Craig Constantine

Cyclical?

October 30, 2022

In some fields our knowledge and discoveries are seamlessly passed down across generations. In others, it’s fleeting. Knowledge in some fields is cumulative. In other fields it’s cyclical (at best).
There are occasional periods when society learns that debt can be dangerous, greed backfires, and more money won’t solve all your problems. But it quickly forgets and moves on. Again and again. Generation after generation.
I think there are a few reasons this happens, and what it means we have to accept.
~ Morgan Housel from, https://collabfund.com/blog/cumulative-vs-cyclical-knowledge/

I spend significant time worrying about how to learn from all the experiences I have. Worrying, of course, is not good. When I stop and honestly assess however, I realize that I do a really good job closing loops and bringing what I’ve learned forward into my ongoing work and life.

And then I read pieces like this. If humanity keeps making these cyclical reset-lurches, forgetting hard-won and important lessons, does that bode well for my ability to keep learning and improving? Or is the problem the inter-personal, or inter-generational learning?

slip:4a123.

Throws down controller

September 7, 2022

That’s the thing about aggregation: one can understand how it works, and yet be powerless to resist its incentives. It seems foolhardy to think that this might be true for economics and not true for ideas, even — especially! — if we are sure they are correct.
~ Ben Thompson from, https://stratechery.com/2022/the-current-thing/

Sometimes I read things on the Internet and I want to throw my keyboard (my title is a reference to 1980s console games where one might get furious, and rage-quit by throwing the game’s controller.) Partly, my urge to rage-quit is from exasperation that Thompson keeps cranking out these great articles (and his podcasts Dithering and Exponent and this other thing he did that is awesome but you wouldn’t understand because I can’t explain it well) while I’m over here plinking away writing snarky blog posts when I should be earning a living.

But also because of the point of the article which is found in my pull-quote of the entire final paragraph.

Dynamic societies

August 6, 2022

What’s often left out of those criticisms of dynamism is what a dynamic society actually means that’s truly positive, and that is when you have a society where people are thinking up new things and starting them, you get the benefits of those ideas all the way downstream: better jobs, more better jobs, jobs that people are happier with, and the like.
~ Ryan Streeter from, https://www.aei.org/economics/embracing-dynamism-my-long-read-qa-with-ryan-streeter/

This long-read goes deep into society, economics, and even politics. It’s a little different than things I generally post. The particular point quoted above feels like a non-zero-sum-game feature of trade among individuals. In a good trade, everyone separately agrees that they are better off after the trade. There’s net increase in “better off”—however we manage to measure that, be it in dollars, or smiles. (Aside: Coercion of any sort disqualifies a trade from being “good” in my estimation.)

Brittle and prone to failure

April 22, 2022

Together, these approaches comprise “complexity.” They tend to make the economic system less resilient. At least temporarily, they pass fewer of the higher costs of energy products through to current citizens. As a result, the economy can temporarily withstand a higher price of energy. But the system tends to become brittle and prone to failure.
~ Gail Tverberg from, https://ourfiniteworld.com/2021/10/18/spike-in-energy-prices-suggests-that-sharp-changes-are-ahead/

I don’t know whether to say you’ll be better, or worse, off—but I absolutely recommend reading everything Tverberg has ever written. I’ve a number, (nowhere near all of her stuff however,) of things quoted here on the blog; All those posts are tagged Gail Tverberg. History shows many examples, over thousands of years of recorded history, where economies, (empires, civilizations, and the people,) grew slowly and ended precipitously. There’s yet to be an example of a gradual decline. The open question is for how much longer—possibly very very much longer—can humanity continue to incline? (And to be clear, I don’t have an educated opinion about that question.)

It’s all about energy

May 17, 2021

The economy runs on energy, far more than it operates on growing debt. Our energy problems don’t appear to be fixable in the near term, such as six months or a year. Instead, the economy seems to be headed for a collapse of its debt bubble. Eventually, we may see a reset of the world financial system leading to fewer interchangeable currencies, far less international trade and falling production of goods and services. Some governments may collapse.
~ Gail Tverberg from, https://ourfiniteworld.com/2021/03/20/headed-for-a-collapsing-debt-bubble/

I’ve been reading, and tagging here on my blog, Tverberg’s commentary for years. I don’t link to these things because I fancy myself Chicken Little. Rather, I link because she has really interesting and insightful things to say about energy.

