Thursday, February 01, 2007

Rich is Better than Poor

Keywords: poverty; economic growth; Peak Oil; Paul Ehrlich, EROEI; oil; Malthus; Rudolf Rechsteiner; carrying capacity; happiness; wealth; innovations; Kenneth Boulding; Johan Galtung.

I never thought I’d have to explain this to anyone, but it’s better to be rich than poor. Accordingly, I hope the population of the earth keeps getting richer.

Why would anyone think otherwise? Those holding the contrary opinion probably never have been poor. I have been poor, and it wasn’t great. It didn’t even make me a better person, but actually worse. Honor and dignity are often so costly that only the affluent can easily afford them.

The leading members of the “poor is good” club nowadays are a small subset of the environmental movement — those who expect the impending shortage of oil to lead to millions, maybe even billions, of human deaths. Convinced that we are rapidly approaching immutable “,” they believe that we must drastically curtail economic expansion and live with the poverty that lack of fuel will bring. Still, they reassure us, this is not entirely bad, for the poor are as happy as the rich.

Oh, yeah?

I’ll call these people “Peak Oil pessimists.” They are not necessarily cruel. Indeed, they favor equitable sharing, while nevertheless forecasting that humankind must retrench to lower standards of living and “steady state” economies. Since the size of our pie won’t expand, their solution is to keep dividing it into smaller pieces. Yet because the population will continue increasing, these portions cannot suffice. Many will die, leaving some survivors subsisting until another epidemic, war, famine, or energy shortage thins out our species again. In the meantime, the Peak Oil pessimists recommend that you move to a farm and grow your own food.

You’ve heard versions of this theory before. Previously, as with Malthus, the predicted scarcity was supposed to involve food, whereas now it is energy. Almost everyone who ever took a social science course now knows how wrong Malthus was. In 1969 it was Paul Ehrlich who predicted looming famine on the basis of malthusian logic; his book, The Population Bomb, argued that we’re outstripping the means of our own subsistence. It was so convincing that in 1970 I sent out about 25 copies as Christmas gifts. (Sorry, friends — what was I thinking?)

As Ehrlich predicted, the world’s population did double between 1960 and 1998, but the world’s food production tripled and its price dropped almost in half. So did the price of several finite mineral commodities that he predicted would be used up within a decade or two. Like Malthus, Ehrlich supposed that human population growth rates would remain at the maximum possible level, whereas in reality global population growth reduced from 2.1 percent to 1.1 today. This decline was not caused by increased deaths but rather by the steep, voluntary reduction of birthrates, even when food was plentiful — a change that malthusians never expect.

Now, to be sure there are compelling reasons to worry about the future of humankind — but mainly because of climate change, not the impending shortage of oil. Fortunately, the solutions to both climate change and looming oil depletion are the same: shift quickly to renewable forms of energy. Yet the Peak Oil doomsayers doubt that alternative forms of energy can be harnessed in time to prevent one or both of these new calamities. Why so?

It’s not because energy is ultimately scarce. (In only 24 hours the solar energy absorbed by the Earth is equal to 9252 times all the fossil fuel, nuclear, and hydro used by people in 24 hours.) The problem, claim the Peak Oil pessimists, is that so much energy is required to obtain renewable energy that we can’t come out ahead. The jargon term for this relationship is EROEI: “energy return on energy.” The EROEI of early oil wells was as high as 100, whereas — according to these pessimists — the renewable sources are vastly lower, if not actually negative.

But they are mistaken. The various sources of energy differ markedly with respect to EROEI, and neither renewables nor fossil fuels are consistently superior to the other. I spent some time this week looking up such estimates. According to Wikipedia, oil has become much harder to produce, so that its EROEI in the United States is now only 3, and in Saudi Arabia about 10. Compare that to electricity produced by wind turbines: 20.

Another estimate from an Australian group is even more favorable to certain renewables. “Both solar parabolic dish and wind turbine returns 30 times more energy than was used to manufacture them — about the same return as the cheapest oil discovered in Saudi Arabia. "Oil on average now, has an EROEI of 8.4. Oil’s chief advantage is its high energy density as a transport fuel. Coal’s EROEI is about 25 now and dropping. Nuclear power plants with an EROEI ranging from 3.84 to 4.5 take about 10 years to build. Photovoltaic panels themselves have an EROEI of 4...”

A Swiss parliamentarian, Rudolf Rechsteiner, is even more enthusiastic about wind’s return, which he claims is in the range of 80 to 100. He writes, “Recently, wind power enjoyed dramatic cost reductions. In many locations the generation cost of electricity from new wind power plants are lower than those of new coal or nuclear-fueled plants of equivalent capacity.”

