Monday, September 30, 2013

Coming apart

Secession is once again in the air, just in time for the government shutdown. As governance on the national level becomes ever more dysfunctional, parasitic and ineffective, I suspect these movements will continue to gain in popularity. The fact that the Colorado one was encouraged by a natural disaster is interesting for a couple of reasons - one, because these kinds of disasters will surely become more common and pronounced in the future due to a changing climate, and two, a changing climate has been associated with the fall of empires and breakup of countries for thousands of years.

Are we finally looking at the beginning breakup of the United States and the transition to medieval America?
Colorado’s worst flooding in half a century killed eight people, destroyed thousands of homes and wiped out hundreds of miles of roads, yet it hasn’t damped enthusiasm in 11 counties to secede from the state.

Three counties with measures on the Nov. 5 ballot, asking voters if they favor forming a 51st state, sustained millions of dollars in flood damage. Secession leaders say they’re quickly rebuilding roads so farmers can get their crops to market and repairing water and sewer systems, without outside help.

“Our local officials have seen very little, if any, direct state or federal aid,” said Weld County Commissioner Sean Conway. “We’ve assisted more than 800 families and 2,500 people. Of the 140 roads closed, we’re down to 27. If anything, this disaster has shown we have the ability to be our own state.”

Anger in rural parts of Colorado, Maryland and California over gun control, tax proposals, renewable energy mandates and other issues have residents pushing ballot measures and petition drives to secede. While unlikely to gain the required approval of state legislatures, the movements illustrate how people in some remote areas are reacting against legislative agendas advanced by urban lawmakers.

They also reflect redistricting efforts that followed a shift in population over the past four decades from small towns to metropolitan centers. Secessionists say city dwellers enjoy greater representation in state legislatures than farmers and miners in less populated areas. They emphasize that their movement is nonpartisan.
Colorado Secessionists Push for Independence After Flood (Bloomberg)
Along Interstate 5 near Yreka, a Northern California town of about 8,000 people, the roof of an old hay barn informs drivers in bold, black letters they have entered the "State of Jefferson."

For over 70 years, a group of citizens in Northern California and Southern Oregon have pushed to unite their rural counties and secede from their respective states, creating a new state following the small-government ideals allegedly professed by Thomas Jefferson.

On Tuesday, a second California county joined the growing movement. Modoc County supervisors voted 4-0 in favor of secession, following in the footsteps of neighboring Siskiyou County that made a similar decision earlier this month.

Modoc County Board Chairwoman Geri Byrne told Al Jazeera that public sentiment was strongly in favor of passing the resolution. In a packed public meeting of about 40 people, Byrne said only two people spoke against secession.

Her constituents, Byrne said, are "frustrated," because rural counties have "no voice in the state of California."

Supporters of secession say that urban California holds sway in the halls of Sacramento, where both legislative houses are elected proportionally. Since California's 33 rural counties make up only 9 percent of the total population, rural residents simply are not represented, Byrne said.

"People in LA have no clue what we face," Byrne said. "We don't tell people in Los Angeles how to manage crime, so why should they tell us how to farm potatoes?"
Second county votes to secede from California (Al Jazeera America). I for one, am hoping for a free and independent Republic of Fredonia. I just like the name. Read about more efforts on Wikipedia. Via that site: White House receives secession pleas from all 50 states (Los Angeles Times)

The outsider's view

Slate has a good feature today, where they report on events inside the United States as we report on events in all those mysterious “foreign” countries that Americans can’t find on a map. I would argue that if this were happening anywhere else in the world rather than THE UNITED STATES, the supposed “leader of the free-world,” this would be reported exactly like what it is – a complete and total breakdown of functional governance in what has essentially become a benighted banana republic. 
The current rebellion has been led by Sen. Ted Cruz, a young fundamentalist lawmaker from the restive Texas region, known in the past as a hotbed of separatist activity. Activity in the legislature ground to a halt last week for a full day as Cruz insisted on performing a time-honored American demonstration of stamina and self-denial, which involved speaking for 21 hours, quoting liberally from science fiction films and children’s books. The gesture drew wide media attention, though its political purpose was unclear to outsiders. 
With hours remaining until the government of the world’s richest nation runs out of money, attention now focuses on longtime opposition leader John Boehner, under pressure from both the regime and the radical elements of his own movement, who may be the only political figure with the standing needed to end the standoff. 
While the country’s most recent elections were generally considered to be free and fair (despite threats against international observers), the current crisis has raised questions in the international community about the regime’s ability to govern this complex nation of 300 million people, not to mention its vast stockpiles of weapons of mass destruction. 
Americans themselves are starting to ask difficult questions as well. As this correspondent’s cab driver put it, while driving down the poorly maintained roads that lead from the airport, “Do these guys have any idea what they’re doing to the country?”
If It Happened There...the Government Shutdown (Slate) Actually, this is why I get my news primarily from British sources. It's always best to look at your country from the standpoint of  an outsider.

This has been done before by others; this was from earlier this year:
BOSTON, Mass. — Human rights activists say revelations that the US regime has expanded its domestic surveillance program to private phone carriers is more evidence of the North American country’s pivot toward authoritarianism. 
The Guardian, a British newspaper, reported this week that a wing of the country’s feared intelligence and security apparatus ordered major telecommunications companies to hand over data on phone calls made by private citizens. 
“The US leadership in Washington continues to erode basic human rights,” said one activist, who asked to remain anonymous, fearing that speaking out publicly could endanger his organization. “If the US government is unwilling to change course, it’s time the international community considered economic sanctions.” 
Over the last decade, the United States has passed a series of emergency laws that give security forces sweeping powers to combat “terrorism.” But foreign observers say the authorities abuse those laws, using them instead to monitor ordinary Americans. 
While the so-called Patriot Act passed in 2001 is perhaps the most dramatic legislation to date curbing freedoms here, numerous lesser-known laws have expanded monitoring of news outlets, email, social media platforms and even opposition groups — like the Occupy and Tea Party movements — that are critical of the regime. 
US leader Barack Obama, a former liberal community organizer and the country's first black president who attracted a wave of support from young voters, rose to power in 2008 promising reform. He was greeted in the United States — a country of about 300 million people — with optimism. But he has since disappointed those supporters, ruling with a sometimes iron fist and continuing, if not expanding, the policies of the country’s former ruler, George W. Bush.
Inside the United States (GlobalPost)

With millions of jobless, tent cities springing up, mass shootings on a regular basis, millions without health care winding up in emergency rooms, municipal bankruptcies like Detroit, a wealth gap greater than parts of Africa, a quarter of the world's prisoners, failing schools, the nation's students collectively a trillion dollars in debt, pathetically slow Internet speeds, decrepit infrastructure, and now this, one wonders at what point we can officially declare the United States to be a failed state.

Saturday, September 28, 2013

Friday, September 27, 2013

The Mathematics of Inequality and Empire

"All hard sciences like physics, chemistry, biology and economics all have an important mathematical component," he tells PopMech, As an evolutionary biologist, Gavrilets developed models to explain biological process. But eight years ago, he switched focus to human origins, and trying to use mathematics to explain the course of human events. For this study, he worked with Peter Turchin, a evolutionary biology professor at the University of Connecticut. In 2003, Turchin coined the term cliodynamics, an intersection of macrosociology and mathematical modeling. "History, in a sense, is the last science that doesn't have [math], so there is a group of people who've been building foundations to do a quantitative approach to historical events," Gavrilets says.

Spanning three millennia (1500 BCE to 1500 CE), the model used these three criteria to run simulations: the presence of agriculture, the ruggedness of the terrain, and most importantly, the distance from the Steppe geographical area, a belt that extends throughout Eurasia. "It appears that a lot of military technologies were invented in this Steppe area," Gavrilets says, including combat on horseback and metal weaponry. Nomads in this Steppe area developed war tech to pillage nearby agricultural societies, he says. As centuries pass, these military advancements spread, and play a key role in the rise of new powers.

The computer model begins with 2600 small societies. When a stronger society encounters a weaker one, they assimilate the weaker society's culture and an empire begins to grow. Run this scenario a couple hundred times over 3000 years, influenced by massive amounts of historical data, and Gavrilets recreates a facsimile of human history in a few hours. The first centuries are almost identical, with early empires forming out of Mesopotamia and ancient Egypt. The simulation is a slow crawl spreading from this center into Western Europe and Southeast Asia. True history is a little more erratic, with some empires disappearing in one century and reappearing the next. However, the general structure of humanity's social development remains similar between the two.