That escalated quickly

May 8, 2021

At a 2.3% growth rate in energy, within 1000 years, assuming all energy is consumed on Earth, the temperature of Earth’s surface will have to become equal to Sun’s surface temperature.
~ Paras Chopra from, https://invertedpassion.com/can-an-economy-keep-on-growing/

Wait. wat?

It’s often really helpful to look at things from a different perspective. (Granted, “from the surface of the sun,” is not a perspective I would like to see from.) This little article is a fun read. It’s got a bunch of small, clear statements, some vertiginous graphs, a few videos—which, mind you, I didn’t look at all… caveat emptor there. Reading it would be like playing hopscotch where someone hid an alligator in the last square. As the Talking Heads put it, “Well? How did I get here? (chorus) Letting the days go by!”

Epidemiology and economics

November 19, 2020

It is increasingly clear that neither of these assumptions is correct. Despite the claims of epidemiologists, our best efforts have never been able to reduce the number of newly reported COVID-19 cases for the world as a whole for any significant period of time. In fact, the latest week seems to be the highest week so far.
~ Gail Tverberg from, https://ourfiniteworld.com/2020/09/23/reaching-the-end-of-early-stimulus-whats-ahead/

It’s not meant as a doom-and-gloom quote. The article goes on to talk about how our economies really work and what’s really going on.

I’ve a tag for Tverberg for a reason. You should read everything she’s ever written—which would be hard because you’d have to also wade through the amazing, museum-piece that is The Oil Drum. I use that site as a litmus test for anyone who ever mentions “energy”—”Have you heard of The Oil Drum site?” If they have, then I’m really listening.

A global, self-organizing what now?

August 30, 2018

Today’s indications seem to suggest that an even more major recession than the Great Recession may strike in the not too distant future. Why should this be the case? Am I imagining problems where none exist? The next ten sections provide an introduction to how the world’s self-organizing economy seems to operate.
~ Gail Tverberg from, https://ourfiniteworld.com/2018/07/11/the-worlds-weird-self-organizing-economy/

“Ten sections.” “Introduction.” Some thinking and integration of ideas will be required.

Supply-and-demand is a model

May 26, 2018

The reason for the strange behavior of energy prices near limits is because the system is very interconnected. It is a self-organized system that gradually changes over time. New customers are added over time. These customers are often also wage-earners. They decide what to buy based on their own wages, and based on other considerations, such as the prices of competing products and whether inexpensive financing is available.
~ Gail Tverberg from, https://ourfiniteworld.com/2018/05/11/how-the-economy-works-as-it-reaches-energy-limits-an-introduction-for-actuaries-and-others/

Supply-and-demand is a model. There’s nothing wrong with the model. Does the model still fit reality as we approach the limits of how much energy our economy can consume? (tl;dr: it does not.)

Chain reaction

March 15, 2018

The catch is that we are too close to the “edge” to be testing an increase in interest rates. Economies, below a certain “stall speed,” cannot repay debt with interest, and cannot hope to provide entrepreneurs with an adequate return on investment. Our low rate of growth is already close to this stall speed.
~ Gail Tverberg from, https://ourfiniteworld.com/2018/02/21/raising-interest-rates-is-like-starting-a-fission-chain-reaction/

There’s a graph early on in this article that is, frankly, alarming.

The Great Depression was an energy crisis

January 10, 2018

When I put together a chart of per capita energy consumption since 1820 for a post back in 2012, there was a strange “flat spot” in the period between 1920 and 1940. When we look at the underlying data, we see that coal production was starting to decline in some of the major coal producing parts of the world at that time. From the point of view of people living at the time, the situation might have looked very much like peak energy consumption, at least on a per capita basis.
~ Gail Tverberg from, https://ourfiniteworld.com/2017/12/19/the-depression-of-the-1930s-was-an-energy-crisis/

One of my rules-of-thumb is to thoroughly read everything written my Gail Tverberg.

Years ago, I found a web site called The Oil Drum which was a collecton of superlative thinkers all writing about things related to petroleum. Actually, it still IS a superlative collection, because they’ve left it up as-is to be an archive.

