don’t think that there are actually many people here who are energy marketplace believers, but what do people think of the whole Keystone XL thing? When opposition started, I saw a whole lot of “ha ha oil has a global price so not building the pipeline won’t change anything foolish greenies”. But finally these people seem to have started to realize that the conditions for this global market aren’t magically just met unless politicians command that specific infrastructure be built, and that essentially none of the major decisions are made by “the market”.

I do want to get in a word about nonrenewable natural resource consumption. This clearly has to go way way down to have any hope of reaching a sustainable level. However the planet has natural energy flows many times our civilizations demand, and we are getting a lot more efficient at tapping into these flows. Longterm I don’t see energy as the limiting resource, simply because there really is a great deal available. The problem is getting a critical mass of decision makers/shapers to see things that way, and then to make the transition happen as rapidly as possible. At the moment, particularly in the USA, Canada, and Australia, those who wish to delay the transition as much as possible have a strong hand politically, and in shaping opinion.

We are almost at peak CO2 effect on the climate.
http://wattsupwiththat.com/2014/08/10/the-diminishing-influence-of-increasing-carbon-dioxide-on-temperature/

The political problem we face is one of governance — that is building systems of governance.

Governance is ultimately what we are talking about in relation to GHG and climate change. Governance is the backward-looking process of gaining control of processes on the basis of experience, aka feedback. Things go badly, you recognize that things are going badly, you organize to bring the processes going badly under control, which is to say you build a model of the process and begin collecting relevant information, playing a game with the universe to get a better result, but accepting some error and waste. And, “you” is a group of people, partly coordinated by hierarchy imposing constraints and gathering and distributing information. AKA government. An example might be the cod fishery in the North Atlantic declining, and then fishery experts are brought in to constrain the activities of the fisherman. Or, an epidemic disease breaks out, and epidemiologists come in to identify the disease and advise on methods to treat and contain the disease. We’ve done it many, many times in the course of developing the modern world, in developing industrial technologies and social systems.

Now, things are going wrong with one of the most general systems of all: the capacity of the earth’s environment to absorb the waste driven by our use of energy, particularly but not exclusively the addition to the carbon cycle from the currently massive use of fossil fuels. Experts are gathering information for the first time on climate and the carbon cycle, modeling their hearts out.

And, here’s the thing about the governance cycle: we wait for it to motivate us with a definite kick in the rear. It is, by its nature, a backwards-looking process. The kick is in the rear for an inherent reason. It is about learning from error and correcting mistakes. We wait for the North Atlantic cod fishery to decline by 97 percent, and then we get busy and hope for recovery, which may never come. We wait for ebola to cause a major epidemic in which lots of people die, then, with some hesitation and delay, we act. We wait for the passenger pigeon to go extinct and then . . . oops.

Assuming that we dither about, waiting for the kick in the rear to arrive, the productive capacity of the earth and our industrial civilization may well have declined significantly by 2050 or 2100. The natural foundation — the gift of natural capital, if you like — will be eroding beneath our feet, and the erosion will be accelerating. Contra the brain-dead economists, who are advising us to buy insurance against certain catastrophe: our grandchildren may very well not be 10x or 4x as rich and productive as we are. The enormous power of the capitalist industrial economy may erode under the pressure of resource depletion and climate change and other untoward developments relating to the limited capacity of earth to assimilate the entropy of industrial civilization combined with Malthusian populations.

The point I was trying to make to Rich P is that the political economy system we live and work in is a loosely coordinated system of decentralized decision-making, even if it most definitely is not the “market economy” elegantly coordinated by market price envisioned by Hayek or Friedman, its invisible hand moving us all to a Panglossian equilibrium.

People commonly have trouble thinking through the implications of what is a decentralized, loosely coordinated system of decision and choice: all decentralized, coordinated systems of choice centralize a lot of decisions, but the individual intentions and reliably predictable consequences of our immediate, personal experience disappear into the ghost in the machine. Economists should know this, and be able to instruct the rest of us, but, mostly, they don’t, because they are busy preaching markets and the market economy to people, who live an economy dominated by hierarchies. Price is one coordinating mechanism among many, and the vast majority of prices encountered by people every day are administered (and not in any practical sense market-formed), because a system of systems of command-and-control to achieve technical efficiency overlays the systems of resource allocation; the hybrid political system is a continual struggle over rent extraction, arbitration, domination, the provision of public goods, management of the commons and governance.

The driveable systems of how our immediate experience — like our automobiles — have a single set of controls, a single steering wheel, a single driver for good reason. But, the political economy is a system with a great many controls and drivers, the coordination among them emerging from the game of bumper cars they play.

Sometimes, you can nudge the system onto another path, by degrees, and that’s sufficient. Sometimes, we have to change the system. Climate change, peak oil, ecology collapse, overpopulation, resource limits — fill your own basket — will require more profound change in the architecture of the system. Which means partially stopping and dismantling at least part of the structure of the system. And, the cost of that stoppage will be immediate and acute. And, it will happen partially by means of accelerated personnel change among the elite and an accelerated exchange of ideologies.

There’s a reason, why revolutions occur in moments of crisis. The revolution doesn’t just create the crisis; the crisis, arising from a failure of the existing system, is the occasion for the revolution. Because the “system” has at that moment failed, and the cost of stopping or dismantling the system is no longer a cost, no longer a consequence of the decision to change — those costs are a given, the gift of crisis. Crisis, brought on by system failure, frees the system to change.

There’s an argument that says we do not have to endure crisis, we can plug in solar panels and wind turbines and smart controls on the electric grid and continue on our merry way, our standard of living intact. We don’t need to have a heart attack to motivate us to finally get serious about losing weight.

Human ambivalence is such, that some people are inevitably going to go into denial mode, and argue that the problems of climate change are exaggerated or that they are not really happening, etc. And, some will argue that changing our habits in small, almost-but-not-quite painless increments will be enough, we will “bend the cost curve” in the famous last words of Obamacare. And, still others will use the prospects to feed their apocalyptic fantasies of the Coming Millenium; they will attempt to “collapse now, and avoid the rush” (as the Archdruid recommends).

And, the actual changes will happen very, very slowly, truth be told. Maybe, maybe, there will some events suitable for a Hollywood movie script — an interruption of the Gulf Stream freezing northern Europe, or a season of super-Hurricanes drowning Florida, or a drought that kills the Amazon rain forest. The kick-in-the-rear that galvanizes ambivalence into the orderly marching of armies and motivates people to seek to change the way we govern our industrial civilization’s use of energy and the natural environment’s assimilative capacity.

Maybe, we will have de-growth thrust upon us, not as a choice but as a consequence. That’s my perception. And, that slide down Seneca’s Cliff, into a three century collapse of civilization will characterize mankind’s future history. Three centuries is a lot of time to come to some collective awareness of what is happening and invent some alternative path. So, there’s that hope.

