Wednesday, February 17, 2016

Improve technology -- and still use more stuff overall??

A while back I had a brief argument with Paul Krugman and some other economists over economic growth and the future of the planet. It's common knowledge, of course, that human use of materials has grown over time -- globally, we now use more steel, plastic, glass, oil, water, etc. than ever before. We use more energy than ever before, and our agriculture puts more phosphorous and nitrogen into the oceans than ever before, and these trends toward more usage of physical stuff of every kind continue. All of this puts pressure on a variety of planetary processes, which we rely on, and threaten at our own peril.

As economies grow, I argued, they inevitably use more physical stuff, even if advanced economies do shift increasingly to providing services. Hence, economic growth (at least GDP growth as we presently know it) will need to be limited if we're to avoid over-burdening the planet, and to preserve its ability to support us in an acceptable environment.

The economists countered that my argument reflected a physical scientists' typical mis-understanding of economic growth. It needn't involve more "physical stuff," they countered, but could use less physical stuff over time as our technology makes us more efficient, and still generate ever more economic value. This is the idea of "de-coupling" between economic growth and physical materials use. I agreed with that point, in principle, but pointed out that -- for all economists' faith -- this hasn't happened so far, and we have no evidence that it will happen or even can happen. Economic growth is still closely associated with increasing consumption of physical materials and energy. Why should be think it won't be in future?

That was then, and we dropped the argument (although I just noticed that Tim Worstall at Forbes took one more swipe at me, and deeply mis-understood my point). But some new research offers an update on the story. It comes from some engineers who have looked at the best data they could find on technologies  and technological development over the past half century, and asked if these technologies -- which have generally improved at an exponential rate on many measures, including efficiency -- have led to a decreased use of materials and energy. Their paper is here, and the short answer they give is "no." I've written a Bloomberg View piece on the paper, and I'll just quote a short section:

Two engineers, Christopher Magee of the Massachusetts Institute of Technology and Tessaleno Devezas of the University of Beira Interior in Portugal, looked at two sets of data covering 116 different technologies existing between 1940 and 2010, ranging from the chemical industry and electronics to metals, wood and energy. Almost every technology over this period shows exponential improvement (though at different rates) in prices, performance and efficiency of energy and material use. Over 20 years up to 2009, for example, the price of photovoltaics consistently dropped about 10 percent per year.

The improvements weren’t enough, though, to outpace the combination of population growth, economic expansion and the rebound effect. As a result, overall material use tended to increase: Those photovoltaics, for example, consumed about 13 percent more materials each year.

To be sure, the data are far from perfect. Information on many of the 116 technologies exists over intervals of only one or two decades. Still, the fact that none of the data fit the usual story of decoupling suggests that the concept is at the very least highly questionable. The only six exceptions were technologies for producing substances such as asbestos, mercury and thallium -- all toxic materials that were ultimately controlled by policy intervention and legal restriction.

The results don’t imply that humans won’t ever achieve decoupling. They simply suggest that the historical record so far isn’t encouraging, and that there’s no reason to expect it to happen on its own.

I don't think this is the end of any argument; just more information to consider.

One final comment on the Forbes Worstall post, which I've just now seen. He suggests that I was arguing, here, that economic growth will eventually have to end because we will face "hard limits" to available energy. I'm not sure where he got that; it's not anywhere in my article. I don't think we're ever going to run out of energy, at least not for a very long time. I've even gone to some lengths to examine how much energy is available from solar sources (it's immense).

My argument was never that we will run out of energy, but that we will be forced, by deteriorating environmental conditions, to reduce and restrict how much energy we use. The energy we use always ends up in the environment, changing the environment, modifying its chemical makeup, the nature of its flows, and even its temperature. There's no getting around it; this is thermodynamics. And the effects, over time, are not small. Of course, somewhere along the way, even if we do restrict our energy use to some safe level, we might be able to eek out a bit more growth and extra GDP by improving energy efficiency, but that will come to an end too -- there are limits to efficiency. Once we've reached maximum efficiency in our technologies, we'll be limited in how much we can do.