Can Math Predict The Rise and Fall of Empires? (Popular Mechanics) I'd hate to think what the math on modern-day America looks like. Here's Science Daily's coverage: Math Explains History: Simulation Accurately Captures the Evolution of Ancient Complex Societies:
The question of how human societies evolve from small groups to the huge, anonymous and complex societies of today has been answered mathematically, accurately matching the historical record on the emergence of complex states in the ancient world.

Intense warfare is the evolutionary driver of large complex societies, according to new research from a trans-disciplinary team at the University of Connecticut, the University of Exeter in England, and the National Institute for Mathematical and Biological Synthesis (NIMBioS). The study appears this week as an open-access article in the journal Proceedings of the National Academy of Sciences.

The study's cultural evolutionary model predicts where and when the largest-scale complex societies arose in human history.
While not from the simulation, here are some maps to help you make sense of it: Maps of Vast Empires That No Longer Exist (io9)

And speaking of mathematical social models, according to some researchers, hierarchical societies are more likely to spread than egalitarian ones. In times of scarcity, egalitarian societies are more stable, while hierarchical, stratified ones are motivated to conquer their neighbors. In addition, hierarchical societies tend to whether scarcity better because the peasants just do society the favor of dying off, leaving the rich and powerful intact. I would imagine that hierarchical, stratified societies are better at warfare, too, because of all the people willing to blindly follow the leaders:
Why do most cultures have a class structure -- rich, poor and sometimes middle -- instead of being egalitarian, with resources shared equally by everyone?

According to Stanford University researchers, it is the very inequities of the class structure that appear to have been behind the spread of those societies and the displacement of more egalitarian cultures during the early era of human civilization.

The researchers used a computer simulation to compare demographic stability and rates of migration for both egalitarian and unequal societies. They found that class structure provided unequal access to resources, thereby contributing a destabilizing effect on the population, and driving migration and the expansion of stratified societies.

Feldman and his colleagues determined that when resources were consistently scarce, egalitarian societies -- which shared the deprivation equally throughout the population -- remained more stable than stratified societies. In stratified societies, the destabilizing effect of unequal sharing of scarce resources gave those societies more incentive to migrate in search of added resources.

In environments where the availability of resources fluctuated from year to year, stratified societies were better able to survive the temporary shortages because the bulk of the deprivation was absorbed by the lower classes, leaving the ruling class -- and the overall social structure -- intact. That stability enabled them to expand more readily than egalitarian societies, which weren't able to adapt to changing conditions as quickly.

Many possible causes for the development of socioeconomic inequality have been proposed by scientists, such as a need for hierarchical control over crop irrigation systems, or the compounding of small differences in individual wealth over time through inheritance.

"The fact that unequal societies today vastly outnumber egalitarian societies may not be due to the replacement of the ethic of equality by a more selfish ethic, as originally thought by many researchers," said cultural evolution specialist Deborah Rogers, lead author of the study. "Instead, it appears that the stratified societies simply spread and took over, crowding out the egalitarian populations." The study is a product of her PhD thesis project at Stanford. Feldman was Rogers' adviser.

"This is not just an academic exercise," Rogers said. "Inequalities in socioeconomic status are increasing sharply around the world. Understanding the causes and consequences of inequality and how to reduce it is one of the central challenges of our time."
Suffering of the Poor May Have Helped Societies With Class Structures Spread Across Globe (Science Daily) Here's the original article - The Spread of Inequality. If true, it's pretty depressing. It means that command-and-control societies will eventually displace any more egalitarian societies. Sadly, history seems to serve as a guide, here.

Thursday, September 26, 2013

Incompetent men and the women (and men) who follow them.

One reason Dmitry Orlov got himself into trouble was that he could not think of any traditional cultures where women had the leadership roles. But it's probably not his fault, and it''s not the fault of women either. By definition "communities that abide" have been around for hundreds, if not thousands of years.Thus, they existed long before the modern fossil fuel/technological society that we inhabit today, and went without all the conveniences that entails. But, as this article below sensitively points out, the gender roles in traditional society were based on certain necessities in a world without energy slaves, professional soldiers, or modern medicine:
All modern societies evolved out of agrarian societies. Before the Industrial Revolution, the male endurance value and physical strength translated directly to political power. Men fought in wars, hunted beasts, erected buildings, and plowed fields PRECISELY because they possessed the physical stamina to do so at a far greater degree than females.

Back before the Industrial Revolution, human fertility was the highest premium factor in existence. People lived to have babies, and babies were the most important thing men and women brought into the world. The female role in reproduction—shall we say—involves a lot more time, effort, and pain (and before recently, a hell of a lot of death). Every moment women spent pregnant (which was a LOT of time) was time that she would have been taken away from power-playing.

This was for a very good reason, reasons that no longer exist (and a reality we now live in that we take for granted). More than half of all human beings died before their second birthday. Life was largely physically challenging, oftentimes painful, and disease was relatively rampant. Life wasn't quite as short as most people make it out to be (mean life expectancy was around 38 years because of child mortality, but only another 10 years is added once we factor in those who make it to their teens, meaning that life expectancy hovered around 48—still awfully short).

So, to put it plainly, women had a place in society that wasn't just dictated by male prejudice (while it certainly existed); it was dictated by the needs of society. Gestating was (and is) a very time-consuming affair. Rearing children could not be done in day-care centers or public facilities. There were no public schools, no social safety nets, no labor laws: All that existed was family and church/temple/mosque (and religious organizations weren't in the business of providing much in the way of social safety nets). Women were needed at home because the lack of sophistication in society basically relegated most men and women into the roles that they had: men = physical power / social manager and women = home power / child-bearer.

Now, with the advent of the industrial and medical revolutions, suddenly there was surplus wealth (to pay for schools, social programs, safety nets), machines that equalized strength, education to give both genders a chance at contributing to society and longer human lives to fill our cities. With this, the necessity of having babies to preserve society diminished. The need for strong and durable men to work in fields, factories, and in war began to diminish because machines did the "equalizing" work. This has continued apace even to today, in places where machines do ALL of the heavy lifting and all that matters is brain power. Now, there may remain a few select jobs where brute physical strength is at a premium (front-line soldiers, miners, construction, etc.) and those are likely to continue to be dominated by men for obvious reasons.

And so the equalizing of the genders is not something that "men granted" but which society needed and women rightly demanded. 
Why Did Almost All Societies Believe that Women Were Inferior to Men? (Slate)

Thus, traditional "women's work" was no less important. In fact, it is surely much more important, because without the bearing and rearing the next generation of the tribe, the culture would vanish entirely making men's work meaningless. Of course, the difference is that some societies treated women in this role with respect, while others treated them as practically chattel in an attempt to control their reproductive abilities (Middle East, I'm looking at you). Of course, this is a varied cultural phenomenon; we do not want a society, traditional or otherwise, that mistreats it members, men or women. I think we can all agree on that.

But why are men still disproportionately represented at the top of the pyramid when brains, not brawn are needed? According to this terrific article, it's because we mistake confidence for competence. Men's narcissistic, histrionic, strident, bullying, extroverted personas catapult them to the top where they are terribly incompetent leaders (I witness this up close and first-hand in my own firm).

Based on this article, I think we should only have women as leaders. Maybe some future society will wise up and pass a law only permitting women to be admitted to the highest stage of leadership for the good of society. As I explained a long time ago in The warlord vs. the bureaucrat, most men are more likely to make decisions to burnish their own status and stockpile and sequester resources for their own blood relatives rather than make judgements that are good for the society as a whole:
In my view, the main reason for the uneven management sex ratio is our inability to discern between confidence and competence. That is, because we (people in general) commonly misinterpret displays of confidence as a sign of competence, we are fooled into believing that men are better leaders than women. In other words, when it comes to leadership, the only advantage that men have over women (e.g., from Argentina to Norway and the USA to Japan) is the fact that manifestations of hubris — often masked as charisma or charm — are commonly mistaken for leadership potential, and that these occur much more frequently in men than in women.

This is consistent with the finding that leaderless groups have a natural tendency to elect self-centered, overconfident and narcissistic individuals as leaders, and that these personality characteristics are not equally common in men and women. In line, Freud argued that the psychological process of leadership occurs because a group of people — the followers — have replaced their own narcissistic tendencies with those of the leader, such that their love for the leader is a disguised form of self-love, or a substitute for their inability to love themselves. “Another person’s narcissism”, he said, “has a great attraction for those who have renounced part of their own… as if we envied them for maintaining a blissful state of mind.”

