Roger,
I am sorry, I seemed to have lost a previously sent reply to your reply.
Disregard the previous email. I am not sure what happened. Perhaps it
will show up later down the line. Here is my response to your email in
its entirety. I did not mean to be confusing.
You ask many questions and bring up many points. It will be difficult to
address them all in one reply, but I will try. I will begin with this,
ROG:
"You also pointed out at least two statements that I agree I should not
have written this month. Thanks! I will highlight both. ...The first
was: 'The problem with free enterprise isn't with free enterprise, it is
that markets aren't actually free enough.' ...The 2nd dumb statement I
made was the '5000 year shale oil' comment.'
Then you say,
"I still suspect that what makes them MOST objectionable is that they
run counter to your views. You seem much more tolerant of arrogance and
obnoxiousness when used by those that agree with you. That's not
important though..."
Andy:
I am not beyond labeling views counter to my views as arrogant if
presented in an arrogant manner. And I might be more forgiving of an
arrogant presentation if those views happen to agree with my own. I am
only human after all. The most objectionable statement I gave of yours
that you did not address was:
ROG:
"I get a lot of satisfaction at the US's reticence to enter a misguided
international court and a wasteful Kyoto agreement."
Andy:
I am curious why you did not choose this as one of your dumbest
statements? How could one receive satisfaction from this? There are many
other global issues that the US also chooses to buck the rest of the
world and continue to function as if the rest of the world's opinion of
our lifestyle is motivated strictly by envy. This is an arrogant view
that is counter to my views - true enough. But it is the source of much
hatred towards Americans and American politics that sooner or later we
will have to address. It would be a pleasant surprise if we looked at
ourselves to see what we might change about our lifestyles and values,
instead of building smarter and more effective bombs to reign down on
"terrorist elements" around the world in order to preserve our way of life.
ROG:
"can I assume you agree that there isn't a better option out there yet
(to modified, modern versions of free enterprise as practiced in most
nations with a high standard of living...Canada, GB, US, S Korea,
Australia etc)"
Andy:
If we look at other nations, we may not be able to find a better option.
There are definitely some nations that our more successful at some
things than Americans. Those socialists off the Florida coast have
higher literacy rates than Americans, lower infant mortality, lower
crime rates, and higher average life expectancies. Surprised? The
statistics are readily available. Try the World Bank site. Their economy
is in sorry shape, but functioning well considering the embargo. Would I
trade their system for ours? Hmmm... Probably, not. But we can improve
our system. And we can learn from the successes of such countries as
Cuba, Canada, Sweden, etc. The main takeaway is that even if we believe
that our system is the best there is, this does not exclude the
possibility of improvement or adaptations that draw on examples from
other countries around the world.
ROG:
"Why would endorsing free trade be exploitation? What makes you believe
that military might is responsible for the dynamic quality of American
culture?
Do you believe exploitation leads to quality? I would argue the opposite
-- that exploitation is self defeating over time and that the extent of
America's specific use of inappropriate force has led the nation
backward, not forward."
Andy:
I agree that overall, the exploitive powers of "American style"
capitalism have led the nation backward. But, there is always a reaction
to exploitation. This is dynamic quality at work. The exploitation of
individuals and communities has long been the source of great works of
art. Many great artists refuse to separate their art from politics.
These works of arts are then preserved as testaments to the 'will' of
the individual and communities. As much as the exploitive powers attempt
to break this 'will,' it refuses to die and learns and adapts to these
exploitive conditions until it breaks free in a work of art (the
intellect, dynamic quality, whatever you wish to call it) that can not
be ignored and is eventually absorbed into the culture. America would
definitely do better without any exploitive institutions, but
exploitation will never kill the intellect. Blues, Folk music, and Jazz
are the testaments to this.
ROG:
"Where we disagree is probably rooted in the area of economics."
Andy:
To be sure! But, don't worry, you are not alone in this regard. Orthodox
economics has a vice-like grip on the minds of Americans.
ROG:
"I accept your numbers on coal and petroleum, and will even consede
[sic]that as a worst case scenario, it is possible that the trend of
finding reserves at a faster rate than we use it could suddenly reverse
itself on all three resources at the same time. Doubtful, but not
impossible."
Andy:
When I first read this I was confused. I thought you were referring to
well known facts and interpreting them the same as I. But a closer
reading reveals our differences. The trend for discovering reserves is
at a very constant historical rate. For coal and petroleum, the
discoveries are increasing at a decreasing rate. It has been estimated
that we are approximately 5 - 10 years away from the peak of this curve
for oil. What this means is that every year beyond this point less
reserves will be discovered. This is such an established trend that I
thought this was what you were referring to. A new trajectory away from
this historical trend is "doubtful, but not impossible." This was what
I thought you were referring to. You have a completely different view
that is not based on any historical trend. It is highly unlikely that
we will deviate from this trend since it has we have not deviated from
it since World war II, and new technologies are assumed into the
preservation of this trend.
Another relevant statistic is that 50 years ago, for every 1 barrel used
in the investment of oil recovery and processing 50 barrels were made
available for use in the economy. Over time as oil is recovered from
more difficult terrain and under the oceans, this ratio has decreased
significantly. Today for every 1 barrel used in the investment of oil
recovery less than two barrels are made available for the economy. This
statistic is not reflected in prices. (Do you know why?) Prices may
continue to fall as this ratio continues to shrink. WHen the ratio
becomes one to one, petroleum is no longer a viable input into our economy.
