While they seem to have receded somewhat, a couple of years ago, there were quite a few arguments about the fundamentals of economics (especially macroeconomics) and how to teach them. As an outsider, one thing that struck me as odd was the emphasis on scarcity (e.g., economics is called the science of scarcity). It’s odd because, at least in wealthy societies, there are very few scarce items. We’re definitely not slacking in our ability to produce calories, which arguably for most of human, if not hominin, history was the vital concern.
Today, many things are finite, but they exceed our capacity to desire them. A few things in the U.S. might be scarce: water in the Western U.S. or non-carbon dioxide emitting energy, though one could argue these are limiting largely due to our stupidity, not because they are truly scarce. In other words, most of our economic problems don’t seem to be Malthusian at all (boldface mine):
We have more empty homes than homeless people.
We have more food than necessary to feed everyone in the world.
This is not an era of actual scarcity. It is an era of artificial scarcity.
We either already have excess capacity or we have the ability to create more than people need of all necessities.
This includes housing, food and clothing. We still have enough water, globally, if we are wiling to be smart about how we use it, and in those areas where there are geographical problems they can be solved, in general IF we are willing to be a bit flexible in how we grow our food. We need to stop draining aquifers and move the farmers over-using aquifer water to crops that use less water, or to other lives.
Early results show that intensive urban agriculture creates between 3 to 10 times the food that traditional agriculture does….
Most scarcity is artificial. It is imposed through a money system where a few people have the right to create money and everyone else has to get it from them. That money is nothing more or less, in this context, than permission to use society’s resources, whether people’s labor or the results of that labor.
The only real restrictions on our ability to supply what people need are overuse of sinks (like carbon) and overuse of resources, whether renewable or non-renewable, but we either have the necessary technology to move away from that overuse, or we have scientists and engineers who would love to create it for us, but who can’t get the resources/money they need to do so.
But much of this is low hanging fruit: we already have enough food and housing and far more textile capacity than we need.
I don’t know enough to speak about the global economy, but, certainly, in the U.S. context, it would seem we would be better served by a science of redistribution, not scarcity. It’s worth noting that there are two forms of scarcity. One is the absence of ‘stuff’, which we’ve already shown isn’t much of an issue. The other, touched on in the quote, is inadequate purchasing power–a scarcity of money. This is something we hear all the time in public debates: we don’t have enough money to do something, even though we have the resources to do it including human resources (people willing to work).
This is what makes modern monetary realism/theory so radical: by recognizing that money-based scarcity (the inability to purchase existing goods) is something that can be solved by creating money–that is, more government spending–puts the lie to the Malthusian paradigm.
Maybe we need a science of redistribution, not scarcity.
This is a very strange post for a scientist…
The whole edifice of modern civilization rests on the completely unsustainable extraction of nonrenewable resources (and many renewable resources are being extracted at unsustainable levels too). That there is no scarcity at this very moment means absolutely nothing — if I took a billion dollar loan from the bank, I would not feel any scarcity either for quite a long time and could go on the shopping spree of my dreams, but I would still be completely bankrupt in the end. Unfortunately, the analogy is not really as good as it should be — because bankruptcy does not kill you, but global ecological overshoot does.
Nonrenewable resources begin to run out the moment you start exploiting them. Because economics has decided that such things as conservation of matter and laws of thermodynamics do not exist, this is not reflected in the prices of those resources, but this is an indictment of economics, not of the idea that there are physical limits to growth. So a long-term scarcity problem very much exists, and I am baffled that anyone with a PhD in the natural sciences could be so oblivious to that.