The truth of the matter is that pretty much anywhere in the world men tend to think that they that are much smarter than women. Yet arrogance and overconfidence are inversely related to leadership talent — the ability to build and maintain high-performing teams, and to inspire followers to set aside their selfish agendas in order to work for the common interest of the group. Indeed, whether in sports, politics or business, the best leaders are usually humble — and whether through nature or nurture, humility is a much more common feature in women than men. For example, women outperform men on emotional intelligence, which is a strong driver of modest behaviors. Furthermore, a quantitative review of gender differences in personality involving more than 23,000 participants in 26 cultures indicated that women are more sensitive, considerate, and humble than men, which is arguably one of the least counter-intuitive findings in the social sciences. An even clearer picture emerges when one examines the dark side of personality: for instance, our normative data, which includes thousands of managers from across all industry sectors and 40 countries, shows that men are consistently more arrogant, manipulative and risk-prone than women.

The paradoxical implication is that the same psychological characteristics that enable male managers to rise to the top of the corporate or political ladder are actually responsible for their downfall. In other words, what it takes to get the job is not just different from, but also the reverse of, what it takes to do the job well. As a result, too many incompetent people are promoted to management jobs, and promoted over more competent people.

Unsurprisingly, the mythical image of a “leader” embodies many of the characteristics commonly found in personality disorders, such as narcissism (Steve Jobs or Vladimir Putin), psychopathy (fill in the name of your favorite despot here), histrionic (Richard Branson or Steve Ballmer) or Machiavellian (nearly any federal-level politician) personalities. The sad thing is not that these mythical figures are unrepresentative of the average manager, but that the average manager will fail precisely for having these characteristics.

In fact, most leaders — whether in politics or business — fail. That has always been the case: the majority of nations, companies, societies and organizations are poorly managed, as indicated by their longevity, revenues, and approval ratings, or by the effects they have on their citizens, employees, subordinates or members. Good leadership has always been the exception, not the norm.
Why Do So Many Incompetent Men Become Leaders? (Harvard Business Review)

Tuesday, September 24, 2013

Automation Linkfest

I'm glad I finally got off that last topic. Now I can start unloading all the links I've built up.

America Has Hit “Peak Jobs” (TechCrunch)

Automation Anxiety (Wilson Quarterly)
Life magazine held up an example in 1963, showing a picture of a device called the Milwaukee-Matic, an innovative industrial machining tool, surrounded by the 18 workers it could replace. “There are 180 Milwaukee-Matics in operation in the U.S., and a union official in a plant in which it was installed reported: ‘There is now no need for 40 percent of our toolmakers, 50 percent of our machine operators. Without a shorter work week, 60 percent of our members will be out of a job.’”
I've never heard of the Milwaukee-Matic and I've lived here all my life. At least I have a name for my rock band or fantasy football team.

Wealth, Not Robots, Makes Us Lazy (Overcoming Bias)

Low pay and the rise of the machines (Tim Harford, The Undercover Economist)

*The Second Machine Age* (Marginal Revolution)

From the comments (Marginal Revolution)
Another way to look at the effect of mechanization is to look at how it affected the other living employees of farmers. The U.S. horse population peaked at 26.5 million in 1915. It declined rapidly after that, hitting a low of just over 3 million in 1960. While it is about 9 million now, that’s because of increased ownership as pets.

I’m not saying humans will be destroyed like horses, but it raises some questions about the ease of transition.
And see: Machines Replacing Humans: They Shoot Horses, Don’t They (Asymptosis) Why I've talked about the "Final Solution" for the working class. Why do you think House Republicans are defunding food stamps - lack of money? And see: The Demise of the Horse and Mule Era and the Rise of the Automobile and Tractor Era (HayWard Econ Blog). Apparently, we used all that land for suburbia.

Eliezer Yudkowsky asks about automation (Marginal Revolution)

(Tyler, have you read that?)

I don’t actually get Brynjolfsson and McAfee. I read the original book and it seemed very unoriginal and not to address at all the basic question of “Why did Ricardian reemployment work fine when agricultural jobs went from 95% to 3%, work fine when automobiles put the whole horse-and-buggy industry out of existence, work fine when women entered the workforce during WWII, and then suddenly stop working?”
Part of the reply is interesting, especially in light of what we've been discussing (that progress really started in 1870):
Think of the machines of the industrial revolution as getting underway sometime in the 1770s or 1780s.  The big wage gains for British workers don’t really come until the 1840s.  Depending on your exact starting point, that is over fifty years of labor market problems from automation.
 So, anyhow, robots… Robots are increasing in numbers and it is indeed very possible that, within the next 25 to 35 years, there will be more robots than people. And the story will play out mostly as Kevin Drum describes it.

With one major exception: Capital owners will NOT be happy. Sure, at present, every individual company is happy to automate away its workers. That reduces the labour cost, one of the biggest expense item for most businesses. The only tiny whiny little problem is that one’s company labour cost is another’s revenue. So far, I think that a lot of big companies are doing exceedingly well, profit margin wise, because they’re capitalising on inertia – the fact that Westerners are, overall and all things considered, quite rich and that most of them have paying jobs (Even a 20% real unemployment or underemployment rate means that, conversely, 80% of the population is still employed). But both things are the result of long gone policies and social structures. When the process kick-started 30 years ago will reach its climax, I have a serious problem in figuring out who will buy all the goods those robots will produce.

And, if nobody is buying and if purchasing power, instead of ‘just’ stagnating, actually goes in reverse, well, I suspect being an owner of capital will feel pretty useless. Sure, you’ll have all those robots and factories and commercial real estate. And it will all be sitting there, doing nothing/little for lack of customers… What will be the point?

But it’s not like there are no historical parallel to the situation. The Romans had much the same problem. Except that, in their case, it was slave labour that had taken all the work, in the farms and the workshops, much to the initial satisfaction of the great aristocratic families. However, these families soon found out that the normal Roman free citizens were not happy about the situation and, from then on, Roman political life revolved around figuring out how to keep the Roman mob (the plebs) content enough for them not to riot or rise up.

One of the solutions they had to this problem was the original ‘dole’ – A free distribution of grain, at the state’s expense - the ‘bread’ in Juvenal’s famous quip about ‘bread and circuses’.

Eventually, this ‘solution’ proved too expensive for the state but one suspect that the tax rate applied to the rich land-owning aristocrats might have had something to do with it, once pillaging neighbouring countries or civilisations became impossible. Plus ca change…
Report Suggests Nearly Half of U.S. Jobs Are Vulnerable to Computerization (MIT Technology Review).
A recent report (which is not online, but summarized here) from the Oxford Martin School’s Programme on the Impacts of Future Technology attempts to quantify the extent of that threat. It concludes that 45 percent of American jobs are at high risk of being taken by computers within the next two decades.

The authors believe this takeover will happen in two stages. First, computers will start replacing people in especially vulnerable fields like transportation/logistics, production labor, and administrative support. Jobs in services, sales, and construction may also be lost in this first stage. Then, the rate of replacement will slow down due to bottlenecks in harder-to-automate fields such engineering. This “technological plateau” will be followed by a second wave of computerization, dependent upon the development of good artificial intelligence. This could next put jobs in management, science and engineering, and the arts at risk.
But I'm sure we'll create new jobs we can't even imagine for half the workforce, right? Right???

Robots May Revolutionize China’s Electronics Manufacturing (Wall Street Journal)

U.S. Textile Plants Return, With Floors Largely Empty of People (New York Times)
Take Parkdale: The mill here produces 2.5 million pounds of yarn a week with about 140 workers. In 1980, that production level would have required more than 2,000 people.
That's 1,860 new "takers" or "water drinkers" or whatever the preferred Libertarian term is these days. I hear Cracker Barrel is hiring. Better hurry, illegal immigration is rising again. They may want to think twice, though:

US farmers using robots instead of migrants to milk cows (BBC) As one dairy farmer put it: "I have yet to have the INS (Immigration and Naturalization Service) question the Green Card of a robot."

Empty F-16 jet tested by Boeing and US Air Force (BBC) Boeing has revealed that it has retrofitted retired fighter jets to turn them into drones. That should get rid of all those pesky useless eaters!
Wealth, Not Robots, Makes Us Lazy

Monday, September 23, 2013

Energy or Innovation???

Last time we saw that your view of human progress rests on whether you believe that the defining factor in history has been energy, or whether it has been innovation.

The tricky part is that energy and innovation are fundamentally intertwined. You need to innovate to get at and use energy. Without the innovation, the energy is useless. Coal, oil and natural gas lay under the ground for all of human history before we gained the knowledge to extract them and put them to use through technology. Thus the union of both seems fundamentally central to the narrative.

