Planet saved … in Brisbane!

by John Quiggin on November 12, 2014

It’s hard to overstate the significance of the agreement announced today by Barack Obama and Xi Jinping to limit US and Chinese greenhouse gas emissions. The limits are significant in themselves: not enough to guarantee stabilization of greenhouse gas levels at the agreed target of 450 ppm, but enough that we can get there just by ratcheting up an existing agreement rather than by looking for something new.

I’ll write more later, but I wanted to note this event as soon as I could



Brett Bellmore 11.12.14 at 10:44 am

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 11.12.14 at 10:57 am

Yes Brett , bad powerful people can always decide to destroy the world, I’m not sure what follows from that.


Metatone 11.12.14 at 12:29 pm

@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.


Palindrome 11.12.14 at 12:31 pm

I’d be at least as worried about the Chinese side. The CCP has displayed persistent weakness in terms of ability to enforce even the meager environmental laws on the books. It is unclear that they will be able to follow through on this one, even with the best of intentions.


guest 11.12.14 at 1:53 pm

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.


Omega Centauri 11.12.14 at 2:16 pm

I unfortunately second Brett’s and Metaone’s concerns. The congress/senate will be looking to sabotage any agreement. Then the Chinese can use that “betrayal” as an excuse…..


Shirley0401 11.12.14 at 3:10 pm

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…


Michael Cain 11.12.14 at 4:15 pm

@3: I expect one of the things on the new GOP majority’s list is a one sentence amendment to the Clean Air Act: “For the purposes of this act, carbon dioxide is not a pollutant.” I suspect that McConnell can find enough Dems to break a filibuster. The President will no doubt veto it, but it sets the stage for 2016.


Marc 11.12.14 at 4:41 pm

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.)


rvman 11.12.14 at 5:20 pm

The targets in this ‘agreement’ are already in line with what Obama has decreed via executive order, and you’ll notice this isn’t anywhere described as a ‘treaty’. The administration has no intention of giving Congress any opportunity to vote meaningfully on this, Constitutional “advise and consent” requirements or no. Of course, this means that the next President can simply declare the accord (and Obama’s decreed future emissions levels) null and void at will, also via executive order.


Bruce Wilder 11.12.14 at 6:41 pm

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.


Rich Puchalsky 11.12.14 at 6:58 pm

I’m hopeful, as I’ve said before, on the basis that China has invested a huge amount of money in developing solar PV technology and has so far seen good results from that investment. I think it’s going to be in their self-interest whether defined broadly or narrowly to replace coal with solar.

Yes, the agreement seems as far as I know to be an executive agreement rather than something that has to go through Congress. Rather than say something like “why did he wait until now” I’ll just say that if it brings results I’ll be happy to hail this as one of Obama’s major accomplishments.


Collin Street 11.12.14 at 8:05 pm

> 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.


John Quiggin 11.12.14 at 8:06 pm

I agree that a lot depends on the next presidential elections in the US. That’s true of a lot of things.

As regards China, there will be some compliance problems, but the big sources of emissions are relatively easy to monitor. There’s a reason China-watchers used to pay more attention to electricity consumption data than to official GDP statistics.


The Temporary Name 11.12.14 at 8:09 pm

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.


The Temporary Name 11.12.14 at 8:10 pm

But fingers crossed!


Heliopause 11.12.14 at 9:17 pm

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.


Bruce Wilder 11.12.14 at 9:40 pm

I don’t get the “depends on the next election” meme. It seems to me that it depends on how fast the popular consensus moves, relative to the addition of CO2 to the atmosphere and the consequences of those additions for the global political economy.

I think it matters to the popular consensus whether national and world leaders act as if they actually believe that the addition of CO2 to the atmosphere matters, is consequential. Lots of people are reality testing this emergent development, trying to wrap their minds around it all the time. We just haven’t gotten very far down that imaginative road, yet. So, an agreement between the leaders of the U.S. and China — an agreement that seems like little more than a memorandum of understanding concerning the two countries separate and independent trend-efforts with no negotiated exchange of anything but commitment to keep doing what each is already doing — is useful for its salience value. Its only other substantive value is that it gives some hope of reviving the international process of negotiating some framework of cooperation.

John Quiggin references the potential to “ratchet up an existing agreement” but despite careful reading of the news reports, I don’t see even a bi-lateral agreement here. It’s more like a reviving of good intentions, that might let multilateral international negotiations go forward.

All in all it looks to me like procrastination by alternative means.


Anderson 11.12.14 at 9:58 pm

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.


Tabasco 11.12.14 at 10:04 pm

Success doesn’t depend on the 2016 presidential election. Why not the 2020 election? Or 2024?

It does depend on the zeitgeist. Why has the gay marriage movement been so successful? Nothing to do with who is in the White House or controls Congress. It’s been the right movement at the right time.

The jury is still out on whether the timing is right – in terms of popular opinion- for meaningful action on carbon emissions


clew 11.12.14 at 10:10 pm

We *could* `trust but verify’.


Omega Centauri 11.12.14 at 10:10 pm

Bruce and others.
I don’t think US government policy reflects popular opinion in the US. A plurality think we shoudl do something about climate, but the support is a mile wide and an inch deep. So they won’t switch their votes from a politicion who opposes any controls, -(presumably because party is part of their personal identity, or other issues trump climate). Likewise for the many who tend to vote on the liberal side, but don’t bother to vote except in presidential elections. So we have a crop of politicians who to a greater or lessor extent reflect the policy desires of their big money donors.


Anderson 11.12.14 at 10:17 pm

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


ifthethunderdontgetya™³²®© 11.12.14 at 11:07 pm

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.

Well put. I find it pretty amusing to see Obama kvetching about net neutrality to the FCC. Apparently, Our President had no idea what would happen when he made a telecom lobbyist its chairman.


Palindrome 11.12.14 at 11:13 pm

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.


Matt 11.13.14 at 1:37 am

The USA emits more CO2 per capita than is sustainable on a global level. So does China. So does Zimbabwe. So did the USSR of 1955. 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.

It would be nice to have a world where the atmosphere stabilized at 350 PPM CO2. That world was 50 PPM ago. The only way to get back to it is aggressive emissions reductions plus vast efforts to draw down atmospheric CO2 levels, or waiting 100,000 years or so for the slow natural processes to do it for us.

The IPCC thinks that net human emissions should be zero in 2100. Again, the only way to get there is aggressive emission reductions plus active sequestration efforts. Or human extinction, I guess, which doesn’t seem like a good goal.

We’re metaphorically in the position of a cardiac patient who ignored the doctor for a long time and now needs some combination of drugs, major surgery, and physical therapy. Everyone still suggesting only changing diet and exercise (or reduced energy consumption and reduced human fertility) is too late at this point. Bad behavioral changes can make the problem even worse but we’re past the point where good behavioral changes are enough.

One of my darker suspicions is that pro-fossil interests will manage to delay changes until they can say “your own models show we’re past any hope of stability, so might as well enjoy another 600 billion tonnes of coal while the Antarctic ice cap disintegrates.”


Sandwichman 11.13.14 at 2:21 am

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.


Brett Bellmore 11.13.14 at 2:34 am

“The Republicans don’t have the ability to prevent this,”

Within limits, I agree. The voters have given them control of the part of government which is *supposed* to make policy, while Obama retains control of the part which is only supposed to execute that policy for only a couple more years, but since there is no effective mechanism for forcing him to execute the policy Congress makes, rather than his own whims, the Republicans do indeed lack the ability to prevent this. With one third of the Senate on his side, any President is a potential dictator.

However, I think Obama also lacks the ability to implement it. His ability to actually make policy without at least SOME support from other power centers in government isn’t infinite. And with overwhelming control of the House, and soon 54 Senators, the Republicans are in a pretty good position to wear him down. The government does need to be funded, and they have no need to send him funding bills that give him money to enforce policies they oppose.

And I think there’s a practical limit to his power, as one man, to bring the government to a standstill, and blame the Republicans. He no longer has the Senate to give him cover in another confrontation. Bills will land on his desk, and it will conspicuously be he who causes the next shutdown, if he vetoes them, not the Congress that voted to continue funding everything they approve of.

It’s a stalemate, and a stalemate doesn’t give him what he wants.


ZM 11.13.14 at 2:53 am

“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 11.13.14 at 2:55 am

The above was a response to Matt


Matt 11.13.14 at 3:38 am

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:

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.


Omega Centauri 11.13.14 at 3:41 am

The +2C number was always just an arbitrary number. Expected damages at +2C are greater than +1C and less than +3C, and much less than +6C. Its been a few years since I’ve had any hope of holding things to +2C. This “deal” gives me hope we *might* be able to hold the line at +3C. The damage bill from +3C will be very high, but not nearly as bad as the damages from +6C would be. We just have to do our best to limit the damage as best we can. Sure out great-great-great grandkids will curse our names, but thats already been in the cards for awhile (assuming we have them).


Ken_L 11.13.14 at 3:48 am

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.


ZM 11.13.14 at 4:03 am

I understand the 2 degrees figure is arbitrary , because it just started with Nordhaus the economist in the 1970s and since he is influential and 2 degrees looked both a feasibly long time away and not too high a change in temperature averages people just stayed with it.

But if anything the scientific view seems to be that 1 degrees or 350ppm is better as a target, but this means drawing down since we are at ~400ppm now.

But the problem with thinking of that going up to 3 degrees is better than 6 degrees is that
changes in the climate do not work in this orderly linear way. AT the moment we are already seeing effects of climate change, but I think they are sort of within the bounds of our normal climate system (albeit worse, as Brett Belier’s wife’s Filipino family would understand no doubt after Typhoon Yolanda ). But geological records indicate Earth has had various sorts of climate systems, and climate change could tip us into a different system.

It is not known exactly what that tipping point could be, although the more ghg emissions the more likely that is. But this suggests 3 degrees could be a tipping point we need to avoid.