Worstall suggests we might have another "13 millenia of exponential growth" before running into any problems, but this is a vast misunderstanding. See physicist Tom Murphy's famous post in which he estimates how long it will take continued exponential growth in energy usage -- along the trajectory we've seen the past few centuries -- to make the oceans boil due to waste heat. It's not 13 millenia, and not even close. It's 400 years. 

My point in all of this, of course, is not to predict with precision the situation we will face in this future point. I don't know any more about it than the economists do. The point is that, according to the current data, the rosy picture economists often paint about near term de-coupling look mostly like wishful thinking.

Tuesday, February 16, 2016

Economic growth -- vastly slower than we thought (maybe)

You'd think that by now we'd have a pretty good empirical understanding of how economies grow, i.e. what the normal pattern of growth is through time. We've been studying economies for a couple of centuries, and have had reasonably good numbers of the (crude) measure of GDP for half a century. In economics -- and among the financial media generally -- it's almost beyond question that the normal pattern of economic growth is exponential growth. Indeed, almost no one ever supposes it might be different; we only debate how fast or slow recent exponential growth has been.

But we might be wrong, especially for mature economies. That's  the conclusion of some recent research by a team of European economists and statisticians who looked at the data on 18 mature economies from 1960 onwards. They find that the best fit to the data isn't exponential at all, but linear, suggesting that if growth was ever exponential (in young economies), it isn't  like that any more.

I wrote a piece in Bloomberg about this a couple weeks ago. I wasn't aware of this line of work, but apparently a handful of (mostly) German economists have been pointing to this evidence for nearly twenty years.

It would hardly be surprising, of course, if human economies -- like individual people themselves, cells, bacterial colonies, trees and anything else alive -- turn out to have natural stages of growth, with fast growth eventually slowing toward something more gradual and, eventually, stopping altogether (which wouldn't imply the end of change, just some kind of balance). Current ideas in economics might need considerable re-thinking, of course.

But that wouldn't  surprise me either.

Monday, February 1, 2016

Shifting view

Hey, I've changed the title of this blog!

Why? Because I'm going to shift its perspective a little. As all of you will know, I've (mostly) stopped blogging here in the past 4-6 months. Reason? Because much of what interests me now has no immediate link to "finance," and so "physics of finance" doesn't seem quite right. I'd like to eliminate this psychological barrier (for myself). 

So, expect more posts, but maybe on different topics.



Monday, May 18, 2015

Warfare isn't getting less likely -- conclusions from a new analysis

Is warfare getting less likely? Are we entering a new and more peaceful era of history? Quite a few people -- Steven Pinker and Niall Ferguson among them -- have suggested as much. But the mathematics of war statistics over the past 2,000 years doesn't back up the idea. At Bloomberg, I have a short piece describing some excellent new work by Pasquale Cirillo and Nassim Taleb. Also, more detail over at Medium.

Wednesday, May 6, 2015

To save the world -- give up on nature?

Here's a radical idea -- we can best safeguard the future of humanity not by learning to live with nature, but by turning our backs on her and learning to do without her. We should use our technology and science to isolate ourselves from nature, so that we can live without requiring nature. In so doing, we can also eliminate the burden we put on nature, and preserve it as well.

Does that sound crazy? A little, I think, but it is a creative idea and maybe some tempered and humble version of it isn't so crazy. Perhaps with better science and technology we can learn to help humans while also, to some large degree, eliminating our impacts on nature and carving out some safe space for her. That, at least, is the provocative idea suggested in The Ecomodernist Manifesto, a document published recently by folks from The Breakthrough Institute.

Many things in this manifesto seems just a little too optimistic to me -- they seem to suggest that we're already reducing our impact on nature, for example, despite causing the sixth greatest mass extinction in history -- but it is worth reading. We do need more creative thinking. I've written more at Bloomberg.

Monday, March 30, 2015

Common core and common rancor

My most recent thing in Bloomberg touches on the Common Core standards for learning. It's amazing how some things that ought to be pretty good for everyone can be controversial, but...