The analogy of a car is often used. A can of gas by itself is pretty useless; even firewood would be more convenient to burn. At the same time, a car represents a massive investment in materials, technology and innovation. Yet even the most sophisticated car would sit there idle and useless without the energy from that can of gas poured into its tank. Take away either one, and you are left with nothing of much use to anybody. Put both together and you have a miracle. the Industrial Revolution represents a union of both.

It also acts as a self-reinforcing spiral. The first fossil fuels were easy to get at. They drove a frenzy of innovation that made it possible to get at the harder to find oil. The technology required to build a drilling platform and drill a mile under the ocean or break up rocks with high-pressure liquid and sand would not be possible were it not for the knowledge and innovations unleashed by the earlier, easier to find fuel.

Complicating this picture even further is that scientific revolution came along at roughly the same time. The signature achievement of the Second Industrial Revolution was the systematic application of the scientific method to technological development*. So “innovation” as we know it is mainly related this last event.

So where to unwind these things - The use of new technology and engines to do human work, the use of the scientific method to solve problems, the discovery and use of a massive, energy-dense fuel source, colonialism, and the institutional and economic arrangements that encouraged these developments and created capitalism, mass production, globalism, and the consumer society? Technological innovation, capitalism, the scientific method, the control over "undeveloped" parts of the world, and fossil fuel energy all joined to create the world as we know it today. But which way does the arrow of causality run?

Economists tend to ignore energy and resources entirely and focus solely on innovation. They believe that technology, capital and labor combine to produce living standards. Just as breaking the Malthusian trap allowed us to be free of the "limiting factor" of land, they also believe that technology freed us from the limitations of energy, paradoxically at the very time we use ever more of it than ever before. But in truth,  Isn't fossil fuel energy what liberated us from being dependant upon land (which was the principal method of harvesting solar energy for most our our history)? And if so, why do economists stubbornly ignore it? Shouldn't it be essential in the story of humanity since 1870?

For example, I posted this TED talk from Andrew McAfee before, where at one point he puts up a chart and declares that “The entire human story has been one of technology.” I pointed out at the time that the exponential growth seen at the chart also corresponded with the widespread use of fossil fuels. Someone else could put up the exact same chart and say that "the entire history of the human race has been the discovery of cheap, abundant, energy-dense, easily accessible energy sources," and seem to prove the exact same point as Mr. McAfee. Again, the intertwining is hard to separate.

A problem with the innovations story as the central driver of escaping the Malthusian trap is that innovation hardly started in 1870, 1776 or 1601. Humans have been innovating for our entire history as a species, since we started using stone tools and fire to procure food. Ancient Romans used concrete superior to today’s, “nanotechnology” to make glass, and water wheels at Barbegal to churn out enough loaves of bread to feed the urban masses. All these discoveries were eventually lost. Ancient cranes and lifting devices built the Pyramids and the Colosseum. The Middle Ages saw an agricultural revolution with horseshoes, the horse collar, nitrogen-fixing crops, three-field crop rotation and windmills. The Chinese were by far the most innovative society on the planet, inventing sophisticated water clocks, the compass, block printing, paper money, flight (airborne lanterns as far back as c.200 AD), crossbows and gunpowder. The Chinese drilled down hundreds of feet to harness natural gas as far back as the Han dynasty using bamboo pipelines to carry fuel and mix it with air to create burners for salt production from brine. Yet without unlocking the secret of large-scale fossil fuel use and industrialization, their society stagnated and went through periods of expansion and decline. Low Tech Magazine does a good job of documenting all the innovations that took place in power generation, transportation and communications prior to the First Industrial Revolution.

My instinct is that some of these things are backwards. I suspect the institutional reforms were as much brought about by our technical capabilities, as facilitating them. I also suspect that the the New World (and Australia, et. al.) provided the necessary "release valve" for the Industrial Revolution to occur, something China and Japan did not have. It was the New World that weakened the power of elites. After all, you can't compel people to give up their rights and the fruits of their labor if they can just pack up and go somewhere else with no king or extractive elites (cf. Carneiro's circumscription theory). It's also hard for elites to control resources when they are abundant relative to population (land, timber, mines, etc).

It is also well known that governments expanded due to wider trading regimes, not the other way around. Similarly, it was the energy allowed by harnessing fossil fuels that allowed a surplus, which allowed further and increasing innovation to occur. This surplus lead to innovation as much as innovation led to a surplus. The application of the scientific method came later in the game, and the scientific method itself was probably in large part a product of this surplus as well (lots of folks with time on their hands). At the same time, some technological changes, like the printing press, also facilitated the scientific revolution. And an awful lot of the critical scientific discoveries were made in order to facilitate trade (in geography, astronomy, mechanics, etc.) It's a series of feedback loops within feedback loops.

Gregory Clark points out that the conditions that preceded the Industrial Revolution were not unique given the vast range of human economic and social arrangements throughout history. Every "unique" development in 18th century England has some precedent since the rise of civilization. This is a blow to the "organizational" theory of the Industrial Revolution put forward by people like Joel Mokyr. Clark's  contention is that evolutionary pressures working over thousands of years took their time to transform people into cooperative, nonviolent, rational utility-maximizing, low time-preference savers rather than people just focused on basic survival in the here-and-now (i.e. changing grasshoppers into ants). But perhaps the critical factor wasn't so much the people, but the energy source.

That energy source was so large and so abundant, that we could "outrun" the Malthusian world. As Nate Hagens and Chris Martenson pointed out, the energy we have released was so abundant that our living standards soared so far ahead that we made the quantum leaps described. That is, we confused the effects for the cause.England had the three 'C's': capital, colonies and coal.

The question is, take away the energy, and will we still be able to live in the world as we have known it, or will we slide back to Malthusian limits?

It's not an academic question. The reason it seems so urgent is because we're seeing environmental destruction on a planetary scale. We're seeing a rise in the price of basic resources. We're seeing climate change, droughts and resource wars. And we're seeing a stagnation of incomes and a marked increase in income inequality. We're seeing the return of extractive hereditary elites, predatory institutions and debt peonage. Even scientific understanding seems to be on the wane among the "Jesus haunted masses." We seem to be regressing already. As this article poignantly puts it:
When I was growing up, it was assumed that America’s shared prosperity was the natural endpoint of our economy’s development, that capitalism had produced the workers paradise to which Communism unsuccessfully aspired. Now, with the perspective of 40 years, it’s obvious that the nonstop economic expansion that lasted from the end of World War II to the Arab oil embargo of 1973 was a historical fluke, made possible by the fact that the United States was the only country to emerge from that war with its industrial capacity intact. Unfortunately, the middle class – especially the blue-collar middle class – is also starting to look like a fluke, an interlude between Gilded Ages that more closely reflects the way most societies structure themselves economically. For the majority of human history – and in the majority of countries today – there have been only two classes: aristocracy and peasantry. It’s an order in which the many toil for subsistence wages to provide luxuries for the few. Twentieth century America temporarily escaped this stratification, but now, as statistics on economic inequality demonstrate, we’re slipping back in that direction. Between 1970 and today, the share of the nation’s income that went to the middle class – households earning two-thirds to double the national median – fell from 62 percent to 45 percent. Last year, the wealthiest 1 percent took in 19 percent of America’s income – their highest share since 1928. It’s as though the New Deal and the modern labor movement never happened.
R.I.P Middle Class (Salon)

As this post points out, wages aren't just stagnant, they're plummeting. As John Cassidy explains:
What these numbers show, or rather confirm, is that in economic terms much of middle America has experienced four lost decades. Since its founding, the United States has been a country based on enterprise, hard work, and material progress. But for forty years now, the engine that generates across-the-board rises in living standards has been stalled, with incomes stagnating at the bottom and in the middle while growing rapidly at the top.
And this trend has occurred around the world as wealth becomes more concentrated at the top. Some counties, particularly in the Eastern Mediterranean, are in a state of outright collapse. Others, from Spain through Iraq and Afghanistan and down into Africa, are very close. Is this a hiccup on the way to the Singularity? Or is this a terrifying new normal?

It almost seems like we're headed back to preindustrial social relations with all the technology of the modern world. We're at almost medieval levels of inequality, by some measures greater than in all of human history. This is masked, however, by the obscene levels of wealth and abundance procured by fossil fuels. We still have much more food, transportation, entertainment options and creature comforts than the distant past, even in a decreasing wealth situation. Yet we're still getting poorer compared to the very recent past.