“Three degrees may be the “tipping point” where global warming could run out of control, leaving us powerless to intervene as planetary temperatures soar. America’s most eminent climate scientist, James Hansen says warming has brought us to the “precipice of a great “tipping point”. If we go over the edge, it will be a transition to “a different planet”, an environment far outside the range that has been experienced by humanity. There will be no return within the lifetime of any generation that can be imagined, and the trip will exterminate a large fraction of species on the planet” [“Wild” magazine, April 2007].

In the Pliocene, three million years, temperatures were 3 degrees higher than our pre-industrial levels, so it gives us an insight into the three-degree world. The northern hemisphere was free of glaciers and icesheets, beech trees grew in the Transantarctic mountains, sea levels were 25 metres higher [Climate Dynamics, 26, 249-365], and atmospherc carbon dioxide levels were 360-400 ppm, very similar to today. There are also strong indications that during the Pliocene, permanent El Nino conditions prevailed. Hansen says that rapid warming today is already heating up the western Pacific Ocean, a basis for a coming period of ‘super El Ninos’ [Proc. Nat. Acad. Sci., 103, 39, 14288-93].”

Between two and three degrees the Amazon rainforest, whose plants produce 10 per cent of the world’s photosynthesis and have no evolved resistance to fire, may turn to savannah, as drought and mega-fires first destroy the rainforest, turning trees back into carbon dioxide as they burn or rot and decompose [Theor. App. Climatology, 78, 137-56]. The carbon released by the forests destruction will be joined by still more from the world’s soils (see below), together boosting global temperatures by a further 1.5ºC [Nature, 408, 184-7]. It is suggested than in human terms the effect on the planet will be like cutting off oxygen during an asthma attack. A March 2007 conference at Oxford talked about ‘corridors of probability’ with models predicting the risk of the Amazon passing a “tipping point” at between 10 to 40 per cent over the next few decades. The UK’s Hadley Centre climate change model, best known for warning of catastrophic losses of Amazon forest, predicts that, under current levels of greenhouse gas emissions, the chances of such a drought would rise from 5% now (one every 20 years) to 50% by 2030, and to 90% by 2100.

The collapse of the Amazon is part of the reversal of the carbon cycle projected to happen around 3 degrees, a view confirmed by a range of researchers using carbon coupled climate models. Vast amounts of dead vegetation stored in the soil – more than double the entire carbon content of the atmosphere – will be broken down by bacteria as soil warms. The generally accepted estimate is that the soil carbon reservoir contains some 1600 gigatonnes, more than double the entire carbon content of the atmosphere. The conversion will begin of the terestrial carbon sink to a carbon source due to temperature-enhanced soil and plant respiration overcoming CO2-enhanced photosynthesis, resulting in widespread desertification and enhanced feedback [Physics Today,”


John Quiggin 11.13.14 at 5:18 am

@ZM “At the moment global carbon emissions are ~36GtC annually”

About 45 per cent of that is absorbed by oceans and terrestrial sinks. The Meinshausen budget is for net emissions. So you need, broadly speaking, to cut your numbers in half.

That still leaves plenty of problems, but explains why lots of experts have concluded that the task is achievable, though current policy are (as stated in the OP) not sufficient.


ZM 11.13.14 at 5:29 am

John Quiggin,

I am not sure what you mean that the Meinshausen budget is for net emissions.

My carbon budgets were to emit either 398GtC (Meinshausen et al) or 198GtC (IPCC).

Do you mean:

A. I should cut these budgets in half to either 199GtC or 99GtC respectively?


B. that because of absorption I should cut my emission-cuts in half? So the cuts would not be so steep?

If the latter is the case, why didn’t Meinshausen et al and the IPCC factor in the absorption when they worked out the budgets?

I have just used their numbers.

Prof. David Karoly said I could email him about the matter, so I emailed him with my working out here and asked if he would let me know if I went wrong somewhere, and he didn’t say I went wrong working out the budget from 2015.


ZM 11.13.14 at 6:15 am

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.

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!”


Toby 11.13.14 at 9:33 am

I expect one of the things on the new GOP majority’s list is a one sentence amendment to the Clean Air Act: “For the purposes of this act, carbon dioxide is not a pollutant.”

Isn’t that the equivalent of the Indiana Legislature fixing the value of pi by law? A “pollutant’ is a scientific/ medical definition, not a political one. How about passing a law that consuming alcohol excessively is not a hazard to health?

The Indiana bill never passed, due to the intervention of Professor C. A. Waldo of Purdue University, who happened to be present in the legislature on the day it went up for a vote.

Obama can just put himself in Professor Waldo’s shoes.


Brett Bellmore 11.13.14 at 11:47 am

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.


J Thomas 11.13.14 at 12:32 pm

#39, BB

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.

That’s silly. For most pollutants we have to accept minimal levels. The EPA has to establish what level is too dangerous to allow, and then tries to reduce pollution to that level.

Making philosophical distinction about whether we want *any* is completely irrelevant.


Brett Bellmore 11.13.14 at 12:40 pm

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…)


J Thomas 11.13.14 at 12:44 pm

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.

This is an utterly silly argument. I can hardly believe I’m responding to it.

I’ll quit now.


ZM 11.13.14 at 12:48 pm

“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).


Bruce Wilder 11.13.14 at 4:30 pm

The increasing acidity of the oceans is a effect analytically separate from heat or temperature effects. Somewhere between 450 and 500 ppm atmospheric CO2 the oceans will become uniformly too acidic to support corals or shelled creatures, and a collapse of ocean ecologies will follow. Arguably, ocean ecology collapse is already underway with a apparent climax around 2050 or 2060, about the time human population peaks on favorable demographic interpretations.

Gee, it is a great time to be young! So much to look forward to.


Sandwichman 11.13.14 at 4:53 pm

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


Matt 11.13.14 at 5:42 pm

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.

It is quite common that pollution is a matter of “too much” or “wrong place, wrong time”, rather than substances that should be completely banished from the environment.

Nitrogen and phosphorus compounds are essential to plant life, which is why they’re applied to agricultural land as fertilizers. When too much fertilizer is lost to runoff, they cause algal blooms and stress the kidneys of people who drink from the water bodies they land in. Boron and chlorine compounds are important trace nutrients for plants but will kill most plants if present in excess. Even something innocuous as dilute sugar water is regulated as a water pollutant when you discharge a lot of it, because its consumption by microorganisms can deprive the oxygen of dissolved water and kill larger aquatic life.


Omega Centauri 11.13.14 at 10:29 pm

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 Centauri 11.14.14 at 2:18 am

That CO2 model is properly called the Bern Carbon Cycle Model


John Quiggin 11.14.14 at 4:22 am

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.

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.

OTOH, on most reasonable assumptions, 2C is still achievable, though difficult.


clew 11.14.14 at 4:40 am

Lots of toxic elements are micronutrients, including lead (in rats, one study):


ZM 11.14.14 at 8:07 am

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 :/


dax 11.14.14 at 12:42 pm

No, the planet has not been saved. There are other, extremely serious environmental problems besides climate warming, and control on emissions does nothing to solve them.


Sandwichman 11.14.14 at 4:40 pm

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).


Sandwichman 11.14.14 at 4:46 pm

Reminds me of the time the U.S. Supreme Court awarded the Presidency to George W. Bush and the Democrats kept hollering that it was all Ralph Nader’s fault. Maybe that’s the explanation for the result of the 2014 midterms, too?


Omega Centauri 11.14.14 at 7:59 pm

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


Sasha Clarkson 11.14.14 at 8:06 pm

A cartoon from the Grauniad: First Dog on the Moon on … when Cameron met Abbott


Francis 11.14.14 at 11:33 pm

“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.


Tyrone Slothrop 11.15.14 at 1:31 am

Gotta admit that, traveled widely about the vast ethereal noisiness of the interwebs though I be, I’ve yet to encounter that species of global warming alarum yodeler whose response, in the face of (suggested) insufficient reduction in societal consumptive lifestyle, is to shrug and declaim Might as well do nuttin’…


J Thomas 11.15.14 at 1:35 am

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.


Val 11.15.14 at 3:23 am

JQ I am still trying to pin you down on the ‘who are these evil people who want us to live in yurts?’ question, which came up (ok in different wording) in an earlier discussion on your own site.

Are they people like these

Because I suspect you are needlessly fighting with people who could be your allies.


Matt 11.15.14 at 4:49 am

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.


ZM 11.15.14 at 5:02 am

I feel like there needs to be a distinction made between these evil people who want everyone to live in yurt centric 18th C Haiti type societies from pleasant yurt people.

We have a sort of yurt for hire business in my shire and as far as I know the people have never expressed anything about wanting everyone to live in yurts, let alone having an 18th C Haiti style society except with yurts instead of grand colonial homes.


Val 11.15.14 at 6:22 am

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.


Bruce Wilder 11.15.14 at 8:38 am

I am groot yurt.

Is Vin Diesel available?


John Quiggin 11.15.14 at 8:49 am

The people I’m criticising, associated with Ted Trainer’s Simplicity Institute, are in no way potential allies. Trainer has been denouncing renewable energy for 20 years, including on pro-nuclear site Brave New Climate, where he operated in tandem with climate denialists.


ZM 11.15.14 at 8:59 am

I haven’t read anything by Ted Trainer. Samuel Alexander who runs the Simplicity Institute seems alright, I have not heard him denouncing renewable energy.

I do have bad news though if it is a front organisation for the secretive Haitian yurt universalist movement – they are going to film a reality television show next year to show simple living to a wider audience.


Matt 11.15.14 at 9:34 am

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:

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.”


ZM 11.15.14 at 10:10 am

Unlike the U.S. and the UK Australua does not have nuclear energy, and most of us do not want it.

Mark Diesndorf from the University of New South Wales wrote a book on sustainable energy solutions for Australia based on renewable energy, where they had modelled RET for various sorts of weather .

But in his book he did say that part of the solution is going to involve being more conservative with energy use

. And as far as I can tell in grey spells in Winter where according to his model we would need to use biogas turbines for energy generation I would think energy use even in industry would have to be more conservative – so there will be adjustments in terms of being more conservative, and working out how to deal with some fluctuations in available energy.

