Limited resources and economic growth

[Pangur Bán]

The main reason why it doesn't happen in our "own" territories. Though it is often overstated how easy it would to reverse this, even without resorting to protectionism: In the event of peak oil or stringent restrictions to the use of oil to prepare for just that, transportation costs may rise so high that outsourcing is no longer worthwhile. Contractionary monetary policies do the same thing by stimulating investment, which are also the reason why Northern European countries are net-exporters.

When industrial sectors return to the West because of protectionism, peak oil or tight monetary policies, a slight drop in living standards is inevitable. Slight, but not drastic.

The vast variety of products consumed in Western countries depend on cheap land and labour being readily available elsewhere in the world. While it is true that some can be home sourced at a cost, and that virtually all of it individually could be, the land- and labour-intensive cash crops that form the base of much of our wealth are only available to us at such little cost because of our economic and political domination of third world countries.

 

[Cutlass]

Substitutes

For those things that are going to run short, policies should be pushing conservation and the development of substitutes before supplies go critical.

 

[Narz]

Here's my take:
While resources are obviously limited, what we can do with them is not. One liter of oil will get us much further in 2011 than 1920;

Fuel economy improvement has been pretty slow & there's an upper limit due to the inefficiency of internal combustion. The demand for larger vehicles also counteracts efficiency gains.

one acre of land will produce much more food.

Well thanks to unsustainable practices. In reality we're destroying topsoil at a frightening rate.

The return we get from a fixed amount of resources is always growing as our technical progress advances. This is point number one.

This is simplistic & even if entirely true it is often cancelled out by inefficiency. Also using nonrenewables at a slower pace (which turns out to be a faster pace due to more people using them, for example more CO2 was burned in 2010 than even before in human history) doesn't change the fact that they are nonrenewable.

Point number two is that we're not even close to fully utilizing all resources at our disposal, and won't be as far as imaginable. We're only using a negligible amount of the total solar energy that hits the Earth (because today it's cheaper to burn oil); but no doubt in the future we could have giant orbiting solar pannels.

And giant solar panels are going to provide as much power as we currently use in oil? And how are we going to make these thousands/millions of solar panels just in the nick of time? Not using solar power of course. Solar panels too use rare minerals & nonrenewable resources.

Your lack of doubt that we'll magically reach our potential someday lack a scared-straight delinquent isn't contagious.

Don't get me wrong. I love the idea of a world running on solar panels but it's pretty expensive right now & the time & energy investment in the project would be huge.

The problem with letting the "market" decide is that A : the market tends not to realize there's a problem until it's too late, B : those that run the market are going to control the pace of technology to maximum profit off of existing technology until it becomes cost prohibitive for the average person to afford it. Only then will they usher in new technology & by then it will likely be too late to transition to a more sustainable technology.

The potential of fusion power hasn't been tapped yet, but I have no doubt it will at some point in this century. We're quickly heading to a world where most people will live as the western middle class does.

Well it's heading in the other direction right now. But perhaps fusion/solar/aliens/singularity will save us all. All I know is they've been working on fusion/hydrogen/etc. for decades. Every single I've been online (1994) the "next breakthru" has been "right around the corner" but it never seems to come.

So there's no reason why we can't go on growing our economies for as long as we can imagine. Note that I am not offering any original or insightful thought here; I am merely stating the mainstream opinion.

Time will tell.

Now it's time for those who disagree with me say where they think I went wrong.

My pleasure.

 

[zjintz]

Link to video.

 

[Narz]

A smaller percentage of the world lives in absolute poverty now than in any time in history.

Except a few years ago.

Primarily this is because everyone was poor not three hundred years ago.

This is a huge misstatement.

There is a huge difference between ancient human's level of existence (which some might deem "poor") and modern poverty.

They are not comparable in the least. As Pangur Bán said

"Absolute poverty" didn't exist until fairly recently, as it is a modern invention.

I don't believe the well being of 6 billion (and falling) justifies the misery of 1 billion (and rising).

Edit : Nice video zjintz. The sad thing is that people have been aware of resource & population issues for many decades now but no one has done anything about them. This makes me highly skeptical of any hope for society to make the necessary shifts in time. We haven't in the last forty years, why should we in the future. Especially with so many denying that these issues are even problems.

