Casaubon's Book

From David Leonhardt at the New York Times, a good, if very partial explanation of why the overall future of the US and the Global North generally doesn’t look as promising as the 30s. See if you can guess what’s missing from the article.

Still, the reasons for concern today are serious. Even before the financial crisis began, the American economy was not healthy. Job growth was so weak during the economic expansion from 2001 to 2007 that employment failed to keep pace with the growing population, and the share of working adults declined. For the average person with a job, income growth barely exceeded inflation.

The closest thing to a unified explanation for these problems is a mirror image of what made the 1930s so important. Then, the United States was vastly increasing its productive capacity, as Mr. Field argued in his recent book, “A Great Leap Forward.” Partly because the Depression was eliminating inefficiencies but mostly because of the emergence of new technologies, the economy was adding muscle and shedding fat. Those changes, combined with the vast industrialization for World War II, made possible the postwar boom.

In recent years, on the other hand, the economy has not done an especially good job of building its productive capacity. Yes, innovations like the iPad and Twitter have altered daily life. And, yes, companies have figured out how to produce just as many goods and services with fewer workers. But the country has not developed any major new industries that employ large and growing numbers of workers.

There is no contemporary version of the 1870s railroads, the 1920s auto industry or even the 1990s Internet sector. Total economic output over the last decade, as measured by the gross domestic product, has grown more slowly than in any 10-year period during the 1950s, ’60s, ’70s, ’80s or ’90s.

What’s missing, of course, from this discussion is another thing the ’30s had that the early 2000s don’t – a rapidly growing energy surplus to be expended on economic growth, in which the powering force of the economy was cheap and readily available.

This article is as good as any to demonstrate the problems of an analysis that takes energy resources for granted, and doesn’t view them as a fundamental defining factor. We tend to view energy as something to be lumped in with human ingenuity – ie, something there’s always more of somewhere, rather than something that can bump up against significant physical limitations of access. That’s a profound mistake, and our failure to understand energy as a root cause leads us to miss a lot – that in some ways it isn’t the technological leaps that are missing in creating new industry, it is the root force that could drive such economic growth.

Sharon

Comments

  1. #1 Neil Craig
    October 17, 2011

    Obviously you know perfectly well that there is no world recession at all. It is purely an American/EU recession.

    Also that it could be ended within days if the thieving parasites running the US/EU would allow it.

    But since “scienceblogs” will tell any lie and censor any fact to promote their Nazism this must be censored.

  2. #2 Richard Eis
    October 17, 2011

    I also got a laugh that twitter and ipads have altered our daily lives. Being able to access the internet to do an “extra” job from my sofa instead of while sat at my computer chair is hardly a world changing event.

  3. #3 John
    October 17, 2011

    Richard,
    that is an exaggeration as well. I have sat on my couch for years and accessed the internet with a laptop. An ipad and twitter have not revolutionized anything.

  4. #4 Stephen B.
    October 17, 2011

    Sharon, that question was too easy.

    Of course, in addition to the growing supplies of cheap energy not existing this time around, a great deal of the close-to-the-surface, easily extracted iron and other ores are also not as plentiful this time around. Sure, lots of stuff can be recovered through recycling, but that takes energy too.

    @Neil:

    Maybe you left your pills in the kitchen. Did you try looking there?

  5. #5 Neil Craig
    October 19, 2011

    Stephen the resources of shale oil & gas seem close to unlimited. Uranium and thorium are unlimited, at least within the liftime of our Sun. Sopace solar is too. So such supplies of cheap enrgy certainly exist.

    Nor is there any real shortage of any other minerals, at least by comparison with the past. The long term trend of materials prices, in income terms, is down as Simon proved so successfully in his bet with Ehrlich.

    Consequently whatever the reasons for the recession lack of energy, resources or new technology cannot form any part of it. I believe it is entirely caused by Luddite government parasitism preventing the development of these resources and inventions.

    If you have evidence to the contrary show us and, in line with Sharon’s politeness policy how about debating on facts not accusing each other of lunacy. OK?

  6. #6 TTT
    October 19, 2011

    The long term trend of materials prices, in income terms, is down as Simon proved so successfully in his bet with Ehrlich.

    Julian Simon lost a nearly identical bet with David South. I guess material prices must actually be increasing–unless the two bets cancel each other out, in which case they must have stayed the same. At least, that’s how reality has to work if Julian Simon can *think* events into actually happening, which is certainly the way his fanboy cult describes him.

  7. #7 Neil Craig
    October 20, 2011

    Not true 777. I ask you to acknowledgr that it was not “nearly identical” but restricted purely to American timber prices.

    The reason these prices went up is because of “the far-reaching quantity and price effects of logging restrictions in the Pacific-northwest.” He believed this counted as interference from the Canadian government, which rendered the bet worthless according to his economic principles.”

    which obviously entirely supports my position that, when it happens, it is purely government restrictions rather than anything inherent which increases costs and is producing the current recession.

    Or perhaps you have a counter example?

  8. #8 TTT
    October 21, 2011

    What’s worthless are Julian Simon’s economic principles.