Oh, God. An unclosed tag. Here, let me test it. If it turns out the next 5000 words in the thread are in italics, please forgive me my trespasses as I’ve forgiven those who’ve….

Sandwichman @ 114: “The contemporary climate-economy models projecting future affluence make no provision for people choosing leisure over more income.”

Which, of course, would be a sensible choice to make, since leisure, generally speaking, can be satisfying and a lot less taxing on the environment than producing more stuff.

By my rough reckoning, more than half of the U.S. workforce is dedicated primarily to salesmanship in various forms — including, of course, what has become that hunchback cousin of salesmanship and that bane of American economi life, “administration”. There’s nothing wrong with real administration — two cheers for bureaucracy! — but most of what we call “administration” isn’t smoothing the path and oiling the gears of social cooperation, but just the opposite in the service of rent extraction and upward redistribution of income.

Would any of us be worse off if there were fewer commercials on teevee or YouTube? Fewer unsolicited calls from pathetic telemarketers? Fewer quisling managers outsourcing the work of the few people doing actual useful work? If tech support didn’t waste everyone’s time with a preface telling us that our call was important or how easy it is going to be? Is it really necessary for democratic government to be financed and run by giant financial companies whose only business is usury and money laundering?

I don’t think I want to live in Ted Trainer’s Yurt village, but, how hard would it be for us to embrace the value of simply dialing back the enormous effort our industrial civilization puts into making us miserable in the interest of full employment?

An opportunity for pareto improvement!

Potential Pareto improvement, that is.

We’d be better off with less advertising, fewer echo chambers, fewer telemarketing calls. The low hanging fruit should be plucked. But that’s not nearly enough to stabilize atmospheric CO2. If we all do a little, we’ll only accomplish a little. If global per-capita emissions stabilized at North Korean levels, presently 3 tonnes per capita annually, that would still be way too much, absent active interventions to remove CO2 from the atmosphere. What does it take for a democratic country to reach the Very High group of the Human Development Index? Chile, at 4 tonnes per capita, appears to be the lowest-emitting member of the group. HDI world champion Norway is at 10.1 tonnes per capita.

Here’s another thorny equity question I can’t answer: do the land and forests of Norway, including all their natural resources and services, belong to Norwegians? If I say “yes” that’s an extreme form of birth lottery — it means that every Norwegian can consume about 30 times as much as a South Korean just because they were born in a low population density nation. If I say “no, every person is equally entitled to a share of the world’s natural bounty” I’m worried by the intuition — not quite an argument — that this is akin to Americans thinking they deserve cheap oil from the Middle East regardless of how Middle Easterners feel. And on the gripping hand, most ecosystem services are geographically localized. Conserving water in Michigan does nothing to help with a drought in California or Syria. Natural carbon dioxide sinking from uptake by vegetation and rock weathering is the rare ecosystem service that cannot be reserved for local use.

RP: . . . “loosely coordinated system of decentralized decision-making” covers a very wide range of possible setups.

As I intended you to understand. There’s a lot of elastic in “loosely coordinated”.

(If you need a polar contrast, then a strongly coordinated system would be one in which the private interests and autonomy of the component parts are more completely subordinated to the interests and autonomy of the whole. A system has to be fairly tightly coordinated to even have interests or purposes of its own, distinct from those of its components. It’s not clear that a peaceful human political economy as a whole ever rises much above the level of having broadly shared interests among its constituents. Among social organizations, an army in wartime is fairly strongly and strictly coordinated. A mass-production factory in operation is far more coordinated than, say, the community that surrounds it.)

RP: . . . “What levers, as an activist, does that give me to help make changes in the outcome of the system? For example, the people who picked out the Keystone XL pipeline to oppose picked out something that really isn’t up to a loosely coordinated system etc.”

I think it really is up to a “loosely coordinated” system. “Loosely coordinated” systems produce emergent decisions from a game of bumper cars, by bringing in concepts and apparatus of public goods, including the public good of justice and lawful arbitration. In this case, eminent domain, safety and border control feature prominently, but not exclusively. (No, Virginia, no tatonnement.)

If it weren’t a “loosely coordinated” system, public sentiment and protest would hardly matter, as they don’t matter much to the movements of an army in war. The key decisions would not be taken by public bodies and officials, allegedly acting in a public interest.

Keystone XL was picked out because it was unusual, I suppose. Something was being built. By itself, that’s unusual. On the lee side of peak oil, not that much infrastructure is being built, nor will much ever be built. I don’t even want to guess how many years it has been since a new refinery was permitted and built. (As time goes on, one major issue is likely to be deterioration, neglect and abandonment, and a major political problem will be the rentier interest in continue to use enough fossil fuel to keep long-lived sunk-cost assets employed.) It was big — it would have a lot of interested neighbors, even thru sparsely populated territory. It crosses an international border. It helps foreigners (well, Canadians, who are at least technically foreign. Sort of.) It enables the movement of tar sands which even sound ugly. Bitumen — spit when you say it.

The loosely coordinated nature of the system is still as much an obstacle as an opportunity. The politicians can delay, playing all sides. In a loosely coordinated system, a kind of hydraulic dispersion takes place as opposing forces each try to find other routes around their opponents. Other pipelines will be upgraded or built, with a lot of effort to avoid similar salience. The Enright pipeline crosses the border, but has so far avoided Presidential attention, for example.

I disagree about the usefulness of popular consciousness and small commitments. If the price of gasoline goes up fifty cents a gallon, and most people understand that effect of a policy change as a good thing, as a step in going in the right direction, rather than as bad, terrible thing and a reason to throw the bums out at the next election — well, that’s important politically in itself, and for the next increase and the next and next down to the final extinction of gasoline. And, if people seeing the direction that gas prices are going, change their behaviors: drive slower, buy a smaller car, take public transit, ride a bicycle, take fewer shopping trips, move closer to work, carpool, favor a politician who wants to extend a streetcar line, all those will have an appreciable effect on rates of fossil fuel use.

Every political activist knows perfectly well that one of the most effective things you can do to build mass support is to get individuals to attend a meeting. Any meeting; better, many meetings. Just the fact of showing up and seeing other people show up, matters. (It’s not incidentally a proven, effective means to combat many common addictions.) A smart politician will ask for a $5 donation to his campaign, not because $5 donations will add up to enough to run a campaign, but because someone, who has “spent” $5 on your campaign, will make the effort to vote for you. Political parties still hold conventions because people who go to conventions will work for campaigns. Asking people to replace incandescent light bulbs with LED lights bulbs will increase their consciousness of (and responsiveness to!) charges for electricity. Asking them to do it, to save electricity and the planet will affect whether they consciously turn off lights; letting them do it, because it is cheap will get the Jevons effect of lighting up stadium skyscraper walls with architectural LEDs, using more electricity than before. Given the way people think, it really does change what they think and how they act.