 

[pi-r8]

Infinite GDP is easy. Take three people. Person A pays 1$ to person B (for some nebulous service like a "credit default swap" or "extended warranty) , B pays that 1$ to C, and then C pays it back a A. Then make them do it again, but faster. You could automate the process by computer, swapping the dollar around and around faster and faster, and their GDP will grow to infinity.

Meanwhile, someone who's living independently and self sufficient without trade has a GDP of... zero.

GDP is a pretty silly way to measure human welfare, when you really stop to think about it.

 

[Narz]

Meanwhile, someone who's living independently and self sufficient without trade has a GDP of... zero.

GDP is a pretty silly way to measure human welfare, when you really stop to think about it.

Indeed, by GDP standards these people are going to be considered better off than impoverished 3rd worlders in cities, living in shantytowns on pennies a day because money is always better than no money.

They talk about the ridiculousness of this in one of the books I recommend in my sig, Learning from Ladakh about a self-sufficient people ruined by globalization with severely reduced standard of living/community but nonetheless touted as a success story for globalization.

 

[Camikaze]

For me this is why switching to renewables is really important. I mean, forget climate change, the constraint on economic growth is a problem in itself. I disagree that one nation being rich necessarily means another nation being poor, because although with the current fossil fuel based economic system it might be the case, changing over to renewables is a potential solution to it. So it's not really a rule, because it can be broken. So I kinda agree with the OP that we should be able to sustain economic growth, but it relies upon moving over to resources that will not pose the same problem of being in limited quantity. There may only be so far we can go with maximising the economic gain from one litre of oil (the OP's first point), but if the main problem is scarcity, using a renewable source (and using it sustainably) should work to get around the issue.

 

[Tani Coyote]

Short of our bodies suddenly being re-engineered, things such as food do have a finite amount; we cannot become more efficient there, really.

On energy, definitely, the issue is overstated; all it takes is some investment in renewable fuels and the backbone of industrialisation is secure.

Unfortunately, plenty of other things are finite - we only have so much soil, so much water. Fortunately, with proper management, we don't need to worry too much about hitting the peak here. Vertical farms, for instance, can alleviate much of the waste of food production, and provided we keep our population in check(which it is doing pretty good already), we can feed everyone.

Our current economic model is unsustainable, but we can definitely make adjustments so that we can last until space colonisation is a reality, I feel. At which point, resource considerations become moot.

 

[Narz]

If vertical farms are so efficient why aren't people doing it already?

Note : Speaking of vertical farms, if I were a billionaire I would totally build a modern day Hanging Gardens of Narzalon! Why don't rich people do cool stuff like that anymore. It's all about generic looking McMansions and Mercedes' and yachts and crap nowadays. Boring!!

 

[Hygro]

If vertical farms are so efficient why aren't people doing it already?

Note : Speaking of vertical farms, if I were a billionaire I would totally build a modern day Hanging Gardens of Narzalon! Why don't rich people do cool stuff like that anymore. It's all about generic looking McMansions and Mercedes' and yachts and crap nowadays. Boring!!

Perhaps because a McMansioncedesyachtcrap is 1/20 the price of the Great Wall of Narz?


To the question Luiz posed: there may or may not be limits to what we can economically do with resources. However there are limits to how much we can stress our environment without suffering system-wide catastrophe. Conservative estimates of energy consumption growth have use using more energy that our entire planet can physically provide sometime by the end of our grandchildrens' lifetimes (assuming barely improved life expectancy). Faster estimates IIRC put that squarely within our lifetime.

We might pull that off successfully, or we might reach environmental limits before we achieve counteracting environmental technologies and suddenly find ourselves burdened on too many fronts and WHAM we're screwed.

 

[El_Machinae]

As far as I can tell, there're two types of material resources. The first is a resource that provides an essential service that can be depleted. If we were to use our lumber, water, soil, and fish carefully, we could essentially eat without depleting these resources for a long, long time. There's also a buffer of these resources that doesn't really 'matter' if we use them. So, it seems to be okay to convert these buffers into human welfare. A better question, really, is when do we do so? I think the most intuitive answer is Maslow's answer. I'd prefer that we'd spent 50% of our fish defeating polio and smallpox than creating Twilight.

