"System change is now inevitable. Either because we do something about it, or because we will be hit by climate change. '...

"We need to develop economic models that are fit for purpose. The current economic frameworks, the ones that dominate our governments, these frameworks... the current economic frameworks, the neoclassical, the market frameworks, can deal with small changes. It can tell you the difference, if a sock company puts up the price of socks, what the demand for socks will be. It cannot tell you about the sorts of system level changes we are talking about here. We would not use an understanding of laminar flow in fluid dynamics to understand turbulent flow. So why is it we are using marginal economics, small incremental change economics, to understand system level changes?"

Monday, June 16, 2008

Recommended reading

An anonymous positive review of an econ textbook about energy on Grist is worth having a look at.

The reviewed author, Ferdinand Banks, does not feel petroleum geology is beholden to economic theory, but rather observes that it is more useful to look at things the other way round. He does not seem to consider himself to be in the mainstream in so doing.
I also became the object of some "attitude" on the part of other delegates what I made a friendly remark about the work of Dr. M. King Hubbert that dealt with the ultimate availability of petroleum. Among other things, I was sanctimoniously informed that oil reserves are "dynamic," and basically are dependent on human ingenuity (i.e., technology) -- which as all thoughtful persons are supposedly aware, would ultimately come scampering to the rescue in case the energy wolf appears at the door. Finally, I was assured that economics and technology were always the correct aperture through much oil reserves should be scrutinized. Geology was taken to be of minor importance.

2 comments:

Dano said...

Finally, I was assured that economics and technology were always the correct aperture through much oil reserves should be scrutinized. Geology was taken to be of minor importance.

The aperture, of course, being formed from the correct placement and positioning of the two wands of the Free Market Fairy.

IOW: scrunch your eyes closed real hard, and WISH! And in the interim between wish and reality, clap real loud.

Best,

D

David B. Benson said...

Provocative, however one of the comments suggests not taking Banks that seriously...

(Not a defense of neo-classical mathematical economics.)