ROG:
"However, when we add in the energy potential of uranium, geothermal,
solar, wind, hydroelectric, shale and tar sands we find that there is no
shortage of energy sources. The issue isn't that the energy is
unavailable or that it will run out for future generations, it is that
the specific forms of cheap, nonrenewable sources currently in use will
someday run out. As long as gas, oil and coal are widely available and
cheap, the economics are such that these are the sources that people
will use."
Andy:
I agree with your last sentence here. We need to add some qualifiers to
the rest of the paragraph. See below.
ROG:
"However, as current supplies eventually dwindle and future discoveries
become fewer and farther between, the result will eventually be lower
supplies of these energy sources, and a corresponding increase in their
costs."
Andy:
Agreed
ROG:
"This makes alternative sources relatively cheaper, and it incents [sic]
the investments into energy efficiency and R&D into new technologies
(either of finding or extracting more of the non-renewables, or of
designing more efficient alternatives.)"
Andy:
This is true.
ROG:
"Unless my knowledge of economics is way off, I can safely predict that
if you are correct and the supply of these non-renewables becomes
inadequate some day in the future (a reasonable assumption), then the
response will be a steady increase in the price of oil, gas and coal
along with:
1) Conversion to any alternative sources that become more economical in
light of the higher costs
2) A stronger incentive to find new supplies of energy
3) Better economics to find various sources of energy that were once
unaffordable
4) Better economics to research into extraction, processing or
conversion of the various types of energy
5) and/or a reduction in demand for energy"
Andy:
Your knowledge of economics is right on. And that is the source of your
misconceptions. I don't have time to go into all the reasons that the
field of economics has stagnated into a very narrow spectrum that relies
on an abstract model (which was a "wholesale appropriation of the
mid-nineteenth-century physics of energy" by the Marginal revolutionists
- Mirowski, 1989) which, at best is irrelevant when analyzing complex
economies. At worst, it leads to attitudes and arguments such as the one
you make above. The mistake that you make is in the assumption of
"perfect substitution" at the core of the orthodox economic model. You
are correct that higher prices will lead to incentives to search for
alternatives. However, this is where economics becomes irrelevant. It
takes knowledge of the natural sciences to understand how truly unique
oil is as a product. There is no perfect substitute for oil. Once it is
gone, there is no way of replacing it. Compared with coal, natural gas,
methane, ethanol, etc. it has the highest btu/kg. If I remember
correctly, it is almost twice the next highest competitor. The use of
petroleum products in fertilizers and pesticide products is also
noteworthy. I have heard industrial agriculture described as the process
of creating food from petroleum. There is no known substitute for
petroleum in agriculture either. The problem with sources such as shale
(I would be very surprised if your example of Estonia is true - i.e. 75%
or more of its energy from shale) is the amount of energy input that is
required to make it a viable source of energy for our economy. In order
to make a product from shale that we can put in our gas tanks, it
requires a greater input of energy (oil) than we can get out. The same
is true for solar. Solar panels cannot be created without the input of
fossil fuels.
ROG:
"So, will energy run out? Of course not. Not as long as the sun keeps
shining."
Andy:
Irrelevant
ROG:
"'the solution isn't less growth, it is to invest into different, more
environmentally-sustainable types of energy.' (which I will add can
include investments in conservation) Do you disagree? If so, please be
specific and provide your recommendations."
Andy:
Yes, The only solution is less growth. Is that specific enough for you.
ROG:
Are you suggesting that we suppress growth in other nations? What
exactly are you suggesting?
Andy:
I am suggesting we start first with our nation.
ROG:
"I am advocating (pro-growth) investments into, and conversion to, clean
and renewable (virtually unlimited) energy sources. I also gave evidence
that wealthy nations are more environmentally friendly than poor
nations, and that free enterprise has a better record of environmental
sustainability than socialism or totalitarianism (with the caveat that
we still must address greenhouse effects, though this again goes back to
my first point) What exactly are YOU advocating?"
Andy:
I am not really advocating anything. I am a bit of a fatalist on this
topic. Nature will ultimately correct our mistakes. However, if I am
wrong and we are able to make any progress, we first need to change
values and belief systems in America. (western countries, the northern
countries, developed, whichever you prefer). I think investments into
clean and renewable energy sources are a step in the right direction.
The only sustainable economy is one that lives off the flows of energy
(solar, geothermal) and not the nonrenewable stocks (Fossil fuels). The
only examples of renewable economies in the annals of human history are
hunter and gatherer and very primitive slash and burn agricultural
societies. I wouldn't advocate a return to these kinds of economies, but
we should understand that these economies that lived off of flows
supported only a very small fraction of our current population. We
cannot support the current size of our economy, much less a growing
economy, much further into the future.
We can either prepare for this by limiting our growth now or we can wait
for oil to run out and/or be overcome by "negative externalities"
associated with a growing economy (global warming, pollution,
biodiversity loss, etc.). Tough choice. Perhaps dynamic quality and
intellect will come to the rescue. But, Paul Samuelson once said, that
science progresses from funeral to funeral. Paul Samuelson is still
hanging on, but perhaps a new economics will emerge shortly after his
departure. It is my opinion that the hope is truly in the hands of
individuals who did not live through the cold war years. We have been
marred by this experience in America as can be seen by the lack of
contribution to the intellectual level during this time. It has only
been since the end of the cold war that there has been a revival of
interest in American Philosophers such as James, C. S. Peirce, and O.W.
Holmes. Only individuals who have not been tainted by the "cold war
mentality" will make the necessary adaptations towards a sustainable
economy. This might not happen until the last individuals who lived
through this era have passed on. This is where my hope lies anyway.
So, there you have it.
Andy
------- End of forwarded message -------
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