The second resource is non-renewable: mainly fossil fuels or other energy sources. The more we spend of these resources, the more economic growth we get and the more human welfare we get. What strikes me as obvious is that we need to think of these non-renewables as an asset to be invested. The first thing we'll do is look after our material well-being, I think that's a given. If people are desperate, they'll eat the seed corn. And, obviously, we're willing to spend some of that capital on sheer luxury.

There will be a market demand for bridge technologies, but that doesn't guarantee that the bridge will be created. The only way to create permanent (comfortable) growth from the limited fossil fuels is to use part of the wealth created from fossil fuels to create bridges.

Here's a fun task, search 'energy use per capita' in google and use the datafinder to bring up the graph. Click the 'world' option. You can see how little of the global economic explosion is explained by increased energy per capita. We have tremendous leverage for our energy. But you can also imagine how wickedly important increasing energy supplies are. (fun fact, I should be able to afford an interstellar flight in about 3000 years)

The question is, are we investing enough to be guaranteed continued wealth? It's an odds game, more than anything. Waste decreases our odds. Efficiency increases our odds.

Luiz mentioned 'increased food per acre', citing an historical trend (and, I think, common sense). But how do we know this is true? It takes 10 calories of fossil fuels to make a calorie of food. Aquifers are going down, biodiversity is dropping at extinction rates, topsoil is blowing away, and fuel is being used to drive me to Twilight. Three of those resources (aquifers, biodiversity, and topsoil) DO have 'buffers' in which they can be consumed without long-term consequence. But how do we know which side of that catastrophe we're on? Like I said, it's an odds game.

 

[Yeekim]

While resources are obviously limited, what we can do with them is not. One liter of oil will get us much further in 2011 than 1920; one acre of land will produce much more food. The return we get from a fixed amount of resources is always growing as our technical progress advances. This is point number one.

I respectfully say call bollocks. That´s like saying "Olympic records are being broken all the time: ergo there is no limit to what a human body can achieve".

 

[luiz]

Of course it's not. This is key to the topic. If one country or group has something others need, it can "charge" more for it ... thus impoverish others relative to itself.

They fact that countries don't do this often is indicative of that there are limits to what they can do.

If you say so. When I was talking about technology being outstripped by population growth, I meant in relation to critical sources of "wealth" like energy provision. The reality is, oil prices are rising and those who have it are getting richer at the expense of those who don't, and oil production is not rising to keep pace with population rises. Neither is any substitute new technology.

But who is getting poorer? People already mentioned the fantastic growth of the average human's income. A retort was that some elites everywhere are getting wealthier while lots of people get poorer. But that's not true. Aside from the fact that the middle class of the third world is booming both in numbers and purchasing power, we can look at social indicators instead of economic ones.

The life expectancy of the average human has risen from 52.6 years in 1960 to 69.4 years in 2009. The mortality rate of infants has fallen from 101.57 per 1,000 live births in 1968 to 41 in 2010.
http://www.google.com/publicdata/ex...cs=d&nselm=h&met_y=sp_dyn_le00_in&hl=en&dl=en
http://www.google.com/publicdata/ex...cs=d&nselm=h&met_y=sp_dyn_imrt_in&hl=en&dl=en

Those are spectacular developments, unparalleled in any other period human of history, and go to show that progress was very real and benefited most people, not just "urban elites".

As for population growth, it is also slowing down at a fantastic pace. In fact, the global population is expected to grow less in the 21st Century than in the 20th, in absolute terms. And nearly all the growth will take place between now and 2050, from them on the population should remain roughly unchanged (of course those are only projections, but the demography curves do indicate this).
http://www.google.com/publicdata/ex...ail=false&bcs=d&nselm=h&met_y=POP&hl=en&dl=en

People are a bit brain-washed by economic jargon and divorced from reality sometimes. The present US and Western Middle class, as well as being a middle class in the West, is an upper class in terms of the world. I.e. they occupy a place close to the top in relative world wealth. In certain respects, only they by defition can have access to certain components of wealth.

I don't disagree, but as the rest of the world gets richer the US middle class will look more like a middle class and less like an upper class. That's already happening, in fact. They're certainly less of an upper class than in the 60's.

If you can divert wealth from them to yourself, by lower wages for instance, you will.