And, yes, I do think the whole system, the whole architecture of political economy needs to be re-architected. Doesn’t every sentient being?

A revolutionary is just a frustrated activist facing unexpected opportunity.

“I do want to get in a word about nonrenewable natural resource consumption. This clearly has to go way way down to have any hope of reaching a sustainable level. … Longterm I don’t see energy as the limiting resource, simply because there really is a great deal available. ”

They are related though because supposing we don’t go back to just using photosynthesis and warmth and light of the sun – we harness renewable energy from technology — and this technology has to be built with materials. I do not know if RET uses more or less materials than Fossil Fuel Energy Technology – but it would still be a considerable amount.

There was a thread on John Quiggin’s blog a little while ago on a new report by the Australian professor/researcher Graham Turner whose area is looking at The Limits to Growth and comparing the modelling with historical data.

Turner’s work has found that the last 30-40 years have happened like the business as usual model in the Limits to Growth world system.

The concern of his most recent report is in the title – Is Global Collapse Imminent? This is because looking at the model we are now approaching the point where the model goes into decline. In the model I think this is because so many mineral and fossil fuel resources have been used that they get harder to access and the stores in the Earth get lower and lower. The model includes an economic model as well as physical model – and at this point the economic model has more and more capital as well as materials (in the form of machinery) being diverted from other areas in to getting dwindling resources – which then has a follow on effect on capital and materials available for welfare, education, health and eventually agriculture.

I think the best hope is maybe the LtG economic model is not very exact, since I have a low opinion of economic modelling being like reality. And anyway you can just change economic laws and practices if people are amenable.

But I asked Graham Turner about what if we go to a circular economy – but he said the problem is in the physical stocks of resources. If our circular economy recycled 75% of materials, eventually you would get to the point of the material stock dwindling.

This is difficult to know – I have heard this is a problem in some mining at the moment – that physical stocks are dwindling , and it is expensive to conduct exploration geology and if the mineral is not easy and economic to access then the mining companies prefer to do mountain top removal mining. I am not inclined to like this mountain top removal sort of mining, but this is likely because I grew up with a gold mine on the hill just behind our house.

Moving to a circular economy quickly is still the best option. It would be good if you could recycle 100% of things – but some things now get damaged and then can’t be recycled. It might be possible to eliminate this sort of damage?

I think it’s likely that industrial, technological civilization will continue “with” 10 billion people on the planet. I think it is unlikely that it will exist “for” all 10 billion. Much like today, where the median Egyptian and the median Norwegian have very different experiences while living on the same planet in the same year.

Nations that have already attained a high material standard of living are already generally below replacement total fertility rate. Even the US made this transition in recent years, though it might go above replacement again when there’s another economic boom/bubble. The only high GDP-per-capita nations with above-replacement fertility right now are, I think, Israel, Kuwait, and Saudi Arabia. The nations with really high TFR, > 3, are pretty much a list of places you would hope not to be born into. Those are the places where the bulk of (potential) future population growth are coming from. It seems like a lot of growing potential for disaster and misery. Egypt has a rising fertility rate, low education rate, and is now dependent on imports for both food and energy. Heaven help it when/if its allies in the US and the Gulf States decide it’s not worth propping up any more.

I think it’s likely that industrial, technological civilization will continue “with” 10 billion people on the planet. I think it is unlikely that it will exist “for” all 10 billion.

As the environment degrades, more people will die.

The 2004 tsunami killed something like 150,000 directly, before any assistance could possibly come. Katrina killed around 1800 known, about 1% as many, and was surely less than 3,000.

Get more hurricanes and less assistance, and death rates will go up. Allocate less in the way or resources for assistance, and then when a sudden emergency happens say “Nobody could have predicted this!”.

There will still be people who have as many children as they can, on the assumption that some of them will survive. This is the best strategy in come conditions of uncertainty, when raising children is reasonably cheap. Those people won’t participate much in expensive technology. And they’ll only be able to trash resources that are not owned and guarded by somebody else.

ZM@130: “He said his idea is the goal of development is everyone in the world enjoying the same living standards as those of developed countries.”

Always a lovely sounding idea. The problem with it is that the CURRENT living standards of those in developed countries DEPENDS ON unequal exchange, particularly unequal ecological exchange. “Everyone” enjoying the same living standards would be kind of like everyone having a butler, cook, chauffeur and several maids. So if even the servants have servants, where are the servant’s servants going to get their servants from?

Robots! We’ll all have robot servants, which (of course) will run on zero-carbon renewable energy fuels. Meet George Jetson…

Since Bruce asked what I think will be the limiting resource, I’ll take a shot at it. I think it will be food, either because we’ve decreased soil productivity -and probably some ket micronutrient such as Phosphorus will become difficult to procure. But, of course agriculural productivity could also be impact by climate change, which is primarily a problem of sinks, rather than sources. I would be reluctant to predict any particulat mineral will run out, the whole fracking thing may eneable solution mining of lots of deep low concentration matials, and this could potentially increase the availability of any particular mineral resource severalfold. But, I doubt we will be able to do that for all materials, but I wouldn’t care to predict which will be limiting.

Stuff like wind turbines and PV don’t require huge amounts of material resources -at least not when compared to somethingy the volume of coal are burning today.

Of course we could also lose the battle against infectious diseases, it gets intrinsically tougher as the population increases, and there are only so many anti-pathogens to be discovered.

Its just that I see solar energy at several thousands of times current human consumption as being abundant enough to not likely become a limiting resource.

The moral calculus is less imperative than the energy calculus, though they cannot be separated. I trust that the world — or at least the rich parts — will ultimately persuade themselves that they are not responsible for the wretched refuse of the earth. On the front end — the industrial maw — if resources are not sufficient, what resources are available will be appropriated by the powerful and separated from the grasp of the unneeded among the powerless. On the back end, where the environmental consequences are distributed, the rich will use additional resources to protect themselves: as the earth heats up, they will turn up their air conditioning, literally and figuratively, exacerbating the problems of both front-end resource limits and back-end assimilation capacity.

It is a simple truth to say that an urban civilization depends on agricultural surplus. The farmer in his field must produce more than he needs for his own subsistence, if the artisans and merchants, priests and prostitutes, princes and soldiers are to eat. It is also a fundamental fact of agricultural production that too many field hands will eliminate the surplus — it is diminishing returns manifest as congestion of the commons. Sending additional fishing boats out on the lake will increase the haul of fish up to a point, after which each additional fishing boat will diminish the product of the others more than it can add to the total by itself, and the excessive predation may upset the ecological balance of the lake, causing the population stock of fish to crash. Before the industrial revolution, the greatest urban civilization the world had known was in first millenium China, where the enormous productivity of wet-rice methods (three crops a year!) provided the surplus to feed a vast imperium and urban civilization. The scale of artisanal activity enabled China to invent many devices and techniques as well as a great culture. They never realized the necessity of limiting population on the farm, and by 1500, Chinese farmers were living on the edge of perennial famine, as an oppressive political structure extracted the surplus necessary to keep some semblance of urban civilization going. It wasn’t the first instance of this dynamic in history.