Since 1870, the human population has exploded, to seven billion today, on course for ten billion.  Yet the energy available to use via fossil fuels has plateaued. We're innovating desperately to stay in place, but we're not increasing. Demand increase in Asia has been fueled by demand destruction in the developed economies. The rising middle classes in Asia are accompanied by much of the American heartland regressing to a third-world country of abandoned storefronts, foreclosed homes, broken windows, trailer parks, brothels and gangs in a brutal zero-sum game. But is this caused by a lack of energy, or something else? And will technology save us from this situation?

Technology is not some neutral force. Techno-optimists seem to think we have the will and social structure of army ants,  But we're not ants, we're small-group hierarchical primates whose minds were forged for survival on the savanna. If we were ants we could use we could use command-and-control top-down commands and turn on a dime. Instead, human societies have been vulnerable to dysfunction and collapse since the rise of civilization circa 10,000BC. If we look at a map of political boundaries from that time forward, the borders are constantly shifting. Even two hundred years ago the map looks completely different (no Germany and Italy, Austria-Hungary, Tibet is a separate country, the Middle East is the Ottoman empire, etc.)

For example, take the Hyperloop concept. No sooner was it proposed than people pointed out that not only was this proposal not new, but it would be nearly impossible to implement in practice thanks to all of the different parcels that would need to be bought, the governments that would need to cooperate, the funding that would need to be raised, etc. Even high-speed rail, an already existing technology present in Europe for decades, is unbuildable due to political corruption and dysfunction in the United States, much less a pneumatic tube train of the style proposed for decades. And what are the odds that the oil companies will let us tax carbon? Even the much-touted biofuels revolution is on the rails:
  By 2013, America was supposed to be burning nearly 3,800m litres a year of “cellulosic” biofuels made from woody plants.

 But instead of roaring into life, the biofuels industry stalled. Start-ups went bust, surviving companies scaled back their plans and, as prices of first-generation biofuels rose, consumer interest waned. [...] By 2012 America’s Environmental Protection Agency (EPA) had slashed the 2013 target for cellulosic biofuels to just 53m litres.
Making a second-generation biofuel means overcoming three challenges. The first is to break down woody cellulose and lignin polymers into simple plant sugars. The second is to convert those sugars into drop-in fuels to suit existing vehicles, via a thermochemical process (using catalysts, extreme temperatures and high pressures) or a biochemical process (using enzymes, natural or synthetic bacteria, or algae). The third and largest challenge is to find ways to do all this cheaply and on a large scale.
In 2008 Shell, an energy giant, was working on ten advanced biofuels projects. It has now shut most of them down, and none of those that remain is ready for commercialisation. “All the technologies we looked at worked,” says Matthew Tipper, Shell’s vice-president for alternative energy. “We could get each to produce fuels at a lab scale and a demonstration scale.” But bringing biofuels to market proved to be slower and more costly than expected.

Even if second-generation processes can be economically scaled up, however, that might in turn highlight a further problem. To make a significant dent in the 2,500m litres of conventional oil that American refineries churn through each day, biofuel factories would have to be able to get hold of a staggering quantity of feedstock. Mr Ghisolfi of Beta Renewables points out that a factory with an annual output of 140m litres needs 350,000 tonnes of biomass a year to operate. “There are only certain areas, in Brazil and some parts of the US and Asia, where you can locate this much biomass within a close radius,” says Mr Ghisolfi. “I am sceptical of scaling to ten times that size, because getting 3.5m tonnes of biomass to a single collection point is going to be a very big undertaking.”
What happened to biofuels? Do they have a future? (Treehugger)

This is probably best summed up by The Onion:
Citing the fragile economy and an exceedingly volatile political landscape, many Americans told reporters they are now fairly certain that the chances of the United States spearheading global advancements within the likes of biotechnology, health care, or manufacturing are pretty much zilch.

“I always hear politicians talk about America being at the forefront of technological achievement, and it’s just now hitting me how completely absurd that sounds,” said 37-year-old Seattle resident Daniel Townsend. “They’ve been saying that stuff for years as if it’s always right around the corner. If we’ve really been at a crossroads with the next wave of cutting-edge innovation at our fingertips, wouldn’t we have seen at least one huge breakthrough by now? Like something more important and life-changing than a new type of phone?”

This kind of world, sources agreed, is just not happening anytime soon.

“God, even hearing myself say the words ‘next wave of cutting-edge innovation’ out loud makes the whole thing sound even more ridiculous,” Townsend added. “Can anyone honestly say they feel like America is leading the rest of the world into a bold new tomorrow?”

Saying that the United States pioneering daring advancements in clean air technology ain’t gonna happen now, not 10 years from now, not ever, millions of citizens also confirmed they are now coming to terms with the fact that a grand era of sustained American prosperity just isn’t in the cards.

“During the last election, I admittedly got really excited when Obama proposed things like a high-speed rail system, a modernized and more efficient national power grid, and affordable college educations for every American,” said physical therapist Chris Donner, 42, of Wilmington, DE. “But now that I’ve had a chance to sort of step back and calmly assess where we are as a country, I can say with full confidence that we’re not taking any bold leaps into a bright future anytime soon.”

“I still drive a car that runs on expensive gasoline along dilapidated, crumbling roads, I put my kids through an education system that’s as broken as ever, and my sister died of cancer last year,” Donner continued. “So, unless every other part of America is experiencing a bold resurgence that just hasn’t gotten to Wilmington yet, I can safely say I’ll be long dead before any of that happens.”

Though they conceded that more tax incentives for startup businesses and a $100 million initiative to map the human brain “sound great on paper,” many citizens reportedly admitted that such endeavors are seeming less and less likely to fuel a powerful new engine of American enterprise. Residents of all 50 states also told reporters they are gradually learning that greater incomes, higher-quality jobs, and vastly improved standards of living are not headed their way anytime soon.
Nation Starting To Realize New Era Of American Innovation Never Gonna Happen (The Onion)

Innovation does not occur in a vacuum but in a society that enables innovation. You need a certain amount of population, a certain amount of surplus, a certain amount of stability, etc. Thus, a higher number of people and more effective communications technologies enable innovation to take place. For example, Europe probably became a hotbed of innovation after the potato and the printing press enabled rapid population growth and sharing of ideas. If society regresses, so too does innovation. Population drops via disease, political instability, governmental dysfunction, civil wars and infighting, natural disasters such as drought, and social conflict between haves and have-nots have caused innovative societies to falter throughout history, and thus innovation to cease. The Romans’ technological innovation across a wide range of disciplines did not prevent their collapse. The roads and aqueducts were still there, it’s just that nobody used them anymore as they fragmented and fell apart. Can we be certain we will not meet a similar fate?

It was the innovations that allowed us to use fossil fuels that really allowed things to take off. Without those fossil fuels, and limited by the earth’s annual solar energy income, it’s doubtful that all the innovation in the world would have created the extraordinary abundance of the modern exponential growth economy, no matter how hard we tried to innovate our way out of Malthusian limits.

So perhaps we can say that our modern “innovative” societies have been enabled by fossil fuel use, not the other way around. And just as money cannot compound forever, neither can innovation. The extent that growth has been driven by fossil fuel use is debated, but people looking at the topic have pointed out the tight correlations between economic growth, population, and fossil fuel use.

Innovation should not be entirely dismissed however. We do things today much more efficiently and with far fewer resources than we did fifty years ago. Our cars need less gas. Our buildings use less energy. Our industrial processes use less water. We can use things like harvesting waste heat and co-generation to conserve power. We also have a huge cushion of waste to feed off of. We’ve established that forty percent of our food is wasted between farm and table, as well as about 70 percent of our electricity from the station to its destination. Finding more efficient ways of doing things is smart, and might fend of disaster, but it won’t create the kind of growth in living standards we’ve come to expect. I don’t think economists consider the rebound effect enough when they talk about innovation. In fact, innovation all too often allows us to use up resources even faster.

Now, I’ve begun to think of the two as countervailing forces. Innovation is pushing back against declining energy resources. For example hydraulic fracturing, algae-based fuels, nanomaterials, and efficiency measures are making us better off, but these are merely offsetting a more rapid decline caused by energy shortages. Innovation pushes back against resource depletion, sometimes scoring a victory, but a Pyrrhic one that will eventually be turned into a defeat. This means that the simple story of collapse or utopia is too simple. Innovation will allow us to intensify.  I think we might innovate our way down the energy curve. But that will not fix our problems.