OK, but that's not really possible, generally speaking. There is plenty of competition and no individual actor is strong enough to mandate lower global wages. So I'd rather have the rest of the world richer, and so would all businessmen.

There is a difference in some people getting richer and everyone everywhere reaching US middle class lifestyles. But it is notable that the US middle class is already shrinking due to many of their jobs going over to the Chinese.

I don't think everyone will reach US middle class lifestyle. The US is an atypically rich country, and will most likely remain so in the future. But there is a convergence of the rest of the world towards the western middle class. Which is not to say that in 2050 the average chinese will live as well as the average frenchmen. He probably won't. But he's getting closer.

 

[luiz]

I'll address some of the other posts afterwards, a lot of good discussion!

I respectfully say call bollocks. That´s like saying "Olympic records are being broken all the time: ergo there is no limit to what a human body can achieve".

Ah, but there's a crucial difference. In the Olympics we're not allowed to use any of our cool gadgets. We limit our abilities on purpose. With our gadgets, than there's no limit to what the human body can achieve. We can run at over 1,000 km/hour, we can fly at many times that speed, we can lift mountains of steel and throw projectiles out of the Earth's orbit.

When it comes to economic activities, such as farming, we can and do use our gadgets.

 

[MagisterCultuum]

So, with enough gadgets a human can run faster than the speed of light?

 

[luiz]

So, with enough gadgets a human can run faster than the speed of light?

Oh common'. Naturally there are physical limits to progess; there's a finite amount of mass-energy in the universe anyway. But this theoretical limit is not even worth discussing when it comes to economics and progress, as they so far out that we won't reach them as far as imaginable.

Lets work on getting commercial supersonic flights become cheap. We can keep on increasing the speed we can "run" for generations without even getting close to the c barrier. Worrying about the limit posed by the speed of light is for science fiction writers.

 

[Pangur Bán]

They fact that countries don't do this often is indicative of that there are limits to what they can do.

Countries that can do this, will. The way nuclear weapons work in the world is a good model for how rare resources will be monopolized by the most powerful. Oil d does not work this way now because, frankly, most of the countries with it cannot refuse to trade it. In most of the gulf states, trading oil to the powerful in the is their raison d'etre and they wouldn't exist if they didn't.

T
But who is getting poorer? People already mentioned the fantastic growth of the average human's income. A retort was that some elites everywhere are getting wealthier while lots of people get poorer. But that's not true. Aside from the fact that the middle class of the third world is booming both in numbers and purchasing power, we can look at social indicators instead of economic ones.

These are short-term trends. Growing middle classes now are trading off their own future, exhaustible resources, and they are often growing at the expense of other the poorer in their own countries and the middle classes of other countries.

The life expectancy of the average human has risen from 52.6 years in 1960 to 69.4 years in 2009. The mortality rate of infants has fallen from 101.57 per 1,000 live births in 1968 to 41 in 2010.
http://www.google.com/publicdata/ex...cs=d&nselm=h&met_y=sp_dyn_le00_in&hl=en&dl=en
http://www.google.com/publicdata/ex...cs=d&nselm=h&met_y=sp_dyn_imrt_in&hl=en&dl=en

Those are spectacular developments, unparalleled in any other period human of history, and go to show that progress was very real and benefited most people, not just "urban elites".

We have made great advances in medicine there is no denying it. This however can also propagate poverty by fighting off natural checks on population growth leaving huge populations horribly exposed to genocide and famine. The coming century will be a golden age of these two I fear.

Humans were healthiest before the neolithic revolution, and today most of us are less healthy and probably living shorter average lives (ignoring accidents and warfare). Industrial workers and urban dwellers are also less healthy than pre-industrial farmers, the vast majority of the world's population before the 1960s.

I don't disagree, but as the rest of the world gets richer the US middle class will look more like a middle class and less like an upper class. That's already happening, in fact. They're certainly less of an upper class than in the 60's.


OK, but that's not really possible, generally speaking. There is plenty of competition and no individual actor is strong enough to mandate lower global wages. So I'd rather have the rest of the world richer, and so would all businessmen.


I don't think everyone will reach US middle class lifestyle. The US is an atypically rich country, and will most likely remain so in the future. But there is a convergence of the rest of the world towards the western middle class. Which is not to say that in 2050 the average chinese will live as well as the average frenchmen. He probably won't. But he's getting closer.

