What Is Real? And What Is Not?

In a post called Slow Steaming and the Supposed Limits to Growth, Paul Krugman doubled down on the delusional optimism he recently expressed in Could Fighting Climate Change be Cheap and Free? The Conscience of a Liberal was responding to a Bloomberg View piece by Mark Buchanan, who is an actual physicist. Buchanan's editorial was called Economists Are Blind to the Limits To Growth.

Allow me to explain why I am one of those scientists who are preoccupied with the physical. Economists are correct in saying that growth doesn't necessarily require more pollution, more carbon pumped into the atmosphere or more deforestation, even though we're getting all of the above today. Humans can learn, and we might figure out how to grow differently in the future, separating the benefits from the environmental costs.

There's just one crucial exception: energy.

Growth inevitably entails doing more stuff of one kind or another, whether it's manufacturing things or transporting people or feeding electricity to Facebook server farms or providing legal services. All this activity requires energy. We are getting more efficient in using it: The available data suggest that the U.S. uses about half as much per dollar of economic output as it did 30 years ago. Still, the total amount of energy we consume increases every year.

Data from more than 200 nations from 1980 to 2003 fit a consistent pattern: On average, energy use increases about 70 percent every time economic output doubles. This is consistent with other things we know from biology. Bigger organisms as a rule use energy more efficiently than small ones do, yet they use more energy overall. The same goes for cities. Efficiencies of scale are never powerful enough to make bigger things use less energy.

I have yet to see an economist present a coherent argument as to how humans will somehow break free from such physical constraints. Standard economics doesn't even discuss how energy is tied into growth, which it sees as the outcome of interactions between capital and labor.

The second link in the text above goes to a paper called Energetic Limits To Economic Growth. (Bioscience, January, 2011). That paper is an empirical study which captures the observation Buchanan uses—across 200 nations in the period 1980-2000, on average, energy use increases about 70 percent every time economic output doubles. That paper suggests that the Laws of Thermodynamics apply to global civilization and its energy consumption.

Another question is, what are the independent and dependent variables? Does energy use support economic development or does economic development drive energy consumption? Financial and energy economists have used econometric techniques to analyze time series of energy consumption and economic growth within countries in an effort to assess causal relationships, but they have reached no clear consensus about whether energy use causes economic growth, or vice versa (see Mahadevan and Asafu-Adjaye 2007, Payne 2010). By analogy to biological allometry, we plotted per capita energy use as the dependent variable and per capita GDP as the independent variable; this is analogous to plotting the rate of energy use of an animal as a function of its body size. The exponent for the scaling of energy use as a function of GDP, 0.76, is reminiscent of the three-quarter-power scaling of metabolic rate with body mass in animals (Kleiber 1961, McMahon and Bonner 1983).

This may not be coincidental. In a very real sense both animals and economies have “metabolisms.” Both consume, transform, and allocate energy to maintain complex adaptive systems far from thermodynamic equilibrium. The energy and other resources that sustain these systems are supplied by hierarchically branching networks, such as the blood vessels and lungs of mammals and the oil pipelines, power grids, and transportation networks of nations. Models of these networks suggest that three-quarter-power scaling optimizes distribution of resources (West et al. 1997, Banavar et al. 2010).

I can only praise these efforts to find the true physical basis of the highly-ordered (low-entropy) system we call global civilization. However, I want to point out two things.

First, to my knowledge, only one person on Earth has actually modeled global civilization as a thermodynamic system. That person is Tim Garrett.

Second, to my knowledge, only one person on Earth has actually taken pains to explain to people in some detail the importance of that model. That person is me.

Quoting the paper above, human civilization exists "far from thermodynamic equilibrium." In Garrett's model, this highly-ordered physical state is captured by a single variable—the cumulative "wealth" of humankind since some appropriately early historical beginning. Think about a house. That house does not exist naturally.

Work (in the physical sense) was done to create the highly-ordered physical state represented by that house. It took energy to do that work. We humans then assign an economic value to the end result. Thus that house forms a very small part of humankind's accumulated wealth. This incomplete analogy could be extended to every other activity which adds to humankind's accumulated wealth (expressed as incremental world GDP, and review the Buchanan quote above).

Garrett found that there is a constant relationship between additions to our cumulative wealth and energy consumption. Garrett calls this constant "lambda" and the discovery of such a constant puts global civilization on a thermodynamic footing. λ = 9.7 ± 0.3 milliwatts per 1990 US dollar.

Everything else humans say about economic growth, energy consumption, mitigating climate change, etc. is, to some extent or another, bullshit unless it takes Garrett's model into account. That's where any real discussion must begin. See Adventures In Flatland — Part II, and follow the links therein.

I'm sorry, but that's just the way it is.

As for Paul Krugman, I will quote from an e-mail I received recently.

Like civilization, Krugman is trapped by his past. Treating Krugman as a physical system, there is inertia to his way of viewing the world that would be nearly impossible to change based on any input of new information. Still, it's consistently alarming just how disconnected economists can be from reality and still continue to treat themselves seriously.

That's all there is to say about Krugman, although it did occur to me that, in my Flatland model, I am indeed modeling Krugman as a physical system in so far as Krugman's brain tells him that growth's inherent goodness can never be questioned, fixing anthropogenic climate change is cheap and free, technology and markets can solve any problem, etc.

So, this is an existential moment for Homo sapiens. This might be a good time for humankind to ask itself a few pertinent questions:

What is real? And what is not?

Comments

[Nate Hagens]

Hi dave. Great little essay. Krugman still doesn't get energy. And he likely won't as evidenced by your last paragraph.

Re Garrett - a quibble.
Garrett locked on to the *old* biophysical research in the 1970s when there was such a constant of 9.7 milliwats - but since then it has moved around alot and is now 30% lower - that there is a relationship is not in question - the fact that it is a constant is false, and one reason why biophysical economics still gets a bad name with economists. In summary, a) in the long run until the 70s, energy and GDP were extremely highly correlated. b)From 1970-2000, we managed to partly escape that, mostly by increased primary conversion improvements and some efficiency gains. c) After 2000, that has stopped again, because most of those gains were exhausted.

The reasons are complex but related to:
~Higher primary conversion efficiency after the energy crisis in the 70s

~Substitution of energy sources (for example, the introduction of natural gas has improved average electricity production efficiency by about 10 percentage points from coil/oil

~Changed accounting methods, i.e. understated inflation rates, overstated growth rates, leading to higher GDP measures

~Fake GDP, only creating “paper” wealth which never gets converted into real stuff and thus doesn’t need underlying energy production

~True efficiency gains, mostly driven by changed legislation and imposed taxation, which avoided the substitution effects otherwise available (aka Jevon’s paradox)

But at end of day these are quibbles/asterisks. Humans have built and continue to grow, our heat engine. hope you're doing well old friend