And some forms of energy are unlike to RET replacements and the uses need to be banned – like aeroplanes.

But we have to remember Australia is not a big manufacturing country , and has a lot of land and sunshine compared to people.

Someone who had recently come back from Vietnam told me that 100% RET looks to be difficult there , although there is not enough research to be sure. And a friend wondered about the countries with monsoonal periods where it’s grey and the winds are likely too strong for the turbines. I gave read Kenya should be fine, but I don’t know about other monsoonal countries.

Perhaps there could be international RET networks? I don’t know…

Also I asked a panel that included the CEO of the Australian Climate Council that John Quiggin is part of what about RET globally including for manufacturing countries like China – is it possible? And she said some countries would have to have nuclear as well.

So it is not like it is just yurt loving oddballs who have doubts about RET meeting growing global energy demand.

Further, many people are not solely concerned with climate change but other environmental and equity and sustainability issues like poverty, loss of biodiversity, extinctions, pollution, poor waste management, ocean acidification etc etc

I do not think it unreasonable to question middle class Western consumer lifestyles given all these problems they are producing.


John Quiggin 11.15.14 at 10:12 am

ZM: Feel free to ask Mark Diesendorf about Ted Trainer. My comments are mild in comparison


ZM 11.15.14 at 10:16 am

I have not read anything by Ted Trainer so I do not intend to defend him.

I just want to point out that there are reasonable people who are concerned about levels of consumption , their distribution, and environmental impact.


John Quiggin 11.15.14 at 10:22 am


ZM 11.15.14 at 11:18 am

I do not really want to get into an argument about Ted Trainer since that would require I had to read him, and he is not an energy expert anyhow so I think I will direct my reading elsewhere.

But since Samuel Alexander is a lecturer at uni I will defend him, although I have just read a bit of his work and heard one of his talks.

I will look at the article you point to – but first I’ll also say again the Climate Council’s CEO said some countries would have to have nuclear energy. I don’t think she is an energy expert either. But except for Stanford’s Mark Jacobsen’s work looking at the RET capacity picture globally, there is not enough research at this point to know exactly what a 100% RET energy world would be like in terms of agriculture, industry, and consumption. And how it would work in countries where 3 studies have not been done, like they have for Australia (although this is for stationary energy only I think – questions of transport and agricultural machinery etc are still unanswered AFAIK)

From the article you link to:

“… Trainer points out that if the rich economies grow at 3% until 2070, and by that stage the poorest nations have attained similarly high living standards – which seems to be the aim of the global development agenda – total world economic output and impact could be 60 times larger than it is today. “

This seems a lot larger – I doubt it is environmentally possibly to really grow the physical economic output to 60 times what it is now.

“If we assume that sustainability requires that fossil fuel use and other resource consumption must be half of what they are today (and the greenhouse problem would probably require a far larger reduction than this), “

I have looked for and found no good papers on how much material resource consumption (and for which particular resources) is sustainable. It might be half or it might be more or less – but would likely be different for different resources anyhow . The research has not been done to any good level AFAIK.
Fossil fuel use as energy by 2070 needs to be at around ZERO , not 50%, to stay within 2 degrees.
Fossil fuel use as plastic I am uncertain about – since when I looked I found very little research on how plastic decomposes and whether it emits ghg as it decomposes.

“then what is needed is something like a factor 120 reduction in the per unit impact of GDP, not merely a factor 4 reduction.”

I am not sure what this means…

“Even allowing for some uncertainty in these calculations, the claim that technological solutions can solve the ecological crises and sustain limitless economic growth is simply not credible. “

I think this is true – if we care about not causing climate change and extinctions and biodiversity loss and pollution and toxicity etc resource use needs to be lowered to sustainable levels. What these levels would be has not been properly researched though.

“The final nail in the coffin of techno-optimists is the fact that despite decades of extraordinary technological advance, the overall ecological impact of the global economy is still increasing…”

I am not sure this fact will affect the point of view of techno-optimists?

“Trainer has also levelled a narrower critique of technological solutions, which focuses on renewable energy…. [his findings] can be easily summarised.

After examining the evidence on varieties of solar, wind, biomass, hydrogen, etc., as well as energy storage systems, Trainer concludes that the figures just do not support what almost everyone assumes; that is to say, they do not support the argument that renewable energy can sustain consumer societies.

This is because the enormous quantities of electricity and oil required by consumer societies today simply cannot be converted to any mixture of renewable energy sources, each of which suffer from various limitations arising out of such things as intermittency of supply, storage problems, resource limitations (e.g. rare metals, land for biomass competing with food production, etc.), and inefficiency issues.

Ultimately, however, the cost is the fundamental issue at play here. Trainer provides evidence showing that existing attempts to price the transition to systems of renewable energy are wildly understated.”

I think probably energy use has to be lower – but I am not a technical expert. Technical experts need to work more on this issue .
I would be interested in knowing about more countries RET scenarios, not just Australia’s.
Has work been done for China? They manufacture so many things. Or are they one of the countries the CEO thinks needs nuclear to keep up their manufacturing for the world? That doesn’t seem very fair to me…

But it says ultimately it is a cost issue.
Since I think we need a war-time-mobilisation-style economy to transition to zero ghg, I do not care about costs because you just issue bonds and commandeer people and resources. So cost is not an issue.


Sasha Clarkson 11.15.14 at 11:50 am

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.


Sandwichman 11.15.14 at 6:46 pm

Matt @67:

“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”…”

Exactly. It’s called a numeraire and with any old numeraire you can construct a “same yardstick” numeraire illusion. That is using the same yardstick to prove that the yardstick is precisely a yard long. In “New Welfare Economics” and conventional Cost-Benefit Analysis, this tautology is performed by parsing policy into an “efficiency” and an “equity” component. Efficiency means increasing aggregate income, measured in dollars. A compensation test (Kaldor-Hicks) says that this is a Potential Pareto Improvement because everyone could supposedly be made better off through a lump-sum redistribution, whether or not the redistribution is made.

Just don’t pay any attention to the fact that you’re measuring dollars in dollars and concluding that more dollars are “worth more” (in dollars) than less dollars.

The zombie compensation principle was shown to be either tautological and/or self-contradictory — depending on what part of it you were looking at — in 1940 (Scitovsky) 1950 (Little) and 1960 (Mishan) 1976 (Chipman). “…judged in relation to its basic objective of enabling economists to make welfare prescriptions without having to make value judgments and, in particular, interpersonal comparisons of utility, the New Welfare Economics must be considered a failure.”

And yet… there it is, deeply embedded in climate-economy Integrated Assessment Models like some mystical discount rate from Hell. Why? Because economists aren’t supposed to be making value judgments or interpersonal comparisons of utility? No. It’s because the U.S. Bureau of the Budget sent out a directive in 1952 (Budget Circular A-47) telling agencies to do it that way.

I’d be a lot more worried about the residual influence Budget Circular A-47 than I would about the pig-headedness of yurt dwellers.


Matt 11.15.14 at 8:33 pm

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 11.15.14 at 11:58 pm

ZM: stop. The uncertainty in predicting the future far outstrips the exactness of your math.


ZM 11.16.14 at 12:14 am

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 :/


Val 11.16.14 at 2:32 am

ZM I’ve read a lot of your comments, and skipped over quite a few because, yeah, they often are a bit long. But I’ve noticed you also show humility, you try to educate yourself, you read widely, you try to think clearly and logically about difficult issues, and you invite comment from those who know more.

So as far as I can see it’s pretty inevitable that you will get guys who tell you to shut up because you don’t know what you’re talking about, regardless of whether or not they know you’re a woman. Because – I don’t know – but the internet is supposed to be for showing off or something?

Anyway I’ve been looking at this issue also, because I think it’s actually really important what we should do about climate change, and working out our individual responsibilities as people living in wealthy, high emitting societies, is part of that, and discussing whether and how far we should focus on lowering consumption as well as switching to renewables is an important and difficult issue, and as far as I’m concerned I’m welcome the fact that you’re thinking seriously about this.


Val 11.16.14 at 2:38 am

I mean of course “I welcome” above.

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


Michael Cain 11.16.14 at 9:42 pm

Late back to the game, but this: “Isn’t that the equivalent of the Indiana Legislature fixing the value of pi by law? A “pollutant’ is a scientific/ medical definition, not a political one. How about passing a law that consuming alcohol excessively is not a hazard to health?” misses the point I was trying to make. The EPA process of regulating a substance begins by finding that the substance meets the definition of pollutant as specified in the Clean Air Act. If the law says that carbon dioxide can’t be a pollutant under that legal definition, then carbon dioxide can’t be regulated.

Perhaps I was obtuse. The phrasing is the typical polite way of saying in statute, “The EPA is not allowed to regulate carbon dioxide.”


Bruce Wilder 11.17.14 at 8:07 am

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,
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.
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?


ZM 11.17.14 at 8:48 am

Bruce Wilder,

I think Mark Diesendorf is credible, I have not heard anything that says he is disreputable.

Ted Trainer is an alternative/hippy/permaculture lifestyle person as far as I can make out, although I don’t know if he lives in a yurt or not.

I think the connection you are seeking is not between a 2 degrees target and supposed yurt universalists, but it was more amusing to point out the yurt universalist scare.

I do not like risk, so I think going back to 350ppm ASAP is better than a 2 degree limit. When the world was last at 450ppm the climate was significantly different, so 2 degrees is really going into territory that is uncharted in human history.

But there is actual science about how at 2 degrees things are worse than 1 degrees, and at 3 degrees even worse, and worse again at 4 degrees. And the science suggests at some point tipping points can be reached. And some suggests 3 degrees could be a tipping point and once it was reached it would not be possible to stop and non-human contributors such as permafrost would increase the warming by several more degrees.

1. Omega Centauri’s says that once 2 degrees is unachievable people will come over all Beavis and Butthead and want to “party on” only would be of consequence sometime in the future when 2 degrees is impossible.