Compare the EROEI of these fuels. By most estimates, oil from Alaska is 11; Natural gas onshore is 10, and offshore it’s 17. Hydro is 11. Solar photovoltaic ranges from 1.7 to 10. Ethanol from corn is about 1.3 and from sugarcane about between .8 and 1.7. Probably the new cellulosic ethanol, which can be made from waste products, will be considerably higher, but these numbers are not established yet.

In any case, it is clear that some new renewable fuels can easily pay their own way in the world just as well as today’s fossil fuels, allowing us to introduce rapid substitutions and thereby prevent the catastrophic results of either Peak Oil or the genuinely menacing climate change.

Why, then, do the Peak Oil pessimists still insist that economic growth must come to an end? Their reasoning goes like this: there are too many people on earth, and if we all keep producing and consuming, we’ll be putting amounts of natural resources through our industrial system, wrecking forests, fish, minerals, coral reefs — the whole of nature. Even if we stop emitting carbon dioxide from our cars and factories, our processing of other raw materials will destroy our planet. The only solution, they say, is to stop growth.

That’s unacceptable! In 2001 there were still 2.7 billion human beings living on less than $2 a day. In fact, 1.1 billion of them lived on less than a dollar. Their future prospects depend entirely on the continued growth of their economies. Every small decline in growth has measurable effects on rates. As Lant Pritchett and Lawrence H. Summers have written in an article appropriately titled “Wealthier is Healthier,” “...we calculate that over a half a million child deaths in the developing world in 1990 alone can be attributed to the poor economic performance in the 1980s.” Economic growth is essential.

Besides, far from being the problem, economic growth is actually required if we are to manage climate change and other looming disasters. The only real possibilitu for changing over to renewable energy systems is through private investment. fortunately, the new , for example, are exceedingly profitable to manufacture. Where profits can be made, innovations will be forthcoming. We must offer all kinds of positive incentives to encourage human creativity, so as to solve the problems such as pollution that tend to arise within a rapidly growing economy. As the world has become more efficient economically, the “carrying capacity” of the earth has increased enormously and can continue increasing — especially in richer, more developed societies, which are able to address environmental challenges.

And human innovations need not use up the . Economic growth can take place while conserving the environment. This will, of course, require changed attitudes about how to live well and enjoyably, but many affluent people already live rather simply anyhow, Instead of keeping a country house, or traveling for pleasure abroad, there are other sources of pleasure that require few materials. We live in , where instead of producing goods, most jobs involve the exchange of services — especially the “knowledge” industries.

The main feature of the post-industrial economy is and — unlike cars, rocks, clothes, houses, and oil — information is not conserved. It is not scarce. If I give money to you, I have that much left for myself, but if I give information to you, you and I both have it. We can both pass it on to others, endlessly. Information is the opposite of . According to the second law of thermodynamics, the physical world is running down, disintegrating into disorder, chaos (entropy). But there’s an opposing process going on — the creation and dissemination of information, which counteracts entropy by making the world more orderly. Specialists who do knowledge work may rarely handle physical materials. We who make our livings as teachers, writers, therapists, dramatists, or financial counselors, need few tools besides a telephone, computer, and a pencil or two. And we're happy doing it.

What kind of lifestyle makes us happy? Some scholars (notably Richard Easterlin and Richard Layard) claim, with some evidence, that above about $10,000 income per year, additional money does not make people happier. There are several possible explanations for this finding — the most important being an apparently genetic “set-point” for each individual’s happiness level. People tend to hover around a given level of happiness, despite a little fluctuation based on their changing circumstances. Prisoners in jail go back to their typical happiness level after they get used to their new, confined living arrangements. However, there are some psychological circumstances that also affect one’s . Among the chief ones is a sense of control over one’s own life, and the existence of challenges and incentives for taking charge of one’s life in an active way. As Johan Norberg has shown, money does help make us happier – but only money that we have gained by our own efforts. Giving people money does not make them happier if it does not also empower them.

Social justice is often considered a matter of equalizing wealth, but that is generally a false solution. Fair allocation is not the main issue.

Kenneth (see photo) once wrote a paper about his friendly disagreements with Johan Galtung. One of the contrasts had to do with their diverging notions about how to foster equality and well-being. thinks a great deal about how to redistribute the existing wealth of humankind, said Boulding. He imagines a big pie and reflects at length on the optimum way to divide it up. But Boulding himself claimed to think in terms of many small tarts, all representing the national economies of the world. These tarts are growing at different rates. For Boulding, the question was how to encourage the growth of the smallest tarts.