The Neolithic Revolution, when humans first made the transition from living in nomadic hunter-gatherer bands to a sedentary agricultural life witnessed an initial population explosion, and the formation of proto-urban super-villages with many hundreds of inhabitants. Then, came the crash. In the eastern Mediterranean and Mideast, this crash happened very roughly around 5000 BC, and 1500 years passed before the coming Bronze Age witnessed another rise in population, this time with the organization of the imperium of “hydraulic” civilization. (A similar rise and crash appears in many places over time, as agriculture spread — population was crashing in Norther Europe where agriculture had come later, at the same it was rising with the advent of the Bronze Age elsewhere.) Bronze Age civilization crashed around 1200 BC — no one is sure why. And, around 800 BC, a population explosion at the beginning of the Iron Age set a trajectory that would carry the Mediterranean through the Glory that was Greece and the Grandeur that was Rome. The expansion of the Roman Empire reached its limits early in the second century with Trajan and Hadrian, and a secular decline in the productivity of Roman agriculture set in, and with it, a secular decline in trade. The extraction of a surplus was sufficiently oppressive as to depopulate much of the countryside in a series of epidemics, exacerbated by declining standards of nutrition and health. After the Fall of the Western Empire, the East seemed to be reviving its political will and organization in the reign of Justinian, when the Plague of Justinian — the most devastating pandemic in world history — plunged Europe irrevocably into the Dark Ages.

The Industrial Revolution amplified the dynamics of agricultural surplus with an energy surplus, derived from the exploitation of fossil fuels. It’s a more complex dynamic, but it seems to me it could involve a similar trajectory. I fully credit the sketches laid out by Graham Turner as an extension of the Limits to Growth, or the Handy Model, as plausible outlines of the Big Picture.

Tim Worstall, if he was still afflicting us, would champion the economist’s idea that we will simply substitute away from fossil fuels as the fossil fuels become more expensive. And, if the world could get its act together to enact a carbon tax or cap-n-trade or similar to represent the externalized costs of fossil fuels on the environment, many economists would argue, so much the better and sooner.

I think that economist’s argument goes wrong in several respects. On the moral calculus, it doesn’t credit the extent to which externalization of costs and appropriation of resources is built into the capitalists’ model. Good liberal than I am, I like to think we can do better, with democratic politics, social welfare and all that. But, we aren’t doing better, in fact. The concentration of economic and political power into the hands of a few thousand oligarchs and an elite of technocrats doing their bidding is kinda hard to miss. Policy follows structure, and it shouldn’t take a genius to see that policies of appropriation, extraction and externalization will follow.

On the possibility of “substitution” — which is to say, the possibility of substituting photovoltaic and thermal solar power and wind power systems for much of our fossil fuel consumption, there are good reasons for caution. The energy surplus that those technologies promise isn’t enough. The energy required to produce these new means of energy production is too large in relation to their rates of output to support our profligate use of energy. Any transition to depending upon those sources will require fairly radical reductions in overall energy consumption, and that will require changing not just the infrastructure of energy generation, but the infrastructure of energy consumption. I do not see much realism about the scale of effort required from the prophets of “renewable” energy. The energy calculus seems to be missing.

And, that leaves the miscellaneous depletion, pollution accumulation and congestion costs, which will be weighing down the productivity of the natural resources we do have remaining as we go forward. The aquifers that feed some of the most productive agricultural lands are being drained. Top soil is being eroded. Climate is changing. The ocean ecology is collapsing.

Omega centauri,

“like wind turbines and PV don’t require huge amounts of material resources -at least not when compared to something the volume of coal are burning today”

But you don’t use coal to build them – you have to use other materials , it is hard to say what the material differences would be between the current energy technology system and a RET system without research.

And because RET are exposed to the elements they might be difficult to recycle in a circular economy…

BW: “The energy required to produce these new means of energy production is too large in relation to their rates of output to support our profligate use of energy.”

I don’t think this is true — or, perhaps, it may have been true for an earlier generation of systems. Links like this or this say otherwise. Solar panels, for instance, now pay back their energy cost within 1-4 years of operation, and they last for 25 years.

“All scenarios in the UNEP report now require some degree of ‘negative CO2 emissions’ in the second half of the century, through technologies such as carbon capture and storage…”

And yet that is not what scares me. What scares me is that the cost-benefit analyses used to assess the efficiency of implementing various alternatives operate on the assumption of a barter economy.

Hey, buddy, how many beaver you want for that deer?

RP @ 143: Solar panels, for instance, now pay back their energy cost within 1-4 years of operation, and they last for 25 years.

Which, somewhat conservatively, gives a ratio in the area of 8 to 15, which is pretty much what I had in mind, when I suggested that the available energy surplus requires that we scale down energy demand to match, with conservation and a different infrastructure. 8 to 15 is not like the 80 you might get from coal. 8 to 15 might, might be sufficient to do solar breeder farms, which would be a big step forward.

I think solar is great, and wind is great, too. I’m not trying to piss on anybody’s parade. I’m saying that we built an industrial civilization on 80 — really on a false pretense of 80 — and now it is time to get real. Which means matching the really available energy surplus with an infrastructure, whose demands are modest enough to be satisfied. Not yurt villages, but maybe rail and waterways instead of autos and airplanes. And, really focusing the gift of our computational tech on some serious conservation magic, where it is possible.

Well… but 8 to 15 is what we’re getting with current technology. In all likelihood it’s going to get better.

Fundamentally, I think that the ecological problems are the most important: ocean acidification primarily. I don’t think that the energy problems themselves really have the capacity to bring down industrial civilization or anything like that. Unlike CO2 buildup, where we’re already past the point where it may be too late to avoid serious harm, with energy I think that we’ve already passed the point where it’s too late for declines in fossil fuels to really cripple us. Of course political problems themselves could do us in, but that was always possible.

