Another excellent effort from John Mashey that he has honored my comments section with is quoted in full below. Now, it's a bit imperfect; point 9 could be clearer, and point 10 appears to be totally missing. My attempts to prettify the nested list structure (a sure sign you are dealing with someone who has written some code in his day) inside the blogger interface were too frustrating to persist with.
Point 8, though, ah, point 8 is a thing of beauty. I haven't seen it put that way, but it seems pretty compelling.
It happens that I agree with all of it, though I wasn't aware I agreed with point 8 before reading it.
Perhaps point 10 is so important that, like the twentieth principle of the Zen of Python, it is never written down.
John Mashey says important enough things often enough that I think he ought to have his own blog, but meanwhile, if he cares to honor my comments section with stuff this good I at least ought to call your attention to it. Everything that follows is John's commentary, and not mine.
1) Given the history of AEI & WSJ Op-ED, it is very likely this is a "misdirection" argument, even if pieces of it are certainly true. I.e., it's like Lomborg's arguments - see my recent comments over at http://www.desmogblog.com/bjorn-lomborg-bibliography#comment-290344
2) But in any case, to be clear, most of the economic arguments I've seen seem very dubious to me, in that they:
a) Model the US economy via typical neoclassical economic assumptions
b) Which means ~3% GDP growth, more or less indefinitely
c) of which 1.5-2% come from "technological progress" or "Total Factor Productivity" or "Solow Residual" ... See for example http://en.wikipedia.org/wiki/Exogenous_growth_model
To me, this means: we' don't really understand it, but it's been that way, so it will be that way.
3) If past data more or less fits a straight line (for decades, or as in the US GDP case, for ~100 years), then the natural prediction is to predict it to continue indefinitely.
4) If it's more or less a straight line on a log scale chart, it's exponential growth with an approximately constant CAGR, and the temptation is to predict it to continue.
EX: Moore's Law for semiconductors
5) INFLECTION POINTS: if one just does mathematical predictions, without relevant physics underpinnings, one would predict Moore's Law to go on forever. It won't, but it is nontrivial to predict inflection points, and worse to analyze multiple trends and their inflections and make good bets.
6) The "biophysical economists", like Charles A. S. Hall, Robert Ayres+Benjamin Warr, Vaclav Smil, etc, think that a lot of that "Total Factor Productivity" is really:
useful work = energy * efficiency,
with perhaps a bit of a residual boost in the last few decades from computing. I think they make a very good case for it, but then I'm not an economist.
I do observe that the UK got rich in part because it was early to exploit coal heavily, and the US likewise, but for oil.
I also observe that:
- subsistence farmers with nothing but human labor, tend to be poor, but it's why they often have big families.
- farmers with draught animals usually can grow more; many poor farmers would consider the Amish lifestyle unimaginably wealthy, with say, 60 acres/family.
- farmers with electricity, diesel fuel, tractors, and combines do OK, and can (in mid-West) handle hundreds of acres of wheat or corn, and do pretty well.
7) But, if the biophysical model of the world is a better approximation than standard necoclassical, then Peak Oil+Gas is the biggest inflection point in recent history, and all these happy 3% CAGR predictions are ...useless...
8) In that case, it isn't a question of "how much will it cost", it's a question of "can we move fast enough on efficiency and renewables, and *invest* the oil+gas that's left (about 50%) so that there's an above-subsistence economy left when fossil fuels are gone?" (and not be driven by desperation into massive coal-burning). And can we avoid building infrastructure and vehicle fleets that are instant "stranded assets"?
9) Put another way: in the standard neoclassical model, an airplane can keep accelerating upward without burning fuel. Very happy.
In the biophysical model, acceleration depends in large part on increasing fuel * efficiency. In the next decade, fuel starts going down, and then accelerates downward. The plane's eventual altitude depends on the ability to increase efficiency ... and over the next century, replace the 2/3 of US energy from oil+gas. Sad, but true, if one tries to keep acceleration going as fuel diminishes, you can actually damage the engines. [If you try to extract oil too fast from a field, you can damage the oilfield and get less total oil.]
11) Assumption of ~3% growth is built into many plans. I hope it happens ... but personally, I think even folks like Stern are underestimating the problem and the urgency of moving REALLY fast.