Maybe Omega Centauri is right, maybe not.

Some people now say humans are so greedy we’ll never stop climate change, so why bother at all.

But this is a minority I think, or something spoken in a passing moment of quiet despair.

Elizabeth Kolbert’s (critical) review of This Changes Everything in NYRB concludes looking at another problem – that people are abstractly concerned about climate change but baulk at having to decrease energy and material consumption.

2. John Quiggin says that if people concentrate on a 2 degrees target then it strengthens their calls for solutions including central planning, living in yurts, and reducing population by 90%.

Possibly if we had started 20 years ago with market economist’s preferred techniques of carbon trading/taxing and whatever else it is they suggest we might be closer to staying within 2 degrees.

But that is a counter factual.

It is pretty doubtful that carbon trading/taxes are going to be enough to keep us within 2 degrees now. John Quiggin pointed in another OP to the Pathways to Deep Decarbonisation Report – but I read it and it exceeds the carbon budget to stay within 2 degrees.

Yurt dwelling is not at all likely to become universal, so no one offers this as a solution. And anyway yurt living is usually accompanied by sheep farming which produces ghg. However if ‘yurt living’ is a really not about yurts but is a euphemism for decreasing middle and upper wealth/income bracket people’s material and energy consumption then it is more of a realistic solution that does seriously get proposed.

Unless we have an enormous war there is not going to be a big population reduction. People in Australia do talk about population, but not a 90% reduction. So this is not a solution at all.

Central planning is probably a big target of criticisms because market economy people hate planned economy ideas. However these days you would make it less centralised and more responsive and then call it “smart networked economy” or something. Central planning has problems because it is associated with gulags and authoritarianism.

Anyway, I agree a 90% reduction of population is a solution is a bad idea and should not be considered.

But if high consumption market economy means cannot get us to stay within the 2 degrees limit, I don’t see why these are supposed to be so sacrosanct that anyone should argue it’s better to have a high consumption market economy than stay within 2 degrees.

I think that is as bad as the population reduction idea.

If reduced consumption and some planning in the economy would keep within 2 degrees, I don’t see what is wrong with them?


Sandwichman 11.17.14 at 9:30 am

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.


Sandwichman 11.17.14 at 9:36 am

“The choice of money as numéraire is systematically favourable…”

(Not really. The choice of money is only “systematically favourable” in the calculations. That is, it creates an illusion of net gain. Switch to the public good numeraire and that illusion of prosperity becomes an illusion of catastrophic loss.)


Bruce Wilder 11.17.14 at 10:17 am

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 11.17.14 at 10:52 am


I feel I’m not quite grasping what you are saying, but that I should.

From the IPCC, I’ve learned that economists love projecting, say, a 4x increase in income by 2100, and then a modest reduction in that income increase (also projected to 2100) of, say, 12% to represent the “costs” of climate change mitigation. I’m not sure how Pareto is involved, but it does seem remarkably ill-conceived. (Why are we doing this, if it reduces our income?)

Stern, Nordhaus and Weitzman want to buy insurance for our grandchildren, but are uncertain how large a premium to pay, because they project our grandchildren will be so much richer than we are. Because, I guess, the irreparable damage to the planet isn’t really going to affect them all that much . . . because technology or markets or something.

There’s something I’m not quite grasping in how economists think, and maybe it involves the Pareto shell game.


ZM 11.17.14 at 11:45 am

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.


Sandwichman 11.17.14 at 12:51 pm

Bruce Wilder@86 “”I feel I’m not quite grasping what you are saying, but that I should.”

Yes, Bruce, you should try to grasp it. Everyone one should. I have a hard enough time myself grasping what I am trying to say because of the magnitude of misplaced analytical effort that has been poured into this thing. Twenty-seven years ago Chipman and Moore described the New Welfare Economics as a failure and a smoke-screen of technical jargon. Yet the Kaldor-Hicks criterion survives in the heart of climate-economy assessment models. Brekke doesn’t explain it too well either. Drèze’s commentary on Brekke is probably the clearest.

Distribution matters in cost-benefit analysis: Comment on K.A. Brekke, Journal of Public Economics 70 (1998) 485–488

ABSTRACT: When the unweighted sum of net benefits from a project are used as a criterion of project evaluation, cost-benefit analysis may be sensitive to the choice of numéraire. This is one reason, among others, why this criterion should not be used. There is no plausible alternative to the use of distributional weights.


…the central insight of [Brekke’s] paper [is] that the ‘‘aggregate benefit criterion’’ (ABC for short) of cost-benefit analysis is deeply flawed in a way that has received insufficient attention so far.

The significance of this insight arises from the fact that, as Brekke points out, the ABC criterion is widely used in practice, notwithstanding its theoretical flaws. For instance, it is an open secret that the World Bank (which ought to be at the forefront of rigorous cost-benefit analysis) has abandoned the use of distributional weights, contrary to its own guidelines…

To see the importance of Brekke’s point, consider a public project which consists of using foreign aid to reduce pollution in a particular city. Two equally-polluted cities are potential sites for the project: a small city with rich residents (say New Delhi), and a large city with poor residents (say Old Delhi). If income is taken as the numéraire, so that the ABC [aggregate benefit] criterion effectively consists of finding out how many rupees the beneficiaries are willing to pay for the project, then New Delhi may well be selected (since its affluent residents are likely to be willing to pay more, in the aggregate, for the project). But if environmental benefits are taken as the numéraire, so that a unit reduction in pollution is considered to have the same social value no matter who enjoys it, then Old Delhi would be selected. In this particular example, the latter choice seems far more appealing on ethical grounds. Indeed, why should a reduction of exposure to pollution count for more if it is enjoyed by a rich person rather than a poor person? The ABC rule, which purports to be “distributionally neutral”, seems blatantly partial to the rich in this case, if income is taken as the numéraire.

In short, Brekke’s analysis does highlight a major problem with the ABC criterion, which adds to its other theoretical flaws. In the light of these flaws, it may be asked why the ABC criterion is so widely used in practice. Several possible reasons come to mind. First, the practitioners may not appreciate these flaws. Second, they may be aware of them, but use the ABC criterion for convenience. Third, they may be reluctant to contemplate the value judgments involved in choosing distributional weights. Fourth, they may hold the normative view that marginal social utilities are equal in terms of their chosen numéraire. Fifth, they may simply be siding with the rich.
All these are poor justifications for the ABC criterion, though I suspect that each of them has played a role in the demise of distributionally-sensitive cost-benefit analysis. There are two more respectable arguments to consider. One is the compensation argument, namely that if a project has positive aggregate benefits then the gainers can (at least in some notional sense) compensate the losers. The ethical appeal of this argument, however, is weak. If compensation is only hypothetical, it is irrelevant. If it is actual, it should be counted as part of the project, which becomes a Pareto-improving project so that its desirability is not an issue.

Another superficially appealing argument is that distribution is simply not a legitimate concern of public projects. Distributional concerns, so goes the reasoning, should be dealt with through appropriate fiscal and other instruments such as taxes and transfers. While second-best theory suggests that, in a distorted economy, all policies should take all distortions into account, it is more rational for specific policies to focus on specific objectives, e.g. tax policy on distributional goals and project evaluation on economic efficiency. It is, however, wishful thinking to assume that distributional concerns can be adequately dealt with through taxes, transfers and related policy instruments. For reasons that are well understood in public economics, income disparities in the real world are fairly resilient. To put it another way, the assumptions under which a planner might be able to get anywhere near equalising marginal social utilities are 5 extremely restrictive. In a world or resilient inequalities, it is hard to justify giving uniform weights to the benefits of a public project, irrespective of who enjoys them.

In any case, all the above-mentioned justifications for the ABC rule flounder on Brekke’s argument that, unless all individuals have the same marginal rates of substitution between all commodities, “aggregate benefits” may not even be well defined. To put it another way, it is not possible, in general, to be ‘”distributionally neutral” in any precise sense. It seems that practitioners really do have to get their act together.

As Sterner and Persson observed in their review of the Stern Review, “Although distributional weights are seldom used in practice, there is one big exception, where distributional weights turn up under another name: discounting! By setting η higher than zero, distributional weights are in fact applied to future generations.” “An Even Sterner Review: Introducing Relative Prices into the Discounting Debate,” 2008. (They cite Drèze’s commentary on Brekke’s paper.)


Rich Puchalsky 11.17.14 at 12:51 pm

“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.


Matt 11.17.14 at 7:52 pm

@Rich: fully agreed about energy and emissions choices already being dominated by the actions of thousands, not millions or billions, of facilities and institutions. That’s one reason that I am itching for some regulations with teeth. We have many examples of environmental “central planning” (regulation) improving air and water quality across large regions. Where’s the formerly smoggy city that made its air breathable again via voluntary individual choices instead of regulation? I don’t think one exists.

I find that people tend to badly lowball how long climate change could be a problem. If you look at the Bern carbon cycle model that Omega Centauri linked to, for example, observe how flat the CO2 decline is near the 100 year mark where the figure cuts off:

How far to the right would you need to stretch the page to show the time when CO2 reaches 0.02 of its initial concentration?

Every climate thread I plug The Long Thaw by David Archer:

If humans don’t drastically reduce emissions and then actively work to reverse them, climate change isn’t a problem just for our grandchildren or their grandchildren. It’s a problem for the next 100,000 years. And even if humans do get things under control by, say, 2075, or 2175, the possibility of destabilizing climate again will always be latent in human civilization.

The other side of the enormous time scales involved is that factors often rejected as “too slow” today, because they don’t fix rising CO2 by 2050 or whatever, are actually meaningful. This includes long term changes in land use, animal husbandry, and human populations. I think that in the long term human demographic changes are going to be enormously influential on climate and sustainable emissions per capita. Over half of the world’s nations are already below replacement fertility rates. Egypt is the only country I’m aware of that is above replacement fertility and has fertility levels increasing in recent years. The demographic transition is good news! But it’s good news for the long term; the population will almost certainly be billions higher in 2100 than today.

