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?
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.
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.)
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.)
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.
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/
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!”
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.
The authors note that a core resource of the digital economy is the data produced by users of services like Facebook and Google, which can then be used to train machine learning algorithms to do valuable things like precisely targeting advertisements or more accurately processing natural language. The current market treats data as capital: the “natural exhaust from consumption to be collected by firms” for use in training their AI-driven golden gooses. Lanier and company suggest an alternative: data as labor. Put simply, if a major platform monopoly wants your data to help build a multi-billion dollar empire, they must pay you for it. Offering a free service in return is not enough.
~ Cal Newport from, https://www.calnewport.com/blog/2018/01/17/on-seriously-rethinking-the-digital-economy/
Well, that would change everything.
Imagine I changed the sidewalk in front of my house to have plates that moved slightly as one walks across it. I’ve rigged the plates to absorb some of the motion created during walking to generate electricity to offset my electric bill. Let’s assume further that the movement of the plates is barely noticeable. Perhaps something seems a bit “off” when you walk past my house, but nothing bad happens to you; you don’t fall and you don’t get tired, but you do work just a little harder when walking past my house.
What happens when we scale up that “harmless” little modification to include everyone, walking everywhere?
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.
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.)
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.
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.
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.
… 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?
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.