That’s the real challenge – not how to encourage redistribution but how to encourage growth. And by doing that, we can solve the world’s climate and energy problems, even while making unhappy people happier, for growth is the most interesting challenge of all.


Anonymous stepback said...

Dear Metta,

No offense meant, but as a person trained in "Science" (engineering) rather than "Sociology", I find your ideations here re Thermodynamics, EROI, etc., and information/innovation both hysterical and fascinating at the same time.

How did you come to your understanding that "Entropy" means "the physical world is running down, disintegrating into chaos"?

That is hysterically wrong headed.

No. Entropy has to do with the observation that energetic systems (above the atomic scale) tend to move towards the lowest attainable energy state. A rock continues to drop until it encounters the ground, thus minimizing its E=mgh energy state. Heat energy moves from regions of high temperature (high energy density) to those of low temperature to thereby smooth out the distribution of energy to the extent allowed by physical barriers.

Global Warming (which apparently you do "believe" in) is based on the same concept of entropy and physical barriers. InfraRed radiation (IR) tends to radiate away from the warm Earth and towards colder space except for the problem that the increasing CO2 in the toposphere slows down the rate at which IR energy can radiate out, thus causing an increase in average temperature observed in the toposphere and below.

Confession: I am a Peak Oil Freak though not a born-again doomist. The biggest barrier to mankind surviving the transition to Post-Peak, IMHO, is sociological. Can we get the unwashed masses to realize they are part of a mindless lemming herd that is charging head first toward the cliff? Can we shift them away from the "Greed is Good" paradigm and towards a sustainable alternative? "Rich" is not better if it also means you are dead. I'd rather be poor and alive than rich and over the cliff's edge. :-)

5:49 AM  
Blogger Metta Spencer said...

I know what empathy means and I think my readers do as well. (I have even read Jeremy Rifkin, the king of pessimists.) Entropy is usually translated in plain English discourse as "disorder." I think my metaphor of "running down" is a bit more poetic than your statement that "a rock continues to drop until it encounters the ground," and "Heat energy moves from high energy density to those of low temperature." And yes, I even understand that global warming involves entropy.

As to solving our global problem, I don't see others as "unwashed masses" but as people pursuing various goals that I try to respect. When their most pressing physiological requirements are secure, they will be able to think about solving more abstract and interesting problems, such as defining entropy or (better yet) finding forms of economic development that require less and less manipulation of tangible material. That is a more challenging and rewarding way to live, in my opinion. I don't think this delusory notion of survivalism is going to produce any quality of life worth living, and I even doubt that its advocates will live any longer than other urbanized intellectuals. But thank you for your interest.

10:45 AM  
Anonymous step back said...


Well I see that we are mostly talking past each other because we bring different carry-on luggages of knowledge to the discussion table.

I very much AGREE WITH YOU that lone-wolf survivalism is not going to succeed. Throughout history it has been the collectives of people who could focus their various talents towards a common good who came out ahead.

I respectfully disagree with you on the notion that "we" (I guess you mean Americans?) should continue shifting away from an economy that produces tangible things and towards an all infomational (intangible) economy.

At some point you have to step back and figure out that:
1. You can't feed yourself with nothing but "information",
2. You can't clothe yourself with nothing but "information",
3. You can't transport yourself and/or tangible goods with nothing but "information",
4. You can't provide medical treatments for yourself and/or loved ones with nothing but "information" --you need pharamaceuticals, IV bags, hospitals, beds, etc, etc. Also if you are a teacher (as you say you are), you need a physical classroom with lighting, with HVAC, you need a blackboard, you need chairs for the kids to sit in and paper for them to write on.

In short, it's a physical world after all.

It seems to me that your ideations about solving the Peak Oil problem, the Peak Food problem (due to the fact that fertilizers and tractors depend on methane & petro) and the Global warming problem boil down to the usual suspects:

1. The Market will save us;
2. Technologists will save us (and "they" will be spurred by the markets to "innovate" us out of the very corner they painted us into); and
3. Spirituality, good feelings towards all our fellow creatures, will save us.

I wish it could be so.

Unfortunately my own anectodal observations lead me to suspect that most of my fellow humans (I'm no better than any of them) are pre-programmed by their teachers (oops, shouldn't have said that) to view the world from a vantage point of a devout worshipper of the Adam Smith religion (IOW, the Invisible Appandage will guide us and save us). Unless they are re-programmed towards some new paradigm (don't what that is though), they will continue to behave exactly as they have for the last 100 years: running headlong and head-down for the edge of the cliff; never stopping to look around and figure things out for themselves.

P.S. Malthus was right. Only his timing was off. At some point exponential growth always crosses beyond bounded resources.

5:39 PM  

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