With 10 billion people you can’t passively stabilize the climate even at a North Korean standard of material use, not even if you simultaneously replace most fossil energy with non-combustion energy sources. By “passively” stabilize I mean reach an atmospheric steady state of CO2 without making any effort to accelerate removal of CO2 from the atmosphere. The IPCC calls for humans to reach negative emissions per capita, i.e. pursue geoengineering, but I guess “geoengineering” is already a poisoned term so they don’t use that word.

Since you can’t have 10 billion+ people and passively stabilized atmospheric CO2 even at a fairly austere material standard of living, a lot of people reject some of the premises. CO2 doesn’t really have anything to do with climate. A technological deus ex machina will quickly fix everything at the last moment. People don’t need all the material luxuries of North Korea to live a good life. People will be so rich in 2100 that they will barely notice the inconvenience of the great ice sheets disintegrating. There won’t be a 10 digit population in 2100, because we’re going to start throwing people out of the lifeboat.


Bruce Wilder 11.17.14 at 7:53 pm

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.


Bruce Wilder 11.17.14 at 8:07 pm

Matt @ 90

North Korea? What’s the arithmetic on that?


Omega Centauri 11.17.14 at 8:08 pm

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.


Bruce Wilder 11.17.14 at 8:24 pm

Bruce, its tougher for individual actions to have much of an impact than things would appear at first.

Well, it’s tough, née impossible, for individual actions to matter positively to the big picture without coordinated constraints. On the other hand, they do add up in a bad way quickly enough.


Matt 11.17.14 at 8:27 pm

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.


Rich Puchalsky 11.17.14 at 8:58 pm

“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.”

Not really. All those drivers can’t choose to drive if there’s no gasoline, and the people who provide it have to build pipelines, refineries etc. If the infrastructure to deliver the gasoline is built, it will get burnt; if not, it won’t, and the individual driver choices are a predictable function of the infrastructure choices. The drivers all “choose” to start buying new cars with greater efficiency if the scratch of a pen somewhere mandates that cars have greater efficiency.

The only way that hundreds of millions of drivers or house heaters can be said to make meaningful individual choices is if we purposefully decide to believe the propaganda that the infrastructure that they use magically appears via the market rather than through earlier choices made via governmental command-and-control.


Bruce Wilder 11.17.14 at 9:59 pm

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.


Rich Puchalsky 11.17.14 at 10:17 pm

Well, you didn’t say as much if you said that everyone who drives a car or truck is making daily decisions that affect GHG generation. On some level it is true, and that level is “not really at all true”. It’s not that “only the architecture can impose the necessary constraints on individual behavior”, it’s that we already have a command-and-control system for building architecture that already imposes constraints on individual behavior, and the individual behavior already really doesn’t matter. For some reason economists believe that we’re building infrastructure according to “the market”, but I think that this is because a) most economists are never directly involved in infrastructure decisions and have no real idea of how they get made, b) economists self-propagandize themselves into believing that there must be a market involved, because everything is markets. But really, markets only operate within built infrastructure.


Rich Puchalsky 11.17.14 at 10:47 pm

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.


Bruce Wilder 11.17.14 at 10:59 pm

Me: 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.


Sandwichman 11.17.14 at 11:45 pm

No One has ever seen an Invisible Hand!


Rich Puchalsky 11.18.14 at 12:18 am

It’s just a matter of emphasis, Bruce. I know that you wrote something that kind of sounds like what I wrote, but you’re “enough of an economist to quibble about that”, and I really don’t think that there is any meaningful sense in which the voluntary, individual decisions of householders — even all of them, all added up together — make any difference.


john c. halasz 11.18.14 at 1:18 am

Here’s the latest U.S.


J Thomas 11.18.14 at 1:22 am

Masses of individual opinions makes a giant difference in the long run.

This year, if 10% of the po9pulatioin were to ride bicycles at every chance and cut their gasoine use by 50%, that would give us about 5% more gasoline for other uses. It would all get used.

25 years from now if 95% of the public agrees we have to cut fossil fuel use, it will be poor people who use dirty expensive fossil fuels because they can’t afford what everybody else wants.

Like poor people today who drive gas-guzzling clunkers. They don’t want to pay so much per mile, but it’s what they can do.


john c. halasz 11.18.14 at 1:23 am

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:


Rakesh 11.18.14 at 1:40 am

Oreskes and Conway’s The Coming Collapse of Western Civilization is provocative. Looks at the present environmental crisis from the perspective of a Chinese academic in the future. Reports, i.a. how blind people were to the ideological nature of the belief in free markets and the irrationality of tests of statistical significance that put more weight on rooting out false positives than false negatives in assessing anthropogenic climate change.


Rich Puchalsky 11.18.14 at 5:44 pm

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”.


Matt 11.18.14 at 6:33 pm

“The pipeline won’t change anything foolish greenies” was transparently false from the beginning. If a $7 billion pipeline doesn’t change anything, why does anyone want to build it? Obviously it was supposed to change things.

What’s happening since the pipeline hasn’t been built is that tar sands oil is moving by rail. Since rail hasn’t seen major capacity expansions either, other cargoes like coal are being delayed. Operators of coal power plants in the US have been complaining for months of delayed coal deliveries by rail. It’s not great for the climate if you’re delaying coal consumption by saturating transport capacity with oil, but it’s better than the situation where Keystone XL is built and both oil and coal move unimpeded again.


Omega Centauri 11.19.14 at 5:14 am

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.


J Thomas 11.19.14 at 10:08 am

#109 Omega C\entauri

Longterm I don’t see energy as the limiting resource, simply because there really is a great deal available.

This is a side issue and not of any immediate importance, but what are your main candidates for the limiting resource once we have energy sorted out?

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.

If we could get a consensus on some sort of important national goal, we could quickly develop all the things necessary for that goal. Something vaguely like WWII….


Brett the Brit 11.19.14 at 4:12 pm


Bruce Wilder 11.19.14 at 6:16 pm

The limiting resource is the assimilative capacity of the environment. The “assimilative capacity” of a natural body of water is “its capacity to receive waste . . . or toxic materials without deleterious effects and without damage to aquatic life or humans who consume the water.” (Wikipedia) Generalized metaphorically to the whole of earth’s environment, the idea, like the notion of the earth’s “carrying capacity”, is meant to highlight that the apparently multiplying problems of the 21st century are related to the increased weight of impact of human population and economic activity on the natural environment.

The particular point highlighted by considering the assimilative capacity of the environment as the most general binding resource limit is that the problem of sustainability cannot be solved merely by switching from depletable fossil fuels to non-depletable, “renewable” sources, because any use of energy — any use of energy for human purposes whatsoever — entails waste. Our economic production activities are not just limited by the amount of energy we can extract from fossil resources of petroleum or coal, or by the amount of energy we can extract from sunlight, wind, tides or rainfall, but by the natural environment’s capacity to absorb the waste entailed.

An analysis which tends to narrow identification of acute problems may still be necessary and useful to creating schemes of management, but without a consciousness of the context of assimilative capacity, we will find ourselves losing a global game of whack-a-mole, as each “solution” that fails to restrain our general population, and general use of energy for economic activities, and general use of land, water and other natural resources, simply re-appears as new problems breaking down the natural systems of the earth.


Bruce Wilder 11.19.14 at 6:26 pm

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.


Sandwichman 11.19.14 at 7:02 pm

“…our grandchildren may very well not be 10x or 4x as rich and productive as we are.”

Remember what Keynes said eighty-five years ago about the possibilities for his generation’s grandchildren, once we all became (for the sake of argument) “eight times better off”

I draw the conclusion that, assuming no important wars and no important increase in population, the economic problem may be solved, or be at least within sight of solution, within a hundred years. This means that the economic problem is not – if we look into the future – the permanent problem of the human race. …

Thus for the first time since his creation man will be faced with his real, his permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.

The contemporary climate-economy models projecting future affluence make no provision for people choosing leisure over more income.


Bruce Wilder 11.19.14 at 7:14 pm

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.


William Timberman 11.19.14 at 7:24 pm

Again I ask: BRUCE WILDER, PLEASE WRITE A BOOK. More than one book even — I know you’ve got more than one in you. Never mind that doing what you’re doing is more discursive, more congenial, more gemütlich. Talent has certain obligations, after all.


William Timberman 11.19.14 at 7:26 pm

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….


William Timberman 11.19.14 at 7:26 pm

Thank you, God.


Bruce Wilder 11.19.14 at 7:32 pm

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?


Sandwichman 11.19.14 at 8:04 pm

“Would any of us be worse off if there were fewer commercials on teevee or YouTube?”

Twenty-one years ago, I was nominally vice president of a small social policy research and public relations firm in Vancouver called Karyo Communications. Karyo was eventually bought by “the world’s largest public relations firm” (always have to wonder how these records are established) Edelman.

So yesterday I woke up to the news:

Edelman suggests conducting background checks on TransCanada’s environmental opponents, starting with the Council of Canadians, Equiterre, the David Suzuki Foundation, online activist group Avaaz and Ecology Ottawa.

The documents suggest plans to provide that and other information to a list of sympathetic third parties like pro-energy groups, think-tanks, academics, former government officials and pundits who can write op-ed stories and blogs to create “an echo chamber of aligned voices.”

So to parse the microeconomics behind that, a certain portion of the carbon dioxide being emitted from the products refined from the crude being shipped to make profits for TransCanada goes to Edelman to create “an echo chamber of aligned voices.”

An echo chamber of aligned voices! Those are Edelman’s words. “Third-party voices must also be identified, recruited and heard to build an echo chamber of aligned voices.”

Echo chamber is a fitting metaphor. Echo chambers win approval for pipelines. Pipelines pay for echo chambers.

Would any of us (other than Edelman and TransCanada) be worse of with fewer ECHO CHAMBERS?


Bruce Wilder 11.19.14 at 8:48 pm

An opportunity for pareto improvement!