Yes, there is much room for improvement in living standards all over the world. But the US middle class is at the top of a trading pyramid that brings an unimaginable number of goods from all over the world to the US for almost nothing. Sharing that will mean thinning it and making these goods more expensive. And I'm afraid I don't share your belief that Westerners will just sit around and allow their economic domination to vanish, bringing them into poverty. The current economic system in the world is designed to transfer wealth from the third world to the first world. If it stops doing that then, one way or another, it will be abandoned.

 

[luiz]

Fuel economy improvement has been pretty slow & there's an upper limit due to the inefficiency of internal combustion. The demand for larger vehicles also counteracts efficiency gains.

The improvement was actually quite impressive, especially if you look at the state of the art. A Ford T would do 13 mpg, and reach a top speed of 40 mph. A Chevy Volt does 36 mpg and reaches 100 mph. That's a lot of extra "bang for the oil liter".

Well thanks to unsustainable practices. In reality we're destroying topsoil at a frightening rate.

That does not appear to be true. Agricultural production has been increasingly steadily since the first Industrial Revolution. When is this doom coming?

This is simplistic & even if entirely true it is often cancelled out by inefficiency. Also using nonrenewables at a slower pace (which turns out to be a faster pace due to more people using them, for example more CO2 was burned in 2010 than even before in human history) doesn't change the fact that they are nonrenewable.

But if we consider the simple formula "Returns Achieved / Resources Used" we see a constant upwards trend. That's the bottom line here.

And giant solar panels are going to provide as much power as we currently use in oil? And how are we going to make these thousands/millions of solar panels just in the nick of time? Not using solar power of course. Solar panels too use rare minerals & nonrenewable resources.

Theoretically, the giant solar pannels could deliver many thousand times the amount of energy we get from burning oil. Remember, the amount of solar energy that reaches the Earth surface is equivalent to 15,000 times all our present energy needs. And that's accounting for the losses due to the atmosphere.

Also, note that we will never have to rely entirely on solar energy. The hydro and nuclear power we currently get will continue to be here, and will in fact increase.

Your lack of doubt that we'll magically reach our potential someday lack a scared-straight delinquent isn't contagious.

Don't get me wrong. I love the idea of a world running on solar panels but it's pretty expensive right now & the time & energy investment in the project would be huge.

The problem with letting the "market" decide is that A : the market tends not to realize there's a problem until it's too late, B : those that run the market are going to control the pace of technology to maximum profit off of existing technology until it becomes cost prohibitive for the average person to afford it. Only then will they usher in new technology & by then it will likely be too late to transition to a more sustainable technology.

I am not in this thread arguing at all about whether the market will deal appropriately with scarce resources. My point is that resource scarcity pose no technical limit to our continued economic development. A marxist can agree with me here.

I will say though, despite the risk of threadjackin my own thread, that I find the market's quick responses to increased price of any depleting resource to be the most effective way to channel funds to researching alternatives. While not omniscient by any stretch, the market has consistently beaten governments and experts when it comes to this sort of forecast.

Well it's heading in the other direction right now. But perhaps fusion/solar/aliens/singularity will save us all. All I know is they've been working on fusion/hydrogen/etc. for decades. Every single I've been online (1994) the "next breakthru" has been "right around the corner" but it never seems to come.

I didn't say it was right around the corner. I said I expect fusion to be viable at some point in this century, probably in the second half. IIRC the next large scale test reactor will only be in operation in the early 2030's. This sort of thig takes time. Luckily, though, we are currently capable of supplying increased energy needs for the next decades.

 

[galdre]

As to the finite nature of wealth, the important thing to keep in mind (IMO) is that wealth is finite for any one time - we can't all be rich today, because there's only a certain amount of money out there and for one to have more it must be taken from another. Besides, the motivation of wealth seems to me to be to have more than other people ('if everybody's somebody, then no one's anybody' is how the quote goes I believe), so more overall wealth would not correct the real issue, which is the distribution of that wealth.

And as for resources, there is obviously a limit. For example even if we reached 100% efficiency with energy usage, we still are dealing with a finite amount of energy (even if you consider all sources of energy).