The “wind and solar will save us” delusion

May 5, 2017

There has been a misunderstanding regarding the nature of our energy problem. Many people believe that we will “run out” of fossil fuels, or that the price of oil and other fuels will rise very high. In fact, our problem seems to be one of affordability: energy prices don’t rise high enough to cover the rising cost of producing electricity and other energy products. Adding wind and solar tends to make the problem of low commodity prices worse.
~ Gail Tverberg from, https://ourfiniteworld.com/2017/01/30/the-wind-and-solar-will-save-us-delusion/

Presented without comment.

Overly simple energy-economy models give misleading answers

August 22, 2016

It is not intuitive, but complexity-related issues create a situation in which economies need to grow, or they will collapse. See my post, The Physics of Energy and the Economy. The popular idea that we extract 50% of a resource before peak, and 50% after peak will be found not to be true–much of the second 50% will stay in the ground.
~ Gail Tverberg from, https://ourfiniteworld.com/2016/07/25/overly-simple-energy-economy-models-give-misleading-answers/

Today, the situation is different

June 10, 2015

There has been much written about past debt bubbles and collapses. The situation we are facing today is different. In the past, the world economy was growing, even if a particular area was reaching limits, such as too much population relative to agricultural land. Even if a local area collapsed, the rest of the world could go on without them. Now, the world economy is much more networked, so a collapse in one area affects other areas as well. There is much more danger of a widespread collapse.
~ Gail Tverberg from, https://ourfiniteworld.com/2015/02/11/the-problem-of-debt-as-we-reach-oil-limits/

Oil price slide

May 23, 2015

… demand doesn’t pick up quickly as prices drop. We are dealing with a world that has a huge amount of debt. China in particular has been on a debt binge that cannot continue at the same pace. A reduction in China’s debt, or even slower growth in its debt, reduces growth in the demand for oil, and thus its price. The same situation holds for other countries that are now saturated with debt, and trying to come closer to balancing their budgets.
~ Gail Tverberg from, http://ourfiniteworld.com/2014/11/05/oil-price-slide-no-good-way-out/

I have now discussed this a few times, and a common objection raised is that she is over-complicating a simple case of supply-and-demand. To which I say: What part of our enormous, intertwined, legacy, critical to everything from food to medicine to transportation to energy production, global dependency on petroleum is simple?

Our oil predicament

May 11, 2015

A person might think that oil prices would be fairly stable. Prices would set themselves at a level that would be high enough for the majority of producers, so that in total producers would provide enough–but not too much–oil for the world economy. The prices would be fairly affordable for consumers. And economies around the world would grow robustly with these oil supplies, plus other energy supplies. Unfortunately, it doesn’t seem to work that way recently. Let me explain at least a few of the issues involved.
~ Gail Tverberg from, http://ourfiniteworld.com/2014/10/22/eight-pieces-of-our-oil-price-predicament/

Low oil prices

March 21, 2015

I would argue that falling commodity prices are bad news. It likely means that the debt bubble which has been holding up the world economy for a very long time–since World War II, at least–is failing to expand sufficiently. If the debt bubble collapses, we will be in huge difficulty.
~ Gail Tverberg from, http://ourfiniteworld.com/2014/09/21/low-oil-prices-sign-of-a-debt-bubble-collapse-leading-to-the-end-of-oil-supply/

Monopoly’s role in inequality

February 24, 2015

Here’s the point: Maybe you couldn’t watch Jon Stewart for a week, but the problem had nothing to do with either you or Jon Stewart. He wasn’t asking for a raise; you weren’t balking at the price of watching the Daily Show. But both you and Jon were irrelevant when two giant middlemen had a power struggle.
~ Doug Muder from, http://weeklysift.com/2012/07/30/monopolys-role-in-inequality/

Why the austerity fraud matters

February 9, 2015

But this week a controversy broke out in economics, and it actually deserves your attention. A paper that has had a major influence on public policy around the world turns out to be wrong. And not just wrong in a subtle way that only geniuses can see, or even wrong in an everybody’s-human way that you look at and say, “Oh yeah, I’ve done that.” This one was wrong in three different ways that make you (or at least me) say, “That can’t be an accident.”
~ Doug Muder from, http://weeklysift.com/2013/04/22/why-the-austerity-fraud-matters/

Really, you should read this. Foundations have moved.