I guess you could call me a short-term stagnationist and a long-term doomer. I think we will see innovations in the future that will affect our lives for the better. But I do think that we're in for stagnation and decline for a long time, followed by a consumption of prior resources in a catabolic collapse as progress grinds to a halt in the far future. And I think it will unfold over long periods of time and around the world in ways that are impossible to comprehend over a single lifetime. I think it will be an inverse Seneca Effect - the way down will be much slower than the way up, as we use our technology to find temporary solutions and quick fixes while we undertake the necessary social reforms as all else fails. This process will unfold very differently across the world.

I wish after all this I had a more definitive conclusion. I think this fundamental question, energy or innovation, needs further study for a more definitive answer. I'll give the last word, then, to this post on the perils of large-scale predictions:
In general, I believe that large-scale predictions about the course of history are highly questionable. There are several important reasons for this.

One reason for the failure of large-scale predictions about social systems is the complexity of causal influences and interactions within the domain of social causation. We may be confident that X causes Z when it occurs in isolated circumstances. But it may be that when U, V, and W are present, the effect of X is unpredictable, because of the complex interactions and causal dynamics of these other influences. This is one of the central findings of complexity studies -- the unpredictability of the interactions of multiple causal powers whose effects are non-linear.

Another difficulty -- or perhaps a different aspect of the same difficulty -- is the typical fact of path dependency of social processes. Outcomes are importantly influenced by the particulars of the initial conditions, so simply having a good idea of the forces and influences the system will experience over time does not tell us where it will wind up.

Third, social processes are sensitive to occurrences that are singular and idiosyncratic and not themselves governed by systemic properties.

Fourth, social events and outcomes are influenced by the actions of purposive actors. So it is possible for a social group to undertake actions that avert the outcomes that are otherwise predicted.

For these and other reasons, it is difficult to have any substantial confidence in predictions of the large course of change that a society, cluster of institutions, or population will experience. And this is a reason in turn to be skeptical about the spate of recent books about the planet's future.
Large predictions in history (Understanding Society)

Sunday, September 22, 2013

Cornucopians, Doomers and Stagnationists

Closing out this series, it strikes me that your view of the future boils down to one central question: energy or innovation?

Most people are unaware of how recent our ever-growing technologically-based society is. In the beginning of this series, we featured some economic history showing that the lifestyles we take for granted began on a grand historical scale only yesterday – 1870 seems to be a good starting point of longer life expectancy, decreased infant mortality, population explosion, height increases, abundant goods, and the plentiful jobs. I was unaware myself of just how recent this all was. Yet we assume that it will not only continue into the future, but accelerate. It has become "the new normal" for the modern world.

But what caused it? Some say it was the scientific revolution which did it. Others that was institutional reforms allowing capitalism to flourish and preventing elites from harvesting any and all gains from innovation for themselves. Some say it was Enlightenment social reforms banishing religious domination over the lives and thinking of common people and allowing them to advance. Some say it was the resources from the plundering of the new world.

One view of the future sees change and progress (in their view) as exponential and accelerating. They see scientific discovery driving limitless innovation, as each discovery builds upon previous ones. Things formerly unimaginable have become commonplace, and reality has consistently defied predictions of what was possible, as well as past predictions of doom. They envision a world of mastery over materials through nanotechnology, limitless energy from fusion, robotic servants tending to our every need, plentiful goods thanks to 3D printing, intelligence embedded into everything via computer chips and artificial intelligence, and the elimination of sickness and aging via biotechnology.

The other sees humans as rapacious locusts temporarily burning through a one-time windfall of fossil fuels. As that windfall is used up, scientific progress and innovation will slowly grind to a halt. Humans will regress to simpler and more basic forms of social and political organization, as they will no longer have the energy needed to sustain the complexity of the modern globalized economy. We will end up as squatters among the ruins of past civilizations, marveling at what we were able to accomplish using the bounty of fossil fuels which can only be used once. No longer able to sustain such a huge population, it will fall either slowly or rapidly, and the world will come to resemble the pre-fossil-fuel era of low growth and Malthusian limits. There will be a recrudescence of things like starvation, disease, economic depressions, famine, resource wars, social breakdown and political strife.

Now the fundamental difference between these two views rests on where you think human progress (yes, I’m aware of the pitfalls of the term, but it will have to suffice) comes from.

If you believe that the primary engine driving progress and change is innovation, you see innovation continuing apace and accelerating. By contrast, if you believe that the driving engine behind change and progress is energy, and more generally, resources, you are likely to see a marked decline in the human condition as we pass the peak of various fossil fuels and are forced to use lower net energy sources, as well as looming scarcity in key materials like fresh water, arable land, topsoil, phosphorus, copper, uranium, rare earth metals, etc. One side takes a materialist view. The other side sees resources as an incidental factor, with human inventiveness as an "the ultimate resource" that is inexhaustible, as economist Julian Simon put it.

One common argument is that before the modern era, our knowledge was "compounding" and that it only reached a critical mass in this time period, allowing us to make a quantum leap:
Suppose, I give you a magic coin worth 1 cent, which multiplies itself 100 times every year.

At the end of 1 year, you would have a negligible amount: $1.
At the end of 2 years, you would have a very small sum: $100.
At the end of 3 years, you would have barely enough: $10,000.
At the end of 4 years, you start seeing a modest $1 million dollar heap.
At the end of 5 years, you would have a good $100 million.

Now, at the end of the fifth year, you come to me and say, "I have kept the coin with me for 5 years, but 99 percent of the money it made came in last year. What was the coin doing before that?"

So, to answer in one word: compounding.
Why Has 99 Percent of the Technological Progress by Modern Humans Come in the Last 10,000 Years? (Slate)

This is the "back half of the chessboard" idea; that change is exponential, and therefore tends to move more and more rapidly over time. This idea has been most forcefully argued by Ray Kurzweil, who projects this trend out into the future:
When people think of a future period, they intuitively assume that the current rate of progress will continue for future periods. However, careful consideration of the pace of technology shows that the rate of progress is not constant, but it is human nature to adapt to the changing pace, so the intuitive view is that the pace will continue at the current rate. Even for those of us who have been around long enough to experience how the pace increases over time, our unexamined intuition nonetheless provides the impression that progress changes at the rate that we have experienced recently. From the mathematician’s perspective, a primary reason for this is that an exponential curve approximates a straight line when viewed for a brief duration. So even though the rate of progress in the very recent past (e.g., this past year) is far greater than it was ten years ago (let alone a hundred or a thousand years ago), our memories are nonetheless dominated by our very recent experience. It is typical, therefore, that even sophisticated commentators, when considering the future, extrapolate the current pace of change over the next 10 years or 100 years to determine their expectations. This is why I call this way of looking at the future the “intuitive linear” view.

But a serious assessment of the history of technology shows that technological change is exponential. In exponential growth, we find that a key measurement such as computational power is multiplied by a constant factor for each unit of time (e.g., doubling every year) rather than just being added to incrementally. Exponential growth is a feature of any evolutionary process, of which technology is a primary example. One can examine the data

in different ways, on different time scales, and for a wide variety of technologies ranging from electronic to biological, and the acceleration of progress and growth applies. Indeed, we find not just simple exponential growth, but “double” exponential growth, meaning that the rate of exponential growth is itself growing exponentially. These observations do not rely merely on an assumption of the continuation of Moore’s law (i.e., the exponential shrinking of transistor sizes on an integrated circuit), but is based on a rich model of diverse technological processes. What it clearly shows is that technology, particularly the pace of technological change, advances (at least) exponentially, not linearly, and has been doing so since the advent of technology, indeed since the advent of evolution on Earth.
The Law of Accelerating Returns (Kurzweil Hub)

Less extreme conrnucopian views have been argued most recently by bailed-out banker Matt Ridley ('The Rational Optimist'), silicon valley investor Peter Diamandis ('Abundance:The Future Is Better Than You Think'), former Microsoft executive Ramez Naam ('The Infinite Resource'), financial journalist Daniel Ben-Ami ('Ferraris For All'), Bjorn Lomborg ('The Skeptical Environmentalist'), Stewart Brand, Steven Pinker, and as we featured last time, Joel Mokyr. The belief is that human ingenuity solves all problems, and that we have left behind the Malthusian world forever. Human society is progressing, we've just hit a temporary bump in the road, and we just need to iron out the difficulties.

The innovation case rests on two arguments. One is the fact that large-scale, collaborative, empirical, experimental, peer-reviewed science has become the lifeblood of modern growth-based economies, and that we have never seen that institutionalized before now. As the eminent historian of science Alfred North Whitehead put it, “the greatest invention of the nineteenth century is the method of invention.”