Sandwichman 11.19.14 at 9:06 pm

“Located blocks from the center of U.S. government, Edelman’s Washington, D.C. office brings a public affairs perspective to all aspects of our work. Whether it’s helping a client cultivate an echo chamber of supporters, or creating pitch-perfect messaging around a divisive issue, we draw upon our understanding of how Washington works to help clients manage issues and reputations. Our staff of 225 includes former journalists, campaign veterans, political speechwriters, White House staffers and legislative aides.

“The Edelman Washington, D.C. office features a player piano in one of our conference rooms—a tribute to our beloved colleague and former vice chairman Michael Deaver, who earned his way through college by playing piano in a cocktail lounge.”


“After leaving the White House, Deaver set up a Washington public relations firm that was at first spectacularly successful, then discredited when he was accused of using his known friendship and presumed access to the Reagans unethically. In 1989 he was convicted and heavily fined on three perjury charges arising out of his denial to a congressional hearing that he had lobbied high officials before he had allowed a long enough time to lapse since he resigned, charges he indignantly denied.”

“One of the saddest regrets he had after the fall was that he had to sell the superb Börsendorfer piano he had bought in the days when foreign governments and blue chip corporations paid his public relations firm millions.”


Sandwichman 11.19.14 at 9:09 pm

Potential Pareto improvement, that is.


Sandwichman 11.19.14 at 9:16 pm

“We believe that trust is an asset that enterprises must understand and properly manage in order to be successful in today’s complex operating environment. Unlike reputation, which is based on an aggregate of past experiences with a company or brand, trust is a forward facing metric of stakeholder expectation.

“The 2014 Edelman Trust Barometer is the firm’s 14th annual exploration of trust.”

TRUST: an echo chamber of aligned voices.


Matt 11.19.14 at 9:24 pm

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.


Rich Puchalsky 11.19.14 at 9:33 pm

Bruce W.: “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” […]”

Well… I sort of agree, though “loosely coordinated system of decentralized decision-making” covers a very wide range of possible setups. But let’s say I agree. What useful knowledge does this bring me?

I’ll rephrase that. 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. The U.S. President can pretty much kill the project. That’s not an accidental reason why it was specifically chosen to oppose in the first place.

When people seriously believe things like “drivers make daily decisions that affect GHG generation”, it makes them pull on the wrong levers — wrong in just about every sense that I can think of. For instance, Al Gore used to give people tips on how they could individually use less energy. This lets people do a frustrating and meaningless activity, and sets Gore up for a tu quoque about how he sometimes flies in a helicopter or has a big mansion, but it neither directly saves any energy nor changes the political conditions required for us to do so nor, if you think that people really need to change the way they think about our basic lifestyle, changes the way they think.

If the whole system needs to be re-archetected, fine, but then you need a revolutionary, not an activist. If that’s what you really think, then you’re talking to the wrong people.


Bruce Wilder 11.20.14 at 12:18 am

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.


Bruce Wilder 11.20.14 at 12:34 am

Matt @ 125

We sure as heck are not going to manage anything like industrial, technological civilization with 10 billion people on this little planet.


ZM 11.20.14 at 1:30 am

“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?


ZM 11.20.14 at 1:44 am


“Remember what Keynes said eighty-five years ago about the possibilities for his generation’s grandchildren, once we all became (for the sake of argument) “eight times better off””

I went to a talk by Ross Garnaut (our climate change economists, sort of like Lord Stern), and he talked a bit about Keynes (amongst Hayek, Popper, and Schumpetter (sp?)). One interesting thing he looked at was the difference between Picketty’s r and g obsrvations, and Keynes idea that the rate of return on investments would go so low that inequality would eventually diminish.

Garnaut said he thought Picketty might be right in someways , but wrong in others, and so the economy might end up like Keynes’ idea again : “since the beginning of this century we have had an abundance of capital and that has led real interest rates to fall to low levels – this starts to look like Keynes’ world —part of what is being seen is a temporary lift in asset values in this period of lower interest rates”

He seems very committed to the market though, I think due to Cold War sort of ideas linking markets with non-authoritarian government.

He said his idea is the goal of development is everyone in the world enjoying the same living standards as those of developed countries. I do not think this is possible or desirable environmentally unless developed countries material consumption goes significantly down (which is what I think should happen – at another talk when I asked about this he said we could sharply tax everything except books/e-books and healthcare to achieve this desired state. I thought maybe that would be harsh – but if things have good health prevention effects I suppose they count as healthcare too).


Matt 11.20.14 at 1:59 am

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.


ZM 11.20.14 at 11:36 am

News of a very gloomy outlook for fish with ocean acidification:

“an unrelated note, scientists are predicting that fish will become extinct in our oceans. Specifically, in about 34 years.
Yes, an international team of researchers were doing a bit of a study on how fish are dealing with carbon dioxide-related ocean acidification, expecting to find some trends in migration or population change.
And oh, they found some trends alright. Specifically, that we’re on track for a fish-free ocean by 2048.
In fact, 29 per cent of edible fish and seafood species have declined by 90 per cent already. And those coastal species are the ones doing things like preventing toxic algal blooms in the ocean, by the way, so get ready for some poisonous red tides.
“This isn’t predicted to happen. This is happening now,” explained researcher Dr Nicola Beaumont.
So, yeah. Savour your sashimi, dear reader. Then you’ll be able to explain to your grandkids what it was like, and how we did nothing when species started vanishing”

Read more:


J Thomas 11.20.14 at 12:57 pm

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.


Rich Puchalsky 11.20.14 at 2:20 pm

BW: “I disagree about the usefulness of popular consciousness and small commitments.”

I work within the U.S., and U.S. politics is tribal and has been for pretty much my entire life. Getting increasing buy-in through popular consciousness depends on a bandwagon effect — or, at least, depends on the absence of active, respectable opposition offering an alternate set of values. But of course the right opposes fluorescent light bulbs and has organized to push through Keystone XL, because liberals. It’s all a proxy for racism, but since racism itself has been made not respectable an as organizing principle, people will hold on to whatever tribal markers are there as proxies just as fiercely.

“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.”

That sounds like something out of Alinsky, and Alinsky was inspiring and wrong and his organizations failed. I was in Occupy: we got lots of people to attend meetings, and that did not help when police repression arrived. Because of the above-mentioned tribal divide, there was no consensus that a right to assemble and petition the government for redress of grievances actually existed in any enforceable way. Each new police brutality incident grew Occupy until it reached all of the people who didn’t want the police to beat people up, but that number of people is not enough to overturn existing power structures in the U.S.


Sandwichman 11.20.14 at 6:43 pm

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…


Sandwichman 11.20.14 at 6:47 pm


Omega Centauri 11.20.14 at 9:46 pm

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.


Bruce Wilder 11.20.14 at 10:14 pm

The servants we have are energy slaves. Aristotle — on Holbo’s good authority a famous Greek philosopher — once mused that an egalitarian good life would require the development of machines to replace slaves. Well, the industrial revolution provided the machines, powered by fossil fuels, allowing people to relax and become mere monitors and controllers — masters! — of production processes.

Here are some links, where people calculate how many slave equivalents our energy consumption has provided us. Here, a calculation suggests that the average Frenchman relies on 400-500 slave-equivalents to produce his standard of living. Worldwide, some other calculations suggest, that fossil fuels are giving humankind the equivalent of over 200 billion slaves.

The unequal ecological exchange is mostly not really an exchange at all — just an externalization of costs. The Bangladeshi’s who will perish in one of the typhoons that drown the Ganges Delta, as sea levels rise and sea increased surface temperatures drive occasionally more extreme storms, will have neither contributed much to industrial production nor benefitted. Which is not to say that they haven’t been paid too little to sew shirts in sweatshops or been starved to death to support a first world war effort.


Bruce Wilder 11.20.14 at 10:43 pm

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.


J Thomas 11.21.14 at 12:26 am

#137 Omega Centauri

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.

If we get surplus cheap energy, we can use it to substitute for some other things.

Like, some time ago in another thread Brett Bellmore posted links to some preliminary research which indicates someday it may become practical to extract uranium from seawater. Depending on the cost of energy, we could extract practically everything we need from low-quality ores. We could extract every element that’s reasonably soluble from seawater, if the cost of energy is low enough.

From here and now, it doesn’t look like the cost of energy will get that low. My hope is that we’re low enough on the learning curve that costs will go way down and availability will go way up.

And since I see no real hope without that, I want to push for it as best I can. It’s like when you play bridge and your only chance not to go set is if the other players have a particular distribution of the cards. You might as well proceed as if that’s the way the cards actually fell, because otherwise you get a bad result regardless.


ZM 11.21.14 at 12:36 am

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…


Peter T 11.21.14 at 12:52 am

The limits are everywhere – not just CO2, but ability to absorb and recycle what we produce, limits on extraction, limits on heat dissipation….(it would only take a few centuries of increasing power generation to raise the temperature of the earth’s surface beyond what we can tolerate, even without carbon dioxide).

How this plays out is deeply uncertain. Our elites are not only predatory. The relationships they embody are key elements in the cycles of production – we and they go together. Nor is it certain that the elites will do better than the ordinary folk – they tend to be the major targets (when the cities fell, the surviving Mayan lower classes went back to the village; the kings were ritually tortured to death). When complex systems degrade into simpler ones, there is much less room at the top.

We have never gone through a truly global decline before, and the historical record of local ones (insofar as it can be deciphered) offer a range of outcomes – although very few are all that good for anyone.


Rich Puchalsky 11.21.14 at 1:01 am

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.


ZM 11.21.14 at 1:06 am

On the issue earlier discussed about when ghg emissions need to fall to zero:

There was an article in The Guardian today about a new UNEP report that states carbon emissions need to be zero by 2070 and all ghg emissions zero by 2100 and we need to go to negative emissions through drawdown technology.

All scenarios in the United report however used negative emissions technology – so 2070 is not soon enough to get to zero ghg emissions if that technology proves unfeasible/unpracticable/dangerous. I think it is quite a worry UNEP is going down this path of late zero emissions in hopes of technological cures
“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 or, possibly, controversial, planetary wide engineering of the climate known as geoengineering. Unep is “extremely interested” in the subject and is planning a report in the months ahead.