And once again, it’s kind of interesting that the big push to make solar panels really usably efficient is happening as a massive non-market infrastructure/technology investment by China, using tried and true command economy methods. That was what killed Solyandra, and that pseudo-scandal in turn pretty much guaranteed that the U.S. isn’t going to develop this technology. I think a good deal of the gloom and doom is because it’s still built into the international system that the U.S. his supposed to be a leader, and it’s in decline. But that doesn’t mean that every country is in decline.

http://www.technologyreview.com/featuredstory/531756/will-a-breakthrough-solar-technology-see-the-light-of-day/

The MIT Technology Review article linked above is about Semprius, a company trying to develop concentrating photovoltaic systems using relatively large, cheap lenses to strongly concentrate sunlight on tiny, very efficient solar cells. The main problem for Semprius and the other little solar startups is a blessing for the rest of us: traditional crystalline silicon PV keeps getting cheaper and more efficient. I am amazed by how many ‘revolutionary’ solar technologies I have seen press-released over the years, and in the older academic literature going back to the 1970s, but today’s most efficient, most common rooftop PV systems are recognizably kin to the first practical PV systems made by Bell Labs from crystalline silicon in the 1950s. A huge number of small improvements in all aspects of the c-Si PV supply chain, and huge manufacturing capacity increases, beat out all the would-be revolutionaries. So far, at least.

Semprius and other concentrating PV manufacturers are doubly hobbled by some fundamental technical limitations as well as competitors’ price improvements. CPV only works with directly incident radiation, because the sun must be imaged through a lens to produce a tight, bright spot on the tiny cell. All solar systems work better with clear skies but CPV suffers particularly badly when there are clouds or haze between the module and the sun. CPV also needs precise 2-axis mechanical movement to track the sun or, again, the electrical output collapses much faster than with conventional solar modules. Moving parts fail more often and add costs to manufacturing. Because of the tracking requirement, CPV systems need to be ground mounted and can’t compete for the higher-priced rooftop segment. CPV is great only for locations that almost always have clear skies and no more than moderate winds.

When silicon prices were sky high in 2008 CPV looked interesting; following drastic reductions in silicon costs it looks like a dead end. But this is a retrospective judgment. If for some reason it had been Chinese policy to massively support CPV-oriented manufacturers in the early 2000s, today I might be talking about how CPV had such a commanding lead that old-style flat panels were never going to catch up again, at least for utility-scale projects in sunny locales. The big new trail blazed today is next year’s path dependency.

Matt @ 153:

The problem with Chinese PVs is that that are produced with very dirty inefficient energy inputs, (and PVs have still a limited EROEI precisely because their manufacture is energy-intensive) and very spotty quality control. According to the article, the technology achieves a 50% conversion efficiency (compared to maybe 15% for conventional PVs) and would have a cost of $.05 per KwH. There is no single magic solution, but that case really does look like the irrationality of the unplanned market vs. the potential for public investment in R & D and planning.

@JCH: The instantaneous cost to produce electricity in the sunniest regions with solar PV is already below $0.07 per kWh. I’m pretty sure it will reach $0.05 before CPV does. In less-sunny regions costs are of course higher, but CPV only works in the very sunniest regions in the first place. The approaches to decreasing PV levelized cost in low-sun regions don’t have any possible benefits from CPV.

China has a much more coal-intensive energy system than the EU or North America and of course this shows up in the life cycle emissions of their solar PV modules. A recent study estimates that Chinese PV modules may represent as much as twice the embedded CO2 compared with equivalent modules made in Europe. If so, this means that Chinese modules “only” have per-kWh life cycle emissions 90% lower than fossil fuel electricity, compared to 95% for European modules. Both have radically lower life cycle emissions than any combustion based source of electricity. Only wind power and (some) nuclear and hydroelectric plants do better, even if you use Chinese modules.

Some Chinese companies make some of the world’s least reliable solar modules, and others of them make a fine product that matches conversion efficiency and service lifetime of mainstream products from European, American, and Japanese manufacturers. “Chinese stuff is always cheap junk” is falling a bit behind the times. Perhaps you remember how “Made in Japan” once upon a time also meant inexpensive but shoddy products. It didn’t stay like that.

I appreciate some of what Matt said @ 156, but I think he’s too complacent and missing the Big Picture on rentiers and financialization.

The half of me that doesn’t agree with Matt is the half that doesn’t confuse rentier with financier with investor.

“. . . most of the world’s wealthy are not heavily invested in the existing energy system. They’ll gladly throw Peabody Coal and Chevron under a bus if it’s profitable.” is both wrong and confused.

People use words like “invest” and “wealth” carelessly, relying on the connotations of those terms in their arguments, without sufficient attention to what the terms denote in our present circumstances. I do not want to get into an otherwise pointless back-and-forth on definitions for concepts that are too abstract to begin with, quibbling over the distinction between profit and rent and the like, but let’s get real.

As a general proposition, I would say that financialization is a process of disinvestment, of taking cash out, of dismantling institutions and “investing” the proceeds not in capital formation, but in transfer mechanisms — ponzi schemes, usury and so on. Rentiers are not investors in capital formation; they are “investors” (scare quotes meant to be scary) in ownership, leverage and appropriation. Rentiers do not care about value-added; they don’t want profit or risk; they want secure cashflow in their direction only. Right now, in the U.S. over 90% of corporate profits are paid out as dividends or stock buybacks, corporate tax evasion is rampant and massive, c-suite executive pay is extractive, hedge funds arbitrage regulatory evasion and private equity engages in vulture capitalism, eating what it kills; median wages are declining because the actual, productive capital stock is dwindling as the wealthy and powerful cash out and use the cash to seek new sources of cash flow in predatory schemes that feed on the public sector in health care and education and privatization of public infrastructure.

The wealthy are heavily invested in the existing energy system, directly and indirectly, both in producing, processing, distributing fossil fuels and in the production and production and distribution systems that are structured around consuming fossil fuels. Being heavily invested in the past is what being a rentier is all about. Shifting into a program of building a new energy infrastructure — both energy-producing and energy-consuming — would entail actual capital formation and reverse the now torrential upward cash flow. To be efficient, much of it would have to be public goods infrastructure, financed from taxes on economic rents, again reversing cash flow.

We — meaning the 1/10th of 1% aided by their cadre of technocrats and CEOs — are taking apart the old system, without assembling a new system. The massive cash flows being thrown off by stagnating wages amid rising labor productivity, by leveraging advancing computer tech to lay waste to vast systems of distribution and control, are being poured into schemes to appropriate IP and institute debt peonage.

[It’s not energy-related, but it well-illustrates how rents work: Apple with its iTunes Music store, wiped out a vast network of production plants and stores associated with distributing recorded music. Did the price of a song change? No, not really — an “album” still sells in the same rough nominal price neighborhood that I was paying at the Harvard Coop back in the day, only the cost structure behind that album has been reduced by one, maybe two orders of magnitude. Hundreds of thousands of people are no longer employed in the business; vast real estate has been repurposed. That’s not investment; that’s disinvestment. Which is fine; it would be a huge gain for society, if the price of music had fallen commensurately — if recorded music had moved an appropriate distance along the axis of the water-diamond paradox in the direction of water as resources were no longer needed for its distribution. Instead lawyers were hired, and “free trade” became all about securing IP rights; a few unlucky early-adopting teens and their families were sued into penury by the RIAA (while Google got away with scanning the whole of vast public libraries). And, lest we even imagine a better world, neoliberal echo chambers of aligned voices were assembled to wonder aloud how the artists would ever get paid, if we didn’t enact IP protections among our draconian anti-terror legislation.]