“The stone age didn’t end for lack of stones,” is the popular platitude here. There are many just-so stories trotted out  – energy-dense coal replaced wood that became scarce through deforestation; kerosene replaced oil from declining populations of overhunted sperm whales; gasoline-powered automobiles made sure that cities could continue grow without drowning in horse manure; shellac from southeast Asian beetles which was used to insulate electronics was replaced by plastic, nitrogen fixed from the atmosphere replaced dwindling sources of South American guano, and so on.

But note that all of the above depend on fossil fuels. This brings up the counter-argument that the only thing that allowed us to escape the Malthusian trap was the harvesting of a massive store of solar energy that had been harvested by the earth over geologic time-scales, just waiting for humans to discover how to use it.

The case for energy as the primary driver is well summarized in this essay by Nate Hagens:
The chemical potential energy available from the burning of things (e.g. wood) is rather astounding when compared with the energy which we supply our bodies in the form of food, and the fossil fuels of coal, oil, and natural gas burn even hotter while also being much easier to store and transport. We quickly learned that using some of this heat to perform work would transform what we could accomplish in massive ways. One barrel of oil, priced at just over $100 boasts 5,700,000 BTUs or work potential of 1700kWhs. At an average of .60 kWh per work day, to generate this amount of 'labor', an average human would have to work 2833 days, or 11 working years. At the average hourly US wage rate, this is almost $500,000 of labor can be substituted by the latent energy in one barrel of oil that costs us $100. Unbeknownst to most stock and bond researchers on Wall Street, this is the real ‘Trade’.

The vast majority of our industrial processes and activities are the result of this ‘Trade’. We applied large amounts of extremely cheap fossil carbon to tasks humans used to do manually. And we invented many many more. Each time it was an extremely inefficient trade from the perspective of energy (much more energy used) but even more extremely profitable from the perspective of human society. For instance, depending on the boundaries, driving a car on a paved road uses 50-100 times the energy of a human walking, but gets us to where we are going 10 times faster. The ‘Trade’ is largely responsible for some combination of: higher wages, higher profits, lower priced goods and more people. The average American today consumes ~60 barrel of oil equivalents of fossil carbon annually, a 'subsidy' from ancient plants and geologic processes amounting to ~600 years of their own human labor, before conversion. Even with 7 billion people, each human kWh is supported by over 90kWh of fossil labor, and in OECD nations about 4-5 times this much.

Technology acts as an enabler, both by inventing new and creative ways to convert primary energy into (useful?) activities and goods for human consumption and, occasionally, by making us use or extract primary energy in more efficient ways. Even such services that appear independent of energy, are not so- for example, using computers, iPhones, etc in aggregate comprise about 10% of our energy use, when the servers etc are included. Technology can create GDP without adding to energy use by using energy more efficiently but:

a) much of the large theoretical movements towards energy efficiency have already occurred and b) energy saved is often used elsewhere in the system to build consumption demand, requiring more and more primary energy (Jevons paradox, rebound effect).

Despite the power in the Trade, its benefits can be readily reversed. Firstly, if we add obscene amounts of energy, even cheap energy, the wage increases/benefits start to decline. But more importantly, and has been happening in the past decade or so, as energy prices increase, so too do the benefits of the “Trade” start to wane. The graph to the right (source, page 18) shows that as the price of energy doubles or triples the benefits of this 'Trade' quickly recede. This is especially true for the extremely energy intensive processes, like aluminum smelting, cement manufacture- fully 30% of US industry falls into this category. This reduction in 'salary' can only partially be offset by efficiency measures or lean manufacturing moves, because the whole 'Trade' was predicated on large amounts of very cheap energy. Basically, the benefits to human societies from the mammoth bank account we found underground are almost indistinguishable from magic. Yet we have managed, over time, to conflate the Magic with the Wizard.
Twenty (Important) Concepts I Wasn't Taught in Business School (The Oil Drum)

This view has also been forcefully argued by Chris Martenson:
The really big picture goes like this:  Humans discovered about 400 million years worth of stored sunlight in the form of coal, oil, and natural gas, and have developed technologies that will essentially see all of that treasure burned up in just 300 to 400 years.

On the faulty assumption that fossil fuels will always be a resource we could draw upon, we fashioned economic, monetary, and other assorted belief systems based on permanent abundance, plus a species population on track to number around 9 billion souls by 2050.

There are two numbers to keep firmly in mind.  The first is 22, and the other is 10.  In the past 22 years, half of all of the oil ever burned has been burned.  Such is the nature of exponentially increasing demand.  And the oil burned in the last 22 years was the easy and cheap stuff discovered 30 to 40 years ago.  Which brings us to the number 10. 

In every calorie of food that comes to your table are hidden 10 calories of fossil fuels, making modern agriculture and food delivery the first type in history that consumes more energy than it delivers.  Someday fossil fuels will be all gone.  That day may be far off in the future, but preparing for that day could (and one could argue should) easily require every bit of time we have.

What galls me at this stage is that all of the pronouncements of additional oil being squeezed, fractured, and otherwise expensively coaxed out of the ground are being delivered with the message that there's so much available, there's nothing to worry about (at least, not yet.)  The message seems to be that we can just leave those challenges for future people, who we expect to be at least as clever as us, so they'll surely manage just fine.

Instead, the chart above illustrates that on a reasonably significant timeline, the age of fossil fuels will be intense and historically quite short.  The real question is not Will it run out? but Where would we like to be, and what should the future look like when it finally runs out?  The former question suggests that "maintain the status quo" is the correct response, while the latter question suggests that we had better be investing this once-in-a-species bequeathment very judiciously and wisely.

Energy is vital to our economy and our easy, modern lives.  Without energy, there would be no economy.  The more expensive our energy is, the more of our economy is dedicated to getting energy instead of other pursuits and activities.  Among the various forms of energy, petroleum is the king of transportation fuels and is indispensible to our global economy and way of life.

To what do we owe the recent explosion in technology and living standards?  To me the answer is simple: energy. Because a very large proportion of our society was no longer tied up with the time-consuming tasks of growing their own food or building and heating their own shelter, they were free to do other very clever things, like devote their lives to advancing technology. When energy starts to get out of reach either economically or geologically, then people revert to more basic things, like trying to stay warm

Like every other organism bestowed with abundant food – in this case, fossil fuels that we have converted into food, mobility, shelter, warmth, and a vast array of consumer goods – we first embarked on a remarkable path of exponential population growth.  Along with these assorted freedoms from securing the basics of living, we also fashioned monetary and economic systems that are fully dependent on perpetual exponential growth for their vitality and well-being.  These, too, owe their very sustenance to energy.

It bears repeating:  Not just energy is important here, but net energy.  It's the energy left over after we find and produce energy that is available for society to do all of its complicated and clever things.
The really, really big picture: There isn't going to be enough net energy for the economic growth we want (Peak Prosperity)

Such views have also been argued by Richard Heinberg, Jeremy Grantham, John Michael Greer, and others. It's more extreme views are argued by James Howard Kunstler, Michael Ruppert and Guy McPherson (who believes climate change will bring about near-term human extinction). Note that people that do not have access to this abundant source of energy are still living in the Malthusian world. As A Farewell to Alms points out:
English workers of 1800 could purchase much more of most goods than their Malawian counterparts...If a Malawian had tried to purchase the consumption of an English worker in 1800 he would have been able to afford only 40 percent as much. Thus living standards in England were possibly 2.5 times greater than those of current-day Malawi. Yet the meager wage in Malawi is still above the subsistence level for that economy in healthy modern conditions, since the Malawian population continues to grow rapidly...Hundreds of millions of Africans now live on less than 40 percent of the income of preindustrial England. (p. 44)
But need we be limited by fossil fuels? One author doesn't think so. Here's Ramez Naam:
 So we’re at a crucial point in human history –  a race between destruction and creation.  On the one side, we have the pace at which we’re consuming finite resources and warming and polluting the planet – a trend with disastrous consequences should it continue unchecked.  On the other side, we have our vigorous progress in innovating to tap more efficiently and cleanly into a truly enormous supply of fundamental natural resources the planet provides.

Are we on track to win this race?

That’s not at all clear. Consider, for a moment, climate and energy.  Multiple groups have proposed plans by which the world could be powered almost entirely by renewable energy by 2050, or, in the most ambitions plans, by 2030.