“Once you get behind the scaremongering headlines about the schemes that are planetary scale but over which you have no sense of control, there are other geoengineering ideas, going back to the basics of how to manipulate local water bodies and alter, for example, geothermal productivity,” McGlade said. “We haven’t even started to skim the surface of what we can do and we shouldn’t rule out the possibility that some of these geoengineering ideas could be extremely good innovations.”


Sandwichman 11.21.14 at 1:38 am

“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?


Sandwichman 11.21.14 at 1:41 am

How much does that carbon capture and storage technology cost in oysters?


Bruce Wilder 11.21.14 at 4:19 am

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.


john c. halasz 11.21.14 at 4:46 am

B.W. @157:

All fossil fuel sources, as well as, nukes are declining in EROEI terms. Coal is usually currently put at around 40. Conventional oil which used to be at 100 70 years ago is usually put at 15-20. Conventional NG is at 15. Solar is rapidly improving and is prolly above the 5-6 that is often cited, more likely now in the 8-10 range. However, solar and wind (which is a mature technology, at 21-23) directly are electrical production, whereas as thermal methods of electricity generation entail large heat losses and ICEs are only 1/3 as efficient as electrical motors. So adjustments should be made to “system boundaries” to compare. But the big problem with wind and solar, (though not so much hydro), is intermittency and storage. However, the point to the “energy cliff” chart is that EROEI, (which is a physical measure), is to be traded off against net energy flow, which is what really matters. SO the difference between 80 and 40 in net energy flow is only 2%. The midpoint in the curve into the cliff occurs at 8. Probably something above 12 is needed to maintain a much more physically efficient industrial system in the long run. The key issue is whether “we” will use our remaining budget of energy and GHGs to construct such a system in timely fashion or not. The sooner we develop effective systems of renewable energy, which in turn can generate further renwwable production, the better. But time is rapidly running out.


Rich Puchalsky 11.21.14 at 4:52 am

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.


ZM 11.21.14 at 4:54 am

“The key issue is whether “we” will use our remaining budget of energy and GHGs to construct such a system in timely fashion or not.”

That is what Graham Turner’s analysis concludes could begin sometime in the next 15 years. Although he looks at other materials not just energy. He said he worries we will go past the point where we are capable of a planned response, and some Cormac McCarthy or Mad Max style nightmare would follow.

It is a shame I think that the university has not organised a multidisciplinary team to investigate this instead of just leaving it all to Graham Turner. Geology and land and environment departments and engineering departments people should be looking at it with him for the physical analysis, and law and policy and economics department people for the social analysis and recommendations.


john c. halasz 11.21.14 at 5:09 am


Bruce Wilder 11.21.14 at 6:40 am

john c. halasz @ 148

EROEI numbers can get very slippery when you squeeze them hard, and they are abstractions. Presumably, “peak oil” means a declining EROEI for petroleum. And, with IPCC and UNEP and other consensus bodies taking up an assumption of massive removals of CO2 from the atmosphere sometime after 2050, what does EROEI now even mean? If fracking for NG is poisoning the groundwater, how is that reflected in the EROEI of natural gas?

As you say, the most urgent issue is, do we use our remaining carbon budget and “cheap” fossil fuel production capacity to construct a renewable energy generation capacity (and I would emphasize an economical energy consumption infrastructure to match)?

I think humans will not. Somethings will get built, but too little, too late. And, as things get rougher, the first instinct of collective panic will be austerity. More of the world will be cut off from access to resources, as elites substitute intensified administrative extraction to offset declining energy surpluses. Desperate and expedient measures will increase the pollution generated, will increase the critical depletion of fresh water and other vital resources.

Anything we do now that makes long-run sense will require short-term pain, which will fall disportionately on rentiers with a stake in existing systems. The preservationist impulse will inspire denial and forlorn hope. And, the pressure on incomes from declining industrial production and agricultural output will just make it harder to divert resources to investing in a viable future.

It won’t be an “irrational” response. The ROI won’t be there, on a downward slope for the whole economy.

It is a kind of a race condition. The kick-in-the-ass catastrophe that would motivate getting control of the situation happens too late, after the capacity to respond has already been damaged and handicapped to much to permit a response of adequate magnitude.

I can imagine truly frightening catastrophes inspiring some truly horrifying and desperate expedients — wars and epidemics and mind-bogglingly ill-advised geo-engineering schemes — before orderly and well-planned re-structuring.


Matt 11.21.14 at 7:09 am

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.


ZM 11.21.14 at 7:16 am

This is why a war-time-mobilisation-style economy is the best solution. I am sure there are enough educated people and technical systems to accomplish this to a non-disastrous degree.

If it gets too late and there is climate change to 4-6 degrees or higher, ocean acidification, more regular extreme weather events, wars with robotics and whatever else sort of warfare technology which could escalate to nuclear since that is not dismantled and who knows who will have control of it in event of wars and disorder, and so on – I doubt there is much of a chance for re-structuring after the event.


john c. halasz 11.21.14 at 8:46 am

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.


Matt 11.21.14 at 8:50 am

Anything we do now that makes long-run sense will require short-term pain, which will fall disportionately on rentiers with a stake in existing systems.

I half-agree. Coal companies are taking a beating in the stock market and their CEOs are frothing mad at environmental activists, government regulators, and elected politicians who have spoken out about climate change, coal, pollution, and allied issues. Marginal shale oil producers and the poorer OPEC members are very worried about recent oil price declines. Clearly people with a large stake in fossil fuels are not interested in alternatives regardless of how many social or technical advantages the not-fossil options can boast. But… 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.

The 1% are going to continue to enjoy air conditioning, steaks, and liquid fuels whether oil is $30 a barrel or $250. They are the advocates of austerity because they are the last in line for deprivation and new constraints bring new opportunities. When energy prices shoot up, people who command an investable surplus flock toward opportunities to profit from the shortage. This was visible in investment patterns in the last decade and during the first big oil shocks in the 1970s. When there’s a respite in pricing, like in the 1980s or has happened over the last few years, investors pull back. There was enormous investment in solar power companies last decade when solar capacities were much smaller and more expensive. Now that they’re much bigger and cheaper there is less investment even though the whole sector is much more mature and proven. “Nobody goes there anymore. It’s too crowded.”

This is in some contrast to the behavior of decision makers where they’re actually a bit afraid of the masses. Egypt, India, Pakistan, Nigeria, India, Malaysia, Indonesia, and dozens of other countries provide huge quantities of fuels and sometimes electricity to the public below cost, and suffer riots when the subsidies are cut too fast. But Warren Buffett? He doesn’t care if it’s coal power or wind power, contented or angry masses. He’s perfectly willing to see other people endure a decade of short term pain as he locks in long term rents. In fact a prolonged period of pain probably indicates many opportunities to erect the value “moats” that he famously looks for in investments.


Matt 11.21.14 at 9:12 am

@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.


Rich Puchalsky 11.21.14 at 4:26 pm

I agree with Matt @ 156. The financialization of everything is horrible for many reasons, but it does mean the most of the elite really don’t care where their money comes from. The people who have to resist wholeheartedly aren’t generally the “rentiers”, it’s mostly workers in environmentally bad industries, coal miners and so on. It doesn’t sound as good to say that we have to put all the coal miners out of a job as it does for us to oppose the rentiers, especially since neoliberalism being what is it they aren’t likely to get new jobs any time soon.


Bruce Wilder 11.21.14 at 8:24 pm

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.


john c. halasz 11.21.14 at 10:29 pm

Matt @ 157:

Solyndra lost $1 bn, half government guaranteed. Semprius apparently needs just $40 mn to scale up, maybe more but not hugely more. This does strike me as the irrationality of relying on “the market” and its short-run vagaries. Nor do small differences in price points matter all that much. In fact, electricity rates vary widely by region and likely suitable applications could be found regionally for a mere 200 MW in annual output.

More to the point, “levelized cost” calculations are dubious, even more so than attempts to pin down EROEI. Just to point to one key issue, they depend heavily on assumptions about the long-run costs of capital and discount rates, (and those are different issues for corporations and governments). The problem with RETs is that they generally involve high up-front fixed cost investment and low marginal and maintenance costs, (which make them a problem for profit-seeking private corporations), whereas fossil fuels and other conventional energy technology are a) already sunk-cost investment, but b) involve higher and likely henceforth rising marginal costs. Of course, the other big problem for RETs is storage and/or interconnectivity, which decrease their efficiency/raise their costs both in physical and monetary terms. That could be partly mitigated by investing in “smart grids” as a public utility, (in contrast to regarding energy generators as the utility, which under deregulation/privatization has caused them to obstruct RETs). There are planning and coordination problems to be solved here on a large scale, not likely to be achieved through market-price mechanisms alone, nor by profit-seeking corporations left to their own devices.

(Of course, another big problem with levelized cost calculations is that they tend in their assumptions to run directly counter to conservation/efficiency in energy usage/consumption).

But leaving aside any issue of engineering specs, your economics seems to me to be far off the mark. (As B.w. has just addressed above). I will just add that transformation to a sustainable energy system would involve writing down the “value” of a vast amount of energy producing and energy consuming capital and infrastructure eventually to zero, at rates much faster than the assumptions of “normal” economic depreciation, including the piles of financial “asset” claims laid on top of the “physical” capital and infrastructure, (which “assets” already include a “capitalization” of unextracted resource rents), while at the same time raising an immense amount of investment capital, in “real” and financial terms, to build out the alternatives. That entails both a large loss of “wealth” and an increase in the underlying input costs to the price structure of the overall economy. Needless to say, a lot of those rent “moats” upon which corporate investment is currently strategically fixated will be abolished and correspondingly incomes will need to be re-distributed for sustainable demand management.