I’m sorry to rant, but when when you wrote, “Marginal shale oil producers and the poorer OPEC members are very worried about recent oil price declines,” I thought, he just “does not get it”. At all.

In a Schumpeterian torrent of “creative destruction”, the rents of the oil producers would be grabbed by the entrepreneurs of renewable energy, in the way Rockefeller screwed oil speculators and railroads, or Edison made candles a luxury good or Henry Ford made the horse and carriage obsolete. But, that’s not what’s happening in our timeline. “Shale oil” isn’t a real investment — it’s the oil business’s equivalent of a mobster setting up a gang to do smash-and-grab robberies. (I saw the other day that landowners in the Marcellus Shale are now getting royalty checks sometimes in the single digits, after someone set up a pipeline owning shell that skimmed all the profit from the wellheads — CLASSIC!)

Neoliberal financialization and its rentier constituents are not neutral, energy-agnostic weathervanes, ready to abandon fossil fuels and invest in renewables as the financial wind blows. Their interest is in the cash flows from disinvestment, rent-seeking appropriation and extraction and that favorite of the old-time religion, usury.

Actual capital formation, which would suck up cash coming and going, would be a disaster for the 1/10th of 1% and something they will oppose. In light of the probable long-term consequences of such a catabolic policy, I suppose we can say they are short-sighted, but as Matt says, they are not going to be the ones, who suffer most from their alleged nearsightedness.

I will stand by my generalization: any departure from a political economy dedicated to the preservation and enhancement of rentier interest in avoiding net capital formation (because net capital formation reduces returns of cash from established ownership positions, sucks up cash to create new capital, and increases labor’s leverage to make wage claims — all bad things from the pov of a wealthy rentier with a stake in the status quo ante) will be catastrophic for the financial interests of the wealthy — they do fight it and can be counted on to continue fighting it.

I think that Carl Icahn and Andrew Forrest are both rentiers. Carl Icahn is a net disinvestment financial engineering rentier of the sort described by BW above. Forrest extracts rents on material activities like mineral extraction and will pay to open new mines with new miners and equipment when it seems advantageous. Do we need a new term specifically for the disinvestor subset of the rentiers? I just cannot agree that true rentiers won’t pay for tangible capital goods and the people needed to make use of them. When governments hold capacity auctions for additional electrical power, what do you call the owners of the organizations that win the auctions, construct the plants, and collect rents for 20 years on the generated output?

Good rant Bruce 159.

Further to my comments @ 74, 83, 88 and (cryptically) 146, I have posted an entry at EconoSpeak that examines the contradictions inherent in cost-benefit methodology, the Kaldor-Hicks compensation criterion and the barter, non-monetary foundations of Walrasian general equilibrium “rubbish: (Minsky’s term, not mine). Here is the link:#NUM!éraire, Shmoo-méraire: Nature doesn’t truck and barter.

To make a long story short, regardless of whether or not “perfect foresight” is a viable assumption, you can’t have it and still not know whether the losers in a “Potential Pareto Improvement” will be compensated. Yet that omniscient but clueless cognitive state is, according to Stavins (2007), “the theoretical foundation for the use of the analytical device known as benefit-cost (or net present value) analysis.”

Eaten raw, shmoo tastes like oyster on-the-half-shell. #NUM! is Excelese for “you stupid fuck!”

#166 OC

The biggest part of the energy cost of PV is the actual refined silicon. …. So the energy cost of PV is going to take a large drop as this new method gradually replaces the old. But the net savings on panel cost will be only a few cents per watt.

I’m not sure I follow that. Say it costs 5 cents/kilowatt-hour, and it produces 1000 watts for 1000 hours before it has to be replaced. Then it produces 1000 kilowatt-hours total, and so total costs must be $50. That’s $50 for 1000 watts instantaneous? 5 cents/watt? And savings of a few cents per watt….

On the bigger point, apart from the numbers, the energy cost of PV could be a small part of the total cost, so reducing energy cost a lot wouldn’t reduce total cost much, but it would reduce EROEI a lot.

Oops, yes, increase.

I don’t know the truth, but I have a concept of it. We want to do things that we put a little bit of energy in and get a lot out. It can be hard to measure that, but we need to measure it. Like, with gasohol, independent academics estimated that it took more energy to make it than we got back. That would make it a net loss, even if after subsidies and legal requirements it made a profit. The government got Sandia Labs to study the problem and they estimated that using various improvements it should be possible to get 5 barrels of alcohol from corn for every 4 barrels of alcohol-equivalent burned to produce it. I do not consider that worth it. And the estimates of energy use are pretty mushy. Easy to leave out stuff.

EROEI looks to me like a necessary idea. The more energy we consume collecting energy, the worse off we are. Particularly, the more fossil fuel we burn to extract fossil fuels, the more CO2 we produce for no more actual fossil fuels to use for our own needs. But actually computing it leaves lots of room for error and fakery. It might be better if we set a reasonable cost for fossil fuels and created a free market where people could make profits by optimizing the use of the various expensive inputs. But if we tried to set reasonable costs for fossil fuels there would of course be a black market to evade all costs not actually required to produce or steal the fuels, and also we don’t really know how to create bona fide free markets. So we have to muddle through somehow.

EROEI is a constraint that we have to respect, so we have to somehow pay attention to it. But it can be a small fraction of money costs, so markets would tend not to respond until after the costs became large and critical, if we even had workable markets.

It’s one of the foibles of economic and for that matter political systems — the big rewards come from responding well to crises, not to preventing crises. If you store food when famine is unlikely, you will incur costs and no benefits. But if you store a moderate amount food when famine is likely, and then sell it when demand is at a maximum, you can make a killing.

Matt @ 161
Collin Street @ 162

In my non-ranting mode, I’ve been interested for many, many years in critiques of mainstream or “neoclassical” economics — since before “neoliberal” was even a thing, in fact. So, in my plodding way, going over arguments again and again, I’ve had time to think through how the conventional frames of mainstream economics lead our politics astray, into realms where we cannot deal collectively with reality, because the consensus reality built for us by mainstream economics, the framework of concepts and values of Econ 101 that underlies so many slogans and so much policy planning, is such a . . . dream world, such a surrealistic vision of structure and causality.

Sandwichman, in his accustomed mien as scholarly gadfly, has been pounding away at cost-benefit analysis, that banal bit of what (in a different context) Larry Summers once called Ketchup Economics: the application of an esoteric apparatus to eke out the insight that, if you are in the supermarket shopping for ketchup, adjusting for relevant quality and quantity differences, it is a good idea to compare prices, and buy the cheaper bottle. If we were all so brain-dead that we couldn’t figure that out on our own, then economics would be contributing mightily to human welfare by instructing that we should choose to maximize benefits net of costs. If . . .