All of this isn’t just a theoretical consideration for the distant future either — conventional oil production peaked in 2005 (hint: a couple years before the economy crashed). Since then there has been a slight increase in total production but this has been entirely from unconventional sources, and the net energy (which is what really matters) has not gone up (the price has fluctuated wildly, but again, this is because the vast majority of market participants are completely ignorant of geology and do not think on a time horizon longer than a few months to a couple years). Surprise, surprise, the economy has not really recovered since then and will almost certainly never recover (it’s cascading crises from now on, with some brief temporary recoveries here and there, until basically the end of civilization as we know it). This is not to discount all the socioeconomic pathologies that have contributed, but the fundamental constraints on the behavior of the system are set by physical factors.
Yes, if there was a like button for replies, GM, I’d be using it. The OP strikes me as bargaining. Scientists are ruled by their emotions and are as vulnerable to denial and projection as anyone else.
Just a sanity check, but are you a scientist? There’s plenty of faith-based reasoning on both sides of this issue; if you had some facts/data/stats to demonstrates OP’s incorrectness, that would add a lot to your criticism.
E.g., there are places to grow cotton (for textiles) that are not deserts like California — for example, the southeastern part of the US, warm, and wet. We can use bamboo for fibers, too. If we (contrary to current practice and planning) went 100% renewable (wind and solar, mostly), liquid fuel for airplanes would still be an issue, but small electric cars and scooters would work just fine, and rail can be electrified. We’d want to cut our meat consumption, too.
Or to put it differently, as an engineering problem, we have no problem, because we’re so outrageously wasteful in our current systems there’s no lack of places to cut consumption. The problem is social — to convince people that they don’t need quite such a ridiculous amount of animal protein in their diet, that they don’t need monster trucks and SUVs for travel, and that maybe their thermostat settings are a tad wasteful. Air travel will get much more expensive.
1) What California can do is irrelevant. The whole-world system is what matters
2) No efficiency gains can cope with exponential growth. A world of 10 billion people all living at western standard of living will requires an order of magnitude more resources to sustain it. Let’s say you can double the efficiency of all technology (extremely unlikely) — how does that compare to the order of magnitude increase in demand?
3) If you think the solution lies in eating less meat, not driving SUVs, and changing the thermostat settings a few degrees in each direction, you have zero understanding of the magnitude of the crisis and what is needed to adequately address it.
At world scale population growth is a problem, but yes getting them to western standards is hard-to-impossible. Main issue for energy is (1) renewable electricity — it’s available at a price and (2) avoiding absurd waste like giant single-occupancy vehicles. Electric motors and LEDs are already very efficient and will not improve much more.
But point of OP is it is more about allocation than anything else. If we cut meat production by 50% (should target a larger reduction), that frees up an extraordinary amount of agricultural capacity.
PS also depends on how you define “western” — EU-western has about half the per-capita energy consumption of US. A factor of two matters for this problem.
Other issue is how fast we get rest of world up to western standards, vs improvements in solar, wind, gmo. They won’t become western overnight.
It’s a factor of ~10 if it’s EU, a factor of ~20 if it’s US. Doesn’t matter basically
Energy’s “easy” — solar and wind, repeat till done. Maybe the thorium guys come through with something that works, maybe they don’t. Worry more about fertilizer, e.g. phosphorus, other vital elements we might run out of.
PPS all of this of course assumes a widespread good-faith effort to (1) make our society more efficient or (2) support the rest of the world in improving their living standards — neither of which I believe is actually the case. I.e., it’s a social problem, therefore we are F’d.
Rather than scarce, what I was taught was that economy dealt with limited resources susceptibles of alternate uses. That the scarcity we have is artificial I learned when seeing Thatcher monetary policy. The crisis in the Eurozone is plainly about that.
Now, of course if mankind consumption does not curbs itself, then we will suffer natural scarcity.
I don’t think money causes a maldistribution of wealth; political power does. Uneven monetary wealth is just a symptom of the underlying uneven distribution of material wealth [land, factories, etc.] In fact, money provides an easy way to correct the uneven distribution of wealth, through taxes, social insurance, etc. It is only the political power of the “one per cent” that prevents that redistribution, just like it is their political power that created the uneven distribution in the first place.
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