Learning how to distinguish between fact and opinion would seem to be a pretty fundamental piece of any education. In the bizarre world of U.S. public schools, though, it's proving to be controversial.
For several years, schools across the U.S. -- with significant help from the Bill and Melinda Gates Foundation -- have been putting in place something called the Common Core, a set of standards on what students from kindergarten through 12th grade should learn on topics including English, mathematics, science and history. Along the way, they’ve faced ample criticism, some of it reasonable. Teachers, in particular, think they haven't had adequate preparation.

Common Core

One strain of criticism in particular, though, sounds more like an assault on learning itself. Consider the argument of philosopher Justin McBrayer, of Fort Lewis College in Colorado: ...
Read more here.


One thing that deserves a comment is the criticism, voiced by one philosopher in the comments, that teaching kids to know the difference between fact and opinion is somehow confusing them into thinking that opinions, if they're not the same as facts, must be false:

The reason that someone might criticize the teaching of a fact/opinion distinction is quite obvious: such a distinction is specious.

I am constantly criticizing this distinction when my students try to make it in my philosophy classes.
The main problem with the distinction is that it makes it seem like all opinions are subjective or not well-supported.

But it is my opinion that the earth revolves around the sun. That is my opinion. I really do believe that. It also turns out that such an opinion is true and well-supported. It is a fact that the earth orbits the sun. Thus, the fact/opinion distinction is specious. It doesn't tell us anything important about either the facts or the opinions involved. Some opinions are about factual matters.

Philosophers don't talk about a supposed fact vs. opinion distinction because it is not a valid distinction.

I find this rather strange. The distinction between fact and opinion is specious? As in meaningless? Saying that two words are not identical does not imply that they therefore refer to opposing, disjoint sets. We may talk about some mathematical equations as being beautiful, and others as being true, and agree that truth and beauty are not the same thing, but this wouldn't make anyone think that the beautiful equations must be false, or that the true equations must be not beautiful. We simply have two categories with partial overlap.

Perhaps I am wrong, but I equally do not think that teaching kids to distinguish the notion of "fact" from the notion of "opinion" will make them think that there's no overlap between the categories, with some opinions being facts, and others not. Come on. Kids aren't that silly. 

Monday, February 16, 2015

Macroeconomics: "not remotely scientific"

Excellent post by Noah Smith examining the question of why so many people who aren't trained economists like to weigh in with views on macroeconomics. One reason, he suggests, is that people look at macro and see a modelling approach that doesn't seem terribly plausible, and they also see lots of macroeconomists disagreeing over fundamental points. What they see mostly looks like ideology dressed up to look like something else. As he notes,

There is the perception that macroeconomists don't understand their own subject. The Great Recession convinced a lot of people that macroeconomics hasn't solved any of the problems it was created to solve. Contrast that with physics or bio or chem, which have very obviously given us a lot of the awesome stuff that makes our society rich. In addition, you have very public and acrimonious debates between macroeconomists like Krugman, Cochrane, and Sumner. That convinces a lot of people that there is no consensus within macro, which in turn makes them suspect that macroeconomists haven't gotten any answers out of the Universe. If the experts don't understand anything, why can't the amateurs weigh in?

I am not annoyed by normal people's penchant for butting into macro debates (though the "Austrian" and "heterodox" people do annoy me, since they approach things in a tendentious rather than an inquisitive manner). I think it's natural. Sure, a lot of stupid stuff gets said, but let he who is without sin cast the first stone!

I would agree that this is the main reason. By chance, I came upon this post just as I was reading a speech given two years ago by Manchester economist Diane Coyle. She is by no means a heterodox renegade. In general, she argues that there's lots of value in today's economic theory, though not necessarily in macroeconomics. The problem there, as she see it, is pretty clear:

Macroeconomics – the study of how millions of individual decisions aggregate into economy-wide measures – is essentially ideological. How macroeconomists answer a question like ‘What will be the effect of cutting the budget deficit on growth next year?’ depends on their political views. This is not remotely a scientific area of the discipline.