Overly Simple Energy-Economy Models Give Misleading Answers


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.

Today, the situation is different

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 The Problem of Debt as We Reach Oil Limits 1

  1. http://ourfiniteworld.com/2015/02/11/the-problem-of-debt-as-we-reach-oil-limits/ 

Oil price slide

… 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 Oil Price Slite: No Good Way Out1

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?

  1. http://ourfiniteworld.com/2014/11/05/oil-price-slide-no-good-way-out/ 

Our oil predicament

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 Eight Pieces of Our Oil Price Predicament1

  1. http://ourfiniteworld.com/2014/10/22/eight-pieces-of-our-oil-price-predicament/ 

Why the austerity fraud matters

Really, you should read this. Foundations have moved:

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 Why the Austerity Fraud Matters

What if secretaries became programmers

VERY interesting gender/salary math:

But why do women make less? Is it for reasons we can all live with, or is the pay gap an injustice that needs fixing? Several reasons are frequently offered, together with explanations why we can live with those reasons. (Never forget that those are two separate conversations. Even if the whole pay gap could be boiled down to something as simple as “Girls don’t like math”, we’d still need to discuss whether that’s a problem we can or should fix.)

~ Doug Muder, from 77 cents, part II: What if secretaries became programmers?

Debt: This time is different

Many seem to believe that if we worked our way out of debt problems in the past, we can do the same thing again. The same assets may have new owners, but everything will work together in the long run. Businesses will continue operating, and people will continue to have jobs. We may have to adjust monetary policy, or perhaps regulation of financial institutions, but that is about all.

I think this is where the story goes wrong. The situation we have now is very different, and far worse, than what happened in the past.

~ Gail Tverberg, from Debt: Eight Reasons This Time is Different

You don’t have a job, you have a hobby

That’s the only test that counts. It’s not how hard you work, it’s what happens if you stop. If quitting means real hardship for you or your family, you have a job. If you keep at it even though you could spend the rest of your life skipping rocks at your house by the lake, you have a hobby.

I’ve got nothing against hobbies. The Weekly Sift is a hobby. One way to describe the Marxist vision of Utopia is that we’d all be hobbyists, and the world’s work would get done by people who just wanted the satisfaction of doing it. (That vision even works sometimes: Wikipedia, open source software, and so on.)

~ Doug Muder, from Rich People Don’t Have Jobs