Yet even as those plans are articulated, worldwide CO2 emissions are rising, not falling.  In 2012, the planet as a whole emitted a record-breaking 35.6 billion tons of CO2 into the atmosphere.  And the concentration of greenhouse gases in the atmosphere is surging along with our annual emissions. In 2012, atmospheric CO2 concentrations rose by the largest amount in 15 years to a new level of 395 ppm, most of the way to the 450ppm that climate scientists have articulated as the threshold for dangerous warming.

The fundamental driver here is economics.  Consumers, businesses, and industry want energy. They need energy.  That’s true everywhere in the world. And they will buy whatever sort of energy is cheapest. Indeed, if a new source of energy is sufficiently cheaper than the old, consumers will switch their energy consumption from the old to the new.

If we want to win the race against climate change, one thing matters more than all others:  make renewable energy (including storage) cheap.  Dirt cheap.  And do it fast.

How do we do that?  Fundamentally, we need to increase the pace of innovation.  And there are two clear strategies to do so.

The first is to invest more in clean energy R&D.  In 2012, the US suffered $100 billion in damage from the climate-linked disasters of Hurricane Sandy and the still-ongoing drought.  Yet we spent only $5 billion on clean energy R&D, an amount that’s roughly half of what we spent in the 1980s.  It’s also a small fraction of the $30 billion the US spends each year on medical research and the $80 billion the US spends each year on defense R&D.  Yet in a very real sense, clean energy R&D is an investment in both future health and in national security.  Bill Gates proposed last year that this amount should be roughly tripled to $16 billion.  That’s a fine start.

The second is to be more inclusive in our cost accounting.  The market is a brilliant algorithm that does a masterful job of allocating resources and driving incentives – so long as costs are fully transparent to it.  But sometimes, a cost is completely missing from the books – missing in such a way that the market can’t see it.

Fossil fuels have substantial side effects that those who burn them aren’t charged for.  The damage done to the environment – and thus, to others – is a cost that society pays, which isn’t passed on to the polluter.  That cost is high.  Peer-reviewed research suggests that every ton of CO2 emitted inflicts somewhere between $55 and $250 of damage on the environment and others.

Because that cost isn’t passed on as part of the price of fossil fuel use, the market misbehaves.  The overall cost of coal, natural gas, and oil is higher than the price paid at the pump or on the power bill.  But the part that’s missing is being inflicted on others, spread out over billions of people on the planet, and smeared out over years to come.

By driving the cost of renewable energy down, a carbon price has a global effect – those cheaper renewable energy sources become more attractive to consumers around the world, whether their own country has a carbon price or not.

I’ve focused here primarily on climate, because it’s the threat that touches all others.  But similar approaches apply to food, to water, and to fish in the ocean.  In all of those cases, there’s room for substantially higher federal R&D –  to invest in crops that have higher yields, particularly for the developing world; to develop new low-cost ways to cut water usage in farming; and to put more sensible prices and restrictions on the over-fishing of deep ocean fish, and thus accelerate the shift to sustainable fish farming.

Ultimately, there are two paths forward for us, the easy way and the hard way.

In the easy way, we acknowledge the evidence that we are causing real harm to our planet, leaving it worse off for future generations, and flirting with the possibility of sudden and dramatic consequences.   We retain our optimism, that we can both address these problems and be far richer in the future than we are today.  We take our wildly successful economic system and we fix it so that it recognizes the value of our shared resources and encourages their protection, restoration, and careful, efficient, sustainable use.  We invest in action to reduce the risk of even worse future disasters caused by our unwise past.  Nothing is certain in life. But on that path, the most likely outcome is that we’ll solve the problems that plague us and grow progressively richer even as we reduce and eventually reverse our negative impact on the planet.

On this path, there’s no sign that economic growth needs to end.  There’s no sign that we’re anywhere near the wealth limit of this planet.  We have sufficient energy, sufficient water, and the capacity to grow sufficient food to provide 9 or 10 billion people with a level of affluence far beyond what even the richest in the world enjoy today.
The Limits of the Earth, Part 2: Expanding the Limits (Scientific American)

A third view does not look so much at energy, but believes that epoch-changing inventions can only be invented once, and once they are, growth rates will stagnate. They talk about the nineteenth and twentieth centuries, when certain countries escaped the Malthusian trap as a temporary period of extraordinary growth, and that we have now reached a plateau in living standards and innovation. They predict that there will be a "time out" from the manic economic growth we have seen previously, and an economic slowdown that we are ill-prepared to deal with. This has been argued by Robert Gordon, Tyler Cowen and Jan Vijg. As New York Magazine put it in their introduction to the following article, "What if everything we’ve come to think of as American is predicated on a freak coincidence of economic history? And what if that coincidence has run its course?":
Picture this, arranged along a time line.

For all of measurable human history up until the year 1750, nothing happened that mattered. This isn’t to say history was stagnant, or that life was only grim and blank, but the well-being of average people did not perceptibly improve. All of the wars, literature, love affairs, and religious schisms, the schemes for empire-making and ocean-crossing and simple profit and freedom, the entire human theater of ambition and deceit and redemption took place on a scale too small to register, too minor to much improve the lot of ordinary human beings. In England before the middle of the eighteenth century, where industrialization first began, the pace of progress was so slow that it took 350 years for a family to double its standard of living. In Sweden, during a similar 200-year period, there was essentially no improvement at all. By the middle of the eighteenth century, the state of technology and the luxury and quality of life afforded the average individual were little better than they had been two millennia earlier, in ancient Rome.

Then two things happened that did matter, and they were so grand that they dwarfed everything that had come before and encompassed most everything that has come since: the first industrial revolution, beginning in 1750 or so in the north of England, and the second industrial revolution, beginning around 1870 and created mostly in this country. That the second industrial revolution happened just as the first had begun to dissipate was an incredible stroke of good luck. It meant that during the whole modern era from 1750 onward – which contains, not coincidentally, the full life span of the United States – human well-being accelerated at a rate that could barely have been contemplated before. Instead of permanent stagnation, growth became so rapid and so seemingly automatic that by the fifties and sixties the average American would roughly double his or her parents’ standard of living. In the space of a single generation, for most everybody, life was getting twice as good.

At some point in the late sixties or early seventies, this great acceleration began to taper off. The shift was modest at first, and it was concealed in the hectic up-and-down of yearly data. But if you examine the growth data since the early seventies, and if you are mathematically astute enough to fit a curve to it, you can see a clear trend: The rate at which life is improving here, on the frontier of human well-being, has slowed.

If you are like most economists – until a couple of years ago, it was virtually all economists – you are not greatly troubled by this story, which is, with some variation, the consensus long-arc view of economic history. The machinery of innovation, after all, is now more organized and sophisticated than it has ever been, human intelligence is more efficiently marshaled by spreading education and expanding global connectedness, and the examples of the Internet, and perhaps artificial intelligence, suggest that progress continues to be rapid.

But if you are prone to a more radical sense of what is possible, you might begin to follow a different line of thought. If nothing like the first and second industrial revolutions had ever happened before, what is to say that anything similar will happen again? Then, perhaps, the global economic slump that we have endured since 2008 might not merely be the consequence of the burst housing bubble, or financial entanglement and overreach, or the coming generational trauma of the retiring baby boomers, but instead a glimpse at a far broader change, the slow expiration of a historically singular event. Perhaps our fitful post-crisis recovery is no aberration. This line of thinking would make you an acolyte of a 72-year-old economist at Northwestern named Robert Gordon, and you would probably share his view that it would be crazy to expect something on the scale of the second industrial revolution to ever take place again.

“Some things,” Gordon says, and he says it often enough that it has become both a battle cry and a mantra, “can happen only once.”
The Blip (New York Magazine)

Some see this plateau as essentially permanent, others as temporary, with growth heating up again once we have adapted our most recent inventions and integrated them into society. They do not believe that we will collapse back into the Malthusian world of pre-1870, but neither do they see exponential growth continuing forever like the cornucopians. I call these stagnationists. Note that no stagnationist, to my knowledge, has taken dwindling net energy sources into account.

Cornucopians, doomers, stagnationists. Whom to believe? And where does the truth lie? The various camps are talking past each other, but I think that the fundamental difference between the views is, whether the primary driving factor behind change over time is innovation or energy. It's an important question, because whether innovation or energy is the main factor driving growth and progress will largely determine which of these two competing views is a better predictor of humanity’s future trajectory. This fundamental question needs solving if we are ever to resolve this argument.

Well, we’re not going to solve that question here on this blog, obviously, but next time I'll put forward a few concluding thoughts on the subject.