In practice, mainstream economics often seems to be about training stage managers and audience alike to appreciate the kind of stage show put on by the Wizard of Oz. The main message is: pay no attention to the barking dog or that man behind the curtain.

How we get to the surrealistic smoke and mirrors of, say, Quantitative Easing, let alone the Republican mantra of tax cuts for all occasions, is not a tale I propose to tell here. The motivations are clear enough, in any case. What interests me — and needn’t interest many others — are the shared intellectual foundations in economics, of both the impulse to master the art of making collective choices artfully and to good effect, and of the impulse to legitimize the doings and rewards of the Great and Good while insulating them from all responsibility or accountability. The first impulse is identified, rightly or wrongly, with Keynes: the notion that economics should enable the technocrat to serve the public interest in managing the modern economy and enable the public to understand the political choices they are asked to accept as being made in their interest. The latter impulse has been identified, again rightly or wrongly, with laissez-faire liberalism and Dr. Pangloss, since well before Adam Smith wrote of the invisible hand.

Economic rent, as a term of art in economics, plays an interesting role as a subversive concept. As Sandwichman has stressed, mainstream economics likes to imagine itself on a crusade against the money illusion, instructing that there is a difference between money price and real value, but often seems to end trying vainly to instruct that money is an illusion, when money is a very real and critical part of the machinery. (Getting the audience to ignore the machinery is the magician’s job 1 in getting us to believe in a magical causality; pay no attention to the man behind the curtain.) Burying economic rent under the money illusion was a prime objective of the Marginal Revolution.

Economic rent makes an analytic distinction similar in some ways to the distinction between value and price. Economic rent distinguishes between the income a factor earns in production, and the income necessary to allocate the factor to that place in the structure of production, or between income necessary to bring a factor into production at all and the income necessary to allocate the factor to a particular use. Economic rent is a superfluous portion of income, superfluous to the cost structure of production. It arises, to speak frankly, from power and it creates power. Economic rent puts the political into political economy.

Since before Turgot, laissez-faire economics has been a political economy of virtue triumphant, of moral causality in economics — the economics of the confidence fairy and austerity calling forth miracles, and so on. An essential component, put in place by the Marginalists, is the vision of capital investment creating a capital factor metered into production alongside labor, each earning its marginal product. Capital investment does good, and doing good at the margin, that is by its virtue, earning a return.

There’s a more realistic vision in economics. Sunk-cost capital investment do not earn a return, because, properly, sunk-cost investments, like land, cost next to nothing once they are made (ex post), once their cost is sunk; if they earn anything at all, it is a rent, properly termed a quasi-rent, if the capital is itself to be reproduced in production. The owners of capital archetypally, as in the case of the Knightian entrepreneur, receive the residual income of the firm as a return on their commitment of capital. The classical economists noted that the owners of Land received an unearned return on Land, which their ancestors had appropriated; their return was a residual, a consequence not a cause in economic dynamics, and arose from a political power. Sunk-cost investment of capital creates a similar appropriation of the means of production, making Capital, in Marx’s sense, essentially identical with a political power.

It’s easy enough to construct another economics of virtue around “rent”, making a pejorative out of the term. It was done by Ricardo, by Marx, by Henry George in varying ways. Tellingly, the Public Choice variant on Chicago-school conservative economics is relentless in their preaching against rent-seeking. I choose, instead, to draw attention to the functional implications of economic rent.

First of all, no one is going to privately make a sunk-cost capital investment without the prospect of a return. The virtuousness of the investment has no relation, as a practical, functional matter, to the ability to earn a return. Virtue is no business model. The only way to earn a return on the ownership of a sunk cost investment is to earn an economic rent. Which is another way of saying that the only way to privately finance a private capital investment is to have some prospect of having or acquiring the political power to command an income for that investment.

Secondly, whatever income is earned on a sunk-cost capital investment is a residual income. It corresponds to the inevitable error associated with the attempt to control production processes. The power of the capitalist entrepreneur rests on his ability to absorb risk, so the political power to earn a quasi-rent combines with the ability to manage and control a production process. I don’t want to idealize this functional role, just note it as a functional pattern.

In a world of uncertainty, the distribution of income is inextricable from the distribution of risk, as all distributions of income are contingent. The possession of economic rents or accumulations of money wealth, are valuable as insurance and as sources of power, which is to say both discretion and the capacity that discretion creates, to control. Economically, the capacity to control is not merely the political power to dominate, but also, and importantly, the economic to power to economize on error and waste, and to make sunk-cost capital investments embodying technological improvements in the technical control of production processes. The attachment of even minor economic rents to business or professional licenses, or to employment in a corporate structure, are essential to motivating good behavior.

Here’s the essential thing I cannot fully explicate in a comment: a world of uncertainty in which the structure of the economy rests on economic rents is not a world near equilibrium or controlled by the attractive powers of equilibrium. Panglossian stasis is the quintessential concept of the economics of virtue. It’s not how the world works, not how the world is. A world of economic rents and technological progress is a world in long-run and even very-long-run disequilibrium. That’s the world we live in: a world of cycles and cyclical change — and cyclical crisis, for that matter.

At the simplest level, capital investments, by creating capital stocks, create business cycles. The actual American business cycle in the post-WWII era was driven by housing and autos; demand for new houses and new autos depends on existing stocks of houses and autos. The ability to control the level of business activity through interest rates ran through the ability to control spending on houses and autos with interest rates. Inverting the yield curve causes banking lending to contract and creates a recession. The ability of governments to finance the building of suburban expansion — more houses and autos — tied fiscal capacity to the price of oil. Obscuring all of that in esoteric analysis has some purpose, I’m sure, but it sure has not prepared us to think clearly about the economy, post financial crisis, post peak oil or confronting the challenge of climate change.

Much of what I said in my rant about rentiers and disinvestment has a decidedly cyclical context. It was a rant against seeing everything, past and projected into the future, as a stateless path, a random, drunken walk, when much of what we are doing, and what we are tempted to do in our uncertainty, is constrained by the past, and constraining the future. We need to fight for more shared self-awareness about where and when we are, what “we” are doing, and where we are headed.

BW: “cost-benefit analysis, that banal bit of what (in a different context) Larry Summers once called Ketchup Economics:”

I’m not an economist. But there’s something else I’d add to this: economists are generally scientifically illiterate, and this makes them especially bad at handling environmental questions.