Rich Puchalsky @158:

Currently there are just 90,000 coal miners in the U.S., about 55,000 underground. Those are relatively well paying, because highly automated jobs, unlike days of yore, but are not exactly fun, nor safe jobs. Claiming that as a big issue is a corporate canard. (2 million industrial jobs disappeared after the 2001 recession and scarcely anyone complained about that).


Matt 11.21.14 at 10:55 pm

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?


Collin Street 11.21.14 at 11:31 pm

@Matt: I thought the whole point of a rent analysis was so that you could conceptually split the proceeds from some enterprise into two streams, one rent and one trading. Presumably you’d do that because some enterprises have income that derives partially from rent and partially from trading.

[but let’s not demonise rent too much: given global competition, the natural rate of profit is almost certainly negative [because it’s set by what the cheapest producer _thinks_ their marginal cost is], and income through restriction-of-competition is also rent!. So rent’s the only way to actually make money and you know eat and shit.]


TM 11.22.14 at 12:20 am

Good rant Bruce 159.


Sandwichman 11.22.14 at 12:41 am

For the rentiers, the choice has always been between euthanasia or genocide.


Sandwichman 11.23.14 at 12:30 am

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!”


Omega Centauri 11.23.14 at 3:05 am

Talking about CPV. I think the only CPV system maing a profit is SunPowers C-7 system (with only a seven times concentration). They claim 20% better LCOE than unconcentrated panels, and have a project pipeline exceeding a gigawatt (mostly in China). High concentration CPV relied on the assumption that active PV surface area would always be more expensive than optics, and I don’t think that is being born out.

The biggest part of the energy cost of PV is the actual refined silicon. There is now Fluidized Bed Reactor technology for producing such which is several times more energy efficient (and factories are being built). 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.


J Thomas 11.23.14 at 10:16 pm

#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.


Bruce Wilder 11.23.14 at 11:05 pm

it would reduce EROEI a lot

Reduce or increase? (We want EROEI to increase — it’s a good thing, yes?)

How solar PV embeds in the total system of distribution and use is what matters in the end, but that complexity can make EROEI seem almost nonsensical, but maybe that’s your point?

Just asking for clarification.


J Thomas 11.23.14 at 11:29 pm

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.


Collin Street 11.23.14 at 11:37 pm

High concentration CPV relied on the assumption that active PV surface area would always be more expensive than optics, and I don’t think that is being born out.

I was going to make this point. But beyond that… well, lenses and imaging mirrors have never, historically, been particularly cheap. Fairly expensive materials, careful manufacture. I mean, probably optical glass will stay substantially cheaper than PV silicon, but the orders-of-magnitude/almost-free-in-comparison difference that you’d need to cover the much, much higher production costs for concentration?

We should have been able to predict, “ehn, probably not”. [… but we did, didn’t we? I think concentration was always seen as a bit of a gamble, a somewhat-speculative investment… is the problem with these businesses not working just that people don’t appreciate that not everything worth trying works?]


Bruce Wilder 11.24.14 at 2:20 am

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.


Collin Street 11.24.14 at 3:58 am

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.


And it’s such a simple trick, too.


Rich Puchalsky 11.24.14 at 4:02 am

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.


Rich Puchalsky 11.24.14 at 4:16 am

BW: ” 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.”

And this is the kind of thing that I don’t understand about the disparaging use of the word “rentier”, and which makes me sort of agree with Matt @ 161. Every one of us, in what the left considers to be a good society, has to become a rentier at some point, do we not? When someone retires, they live off of rents. Retirees most often want low-risk, stable rents, the kind where you don’t manage them or particularly want to risk anything improving them etc. Maybe this is not necessarily so, and can instead be modeled as people living off of insurance or social solidarity or something.


Sandwichman 11.24.14 at 4:52 am

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!


Matt 11.24.14 at 5:02 am

When someone retires, they live off of rents. Retirees most often want low-risk, stable rents, the kind where you don’t manage them or particularly want to risk anything improving them etc. Maybe this is not necessarily so, and can instead be modeled as people living off of insurance or social solidarity or something.

I have written, though I don’t remember if I have ever written it here, that it is not possible to save for retirement, in a real material sense. When you are a young worker you can’t save strawberries for old age even in principle; they’ll spoil in the intervening decades. You could in principle save toilet paper, dry beans, diesel fuel… but it would actually cost a lot to buy it all ahead of time and then keep it sheltered in usable condition for decades. Some things can’t be saved even in principle, even in the short term. If the barber doesn’t shave you today you can’t store that unused labor for tomorrow. “Saving” for retirement is a particularly confused and confusing concept especially when you are talking about demographic effects over decades. The old are provided for, if they are provided for, due to social obligations rather than whether or not they earlier filled a warehouse with fruit and snow shovelings. Whether those obligations are structured to involve money or not, to involve private pensions or a public social security system.


William Timberman 11.24.14 at 5:22 am

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.


Peter T 11.24.14 at 8:14 am

The more economics I read, the more I feel as I did when, as a student, I cracked open a serious theology text (just to admire it) in the library stacks. Heavy paper, leather binding, a dozen lines of text followed by three-quarters of a page of footnotes in dense type – in Latin, Greek, Aramaic, Hebrew and five or six modern languages. All that erudition, all that scholarship, all that hard-won difficult mastery, dismantled with a phrase: we don’t believe that anymore.

“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.


J Thomas 11.24.14 at 10:31 am

“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….


Brett Bellmore 11.24.14 at 10:47 am

The communists were never really a viable alternative. People were just lied to about that by the likes of Duranty.


J Thomas 11.24.14 at 1:19 pm

#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.


Brett Bellmore 11.24.14 at 3:07 pm

They collapsed because there was a better alternative, that they had to compete with. If the alternative had been a hunter-gatherer society, or medieval feudalism, they’d have hung on.

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


J Thomas 11.24.14 at 5:02 pm

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.


Bruce Wilder 11.24.14 at 6:38 pm

Brett Bellmore: If the alternative had been a hunter-gatherer society, or medieval feudalism, they’d have hung on.

Nothing since our hunter-gatherer days has ever hung on. Certainly not medieval feudalism, which was an inherently unstable system, with remarkably strong de-stabilizing dynamics: an hereditary ruling class formed as a military caste engaged in perpetual pillage and dynastic competitions, while demanding long-distance trade from the autarkic economic system it feeds upon. What about that sounds stable?

Medieval feudalism exploded, collapsed and mutated with great irregularity and violence, transforming the institutional landscape of western Europe at a furious pace over generations. Historians have labeled many dramatic events as the end of feudalism from the Black Death and the Battle of Crécy in the 14th century down to August 4, 1789, and struggled in vain to find any definition of the feudal template that could fit the pattern of any but a short period in a small neighborhood.

In England, the bastard Conqueror’s regime was passed in usurpations until falling into the Anarchy — the Anarchy marked a high point for chivalry as a political ideology in England, by the way — and re-emerging as the Angevin Empire, beloved by some historians but apparently invisible to contemporaries. The Plantagenets took 300 years to learn English, before leading the landed nobility into the collective suicide of the Wars of the Roses. Then, the Tudors and modernity arrive: the Star Chamber, the Dissolution of the Monasteries, Shakespeare!

In France, the Carolingian empire dissolved into the irregular fragmentation of Feudal Revolution, followed by the Hundred Years’ War. How the Germans got from stem duchies to Hapsburgs you don’t want to know.

J Thomas is right that it isn’t a case of people going shopping for the “better alternative”. There’s generational change and strategic political competition driving the dynamics, making it very like ecosystem development, where every development creates the conditions undermining its own continuity and favoring some other, further development and there’s no magical stasis acting as attractor.

The political anacyclosis of societies powerful enough or isolated enough not to be disturbed too much by their neighbors follows a remarkably regular rhythm, driven by generational change, putting the cycle in the 70 to 75 year range. Historians have noticed that the U.S. has demonstrated a 72-year cycle of major constitutional regime change: 1788, 1824 (Jackson), 1860 (Lincoln), 1896 (Republican majority), 1932 (New Deal), 1968 (Nixon), 2004 (!). The process of change is continuous, of course, but applying a little punctuation allows us to see just how momentous it is. Great Britain can be given similar treatment, if you allow a bit more flexibility with dates: 1688, 1724 (Walpole), 1760-63 (George III, Empire), 1796-7 (Crisis of Napoleonic Wars), 1832 (Reform), 1867-8 (Disraeli’s electoral reform), 1906 (Liberal reform), 1940, 1979 (Thatcher). France being France, things are a bit choppier, but it’s roughly 70 years from Napoleon to the Third Republic and another 70 years to Petain. Applying that sort of scale to measuring the pace of change, Russia’s evolution doesn’t seem irregular: 1881 (Alexander II assassinated), 1917 (Revolution), 1953 (Death of Stalin), 1989.

The point is not that dates cause crises, but that crises are a regular part of development, paced, at bottom, by generational change.


Bruce Wilder 11.24.14 at 6:45 pm

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.


J Thomas 11.25.14 at 1:39 pm

“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.

Yes. The concept of blitzkrieg warfare had been kicking around for some time but nobody wanted to risk it until the Germans did. Once they did it and it worked, nobody could ignore it. They had to respond to it or lose.

Meanwhile the concept of strategic bombing had also been kicking around for some time, and some people thought it was horrible and useless. But once it started getting used, and people saw they had no real way to stop it — they could shoot down a few bombers and increase the expense, but they couldn’t stop it — then they either did it themselves or they just suffered when it got done to them. It didn’t matter whether it actually did the enemy more harm than it did the nation using it, they didn’t want to sit there and do nothing while they were being attacked.

I read that the europeans maintained an agreement not to use crossbows for awhile — if a peasant with a crossbow can kill an aristocrat, that makes armored knights look weak — but they couldn’t maintain that agreement fighting muslims in the Crusades, and then it broke down at home too. The Japanese kept a ban on firearms for longer, but theirs gave way also. Even when it was plausible that the new weapons would destroy their military class as a class, they couldn’t stop. Given the choice between winning the current battle and then watching society change into something new and disgusting, versus losing, somebody preferred a chance to win.

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