    You draw a distinction without a difference. The price went up and Simon lost. Since government exists and will continue to exist, its actions have to be taken into account in considerations of pricing, and cannot just be assumed into irrelevance for the sake of perfect theoretical idealism of the sort that only ever exists in Econ 101 textbooks or Marxist kum-ba-ya chants. This is especially true in a case such as old-growth timber, where deforestation is a real problem and government, in representing the wishes of its constituents and acknowledgment of the importance of national heritage, very well might limit the takings allotments. This is as “real” a market force as anything ever could be. Simon never should have shot his mouth off about that issue, precisely because all of his fundamental assumptions about how lumber gets managed and valued were wrong. Humans do not actually live on an idealized perfect supply-and-demand curve taken straight from a textbook; Simon was too naive and cloistered in his academic ivory tower to grasp this. He “did not believe anything worthwhile was shown” by the price increase because government got involved? I don’t think I could possibly say anything worse about him.

    I could also bring up the market availability of Atlantic swordfish, another topic in which Simon attempted to ignorantly dabble, as recounted in the book “Shoveling Coal on a Runaway Train.” Simon predicted that swordfish prices and availability would never be impacted either by shortages or regulations, and attempted to back it up by “citing” fishery reports that were unpublished even then and that in the subsequent +/- 14 years have yet to surface. Meanwhile, all real fishery reports showed swordfish populations dwindling, which resulted in popular will exercised in the form of government limits on swordfish takings.

  9. #9 Neil Craig
    October 22, 2011

    Ok so you accept that the rise in timber prices was due to government but that, since government is always with us, Simon should have expected that.

    One obvious counter to your argument about the unchanging nature of government parasitism is that it had to change to raise those prices. If Simon was duty bound to assume it would not change then he would have been duty bound to ignore it.

    The other is that the amount of government we get has indeed changed enormously. A century ago the US government spent about 6% of GNP and did almost no regulating. Now US government spending is approching 50% of the economy and the reach of its regulation destroys a far greater amouint than that. The rule of thuimb is that regulations cost the regulated 20 times more than it costs government to enforce them..

    The only consistent way you could make your argument would be if you are asserting not that “government exists and will continue to exist, its actions have to be taken into account in considerations of pricing” but that “government is growing exponentially and will continue to grow exponentially, its actions have to be taken into account in considerations of pricing”.

    I do not believe that permanent exponential growth is inevitable. I do not even believe it is possible.

    That the world economy is growing at 5% shows that governments that allow more economic freedom than the USA’s are not only possible but common and successful.

  10. #10 Richard Simons
    October 22, 2011

    That the world economy is growing at 5% shows that governments that allow more economic freedom than the USA’s are not only possible but common and successful.

    Or that the US has reached a stage of economic development at which exponential growth is no longer possible while other countries are still playing catch-up. One of those countries with a high economic growth rate is China, which is not noted for its lax government control.

  11. #11 Neil Craig
    October 23, 2011

    Another is Singapore which achieved 14.4% growth last year despite being a country with no mineral resources (or much land) and a higher per capita GNP than the USA.

    China IS noted for being a country where economic freedom is increasing and Guandong province, the fastst growing bit, for being an area of very great economic freedom.

    Basic technology is increasing at a faster rate than at any time in human history (eg Moore’s Law) so the suggestion that it is impossible for developed countries to grow is clearly false. Indeed history shows that growth is easier for developed countries.

    “it is purely government restrictions rather than anything inherent which increases costs and is producing the current recession.”

  12. #12 Neil Craig
    October 27, 2011

    To whom it may concern. A climate scientist, “peer reviewed and published in the finest journals “* using the name Skip on “scienceblogs” has, since I was banned from other “scienceblogs” sites has commented on mine in a fact free, ad hom filled manner. Having given him repeated opportunities to discuss facts (& lets be fair given him endless opportunities to show publicly the behaviour to be expected of climate “scientists” I have eventually said I will bar comments consisting of ad homs.

    In a display of the state of mind of climate “scientists” he has said that such censorship probes me a Nazi (in an equal display of the level of integrity of such “scientists” he actively does not describe all the other “sciencebloggers” as “Nazis” though they censor purely for producing inconvenient facts.

    He now promises to pursue me to any blog I comment on – though it is likely the only one he knows is “scienceblogs”. In one sense I, of course, welcome any such person willing to repeatedly and publicly demonstrate what is, if not the pinnacle of honesty to which any climate “scientist” ever aspires, certainly a degree of obscenity and dishonesty to which not a single one of them ever in any way demurs. However Sharon it is clear that Skip is going to test your moderation policy.

    I, of course, will and need say nothing rude about him or any climate “scientist” and certainly will not suggest they are all Nazis – with such as him around there seems no need.

    *While we have all met people on blogs who claim obviously false credentials he went to some lengths to prove he was such, including naming several others who could vouch for him, none of whom demurred, so I am forced to accept his credentials though the idea of a “scientist” depending on ad homs and obscenities and abjuring facts is counterintuitive