I once , sometime in the 90’s, dug into a CBA that was touted by the right as showing that the government spent $4 billion to prevent each case of cancer from a pesticide. When I looked into all the supporting documentation — a lot of which didn’t exist in any central place, and had to be obtained through visits to reading rooms and phone calls to people involved — I discovered that this was supposedly due to regulation of atrazine, and I also found that:

1. The total cost of regulation was $10 million. It became $4 billion per case because there were so few projected cases (but see below):

2. Atrazine wasn’t even regulated for carcinogenic effects in the first place. You get alachlor regulation along with atrazine regulation, and alachlor had the small projected number of cases. Atrazine was regulated for non-cancer effects.

But the agency doing the CBA had no linear dose-effect relationship known for these non-cancer effects, so since it couldn’t easily calculate a risk/cost number, it set that number to zero.

I’ve never dug into a CBA for global warming in the same way. But I assume that somewhere in there are a lot of uncertainties that are implicitly set to zero because economists don’t know about error bars, or something like that.

BW: “In practice, mainstream economics often seems to be about training stage managers and audience alike to appreciate the kind of stage show put on by the Wizard of Oz. The main message is: pay no attention to the barking dog or that man behind the curtain.”

One of my favorites is Enrico Barone’s “It is convenient to suppose – it is a simple book-keeping artifice, so to speak…” following which he portrays the worker selling the “capital” of his 24 hour day and casually buying back 16 hours for consumption as leisure. With this “artifice” Professor Barone obliterates (without mentioning them) both Marx’s analysis of the working day and Thomas Brassey’s extensive empirical observation of the variation of output in response to hours of labour. After all, 24 – 16 = 8, doesn’t it?

So much of “the math” would not, could not exist except for the distraction of that “simple artifice” announced over a century ago while the a-theoretical rabbit was being jammed into the hat. Par ma foi! Little does our mathematical economist, M. Jourdain, realize he has been speaking Barone prose all these years!

Looked upon by a hard-pressed young person, defined benefit pension plan payments are non-productive rent. Looked upon by a decrepit old geezer who lacks the strength and stamina to continue shoveling shit into his seventh decade, they’re deferred compensation, the alternative to which is to go sit on the Inuit’s proverbial ice-floe.

This is the first half of Bruce’s thesis, I think. Our so-called political economy, particularly the political part, is conditioned by the decisions we make about the kind of society we want to live in, even when — most especially when — we refuse to admit as much.

The second half has to do with how the decisions we’ve already made have shaped us, and led us to what appears to be a dead end, unless we pull up our socks and look back through history to see what other, more promising choices we might have made, and might still make, assuming we could actually purge ourselves of our current delusions.

Bob Dylan had his visions of Johanna, Bruce Wilder writes his sober histories of the future. There’s virtue in both perspectives, I think — essentially you pays your money, and you takes your choice. The only really fatal option is to go on pretending that what comes out of New York or Washington makes a damned bit of sense.

“Capital”, “Rent”, “Saving”, “Money”- all (as used in economics) analytic concepts awaiting someone to come along and say “we don’t believe that anymore”. Used not to describe but as gestures in a morality play.

Lots of people never believed that. But they were not particularly influential, they were just the masses of people who didn’t believe. Economists were like the shamans who did rituals for the king to appease the gods. Enough people believed in them that the king didn’t want to just fire them, and anyway it was part of the pomp of it all.

I had my first big doubts the summer of my freshman year in college, when an ecologist let me do independent study. I expected that predator-prey relations would regulate the numbers of prey, it would settle to an equilibrium in the absence of weather etc to drive random changes. He told me to make a computer model. Somehow no matter what I did to my model, it fell into a limit cycle and never a fixed equilibrium. The actual limit cycle varied with details, sometimes pretty extreme, and it was due to the details of the regulatory system and not to anything getting optimized. He told me to read about Lotka-Volterra cycles. Oh.

But of course, the invisible hand of free enterprise economics is more complicated than predator-prey models. When people can make money by predicting cycles, they can moderate the cycles. Given lots of people trying to predict what will happen and all moderating it, they will generate their own instabilities unless they know what each other will do….

It was all very peculiar. It seemed intuitively obvious that feedback cycles would head toward equilibrium in the absence of outside forces, and they just don’t. To use them to get stability you have to design them very carefully, and any feedback system can make things less stable when given the wrong inputs, that it was not designed to handle. My intuition was just plain wrong.

It was easier when the communists were a viable alternative. Of course people believed *our* economics and not *their* economics. But that battle has been won. Two inviable systems, and they collapsed first. So their ideas did not work. Since they were wrong, lots of people wanted to say it proved we were right. We have to be right since there’s no known alternative. Except it doesn’t really work that way….

#180 BB

The communists were never really a viable alternative.

Well, no, but it took them more than 70 years to collapse even after the disastrous WWII. They gave a pretty good illusion of being viable for awhile.

If it takes the USA 30 or 40 years longer to collapse, then that will prove we won the Cold War. But lasting 30 or 40 years longer than the USSR doesn’t exactly show that we had a viable alternative either.

I take it as a given that capitalism will collapse when something better comes along. But likely not before that.

Capitalism collapsed in the 1870’s, and was replaced by something that might reasonably be called crony capitalism.

In line with ecosystem development and also military technology, things are not replaced by alternatives when people think the alternative is “better”. They are replaced when they cannot prevent being replaced.

So after a major ecological disturbance, in some places pines are the first trees to grow. They are good at spreading and they grow fast. But when the pines have grown dense enough, pine seedlings can’t get enough light etc to grow — but various hardwoods can get enough light to grow. So from that time the seedlings are hardwoods, and soon the saplings are hardwoods, and when the mature pines die off they are replaced by hardwoods. Because they created an environment that something else could survive in better than they could.

But some places the pines have a working strategy. They create lots of burnable stuff, and every so many years the weather is dry enough to create a giant forest fire that kills almost everything. But the pines have lots of seeds that survive the fire. The hardwoods are burnt out, and the pines spread and grow fast. Before the hardwoods manage to take over, the pines burn them out again. In terms of “efficiency” etc this is a wasteful approach, but it works. The pines get to keep their land because they do it.

Similarly, military technology doesn’t change to what people prefer, it changes to what people think will win. Depleted uranium is poisonous and a bother for US troops to store safely. After it has been fired it makes the battlefield unsafe for US troops, and for civilians. It causes birth defects in civilians for a long time afterward. Various nations that can’t win wars say that using it is a war crime. But the USA keeps it and uses it anyway, because if they don’t somebody else will, and they refuse to lose battles because somebody else uses technology they refuse to use.

Capitalism did not die in the USA because it was replaced by something that better met the needs of consumers, or something that was more “efficient”. It died because it could not compete politically.

In a way that’s why for 70+ years it could not compete in the USSR. Capitalists could not get an in with the government, so the government grabbed their resources and jailed them. Only the croniest of crony capitalists could thrive in that environment.

J Thomas: Similarly, military technology doesn’t change to what people prefer, it changes to what people think will win.

“Think” is a key word there.

Stupidity, mistakes and corruption tend to play very large parts.