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The Forum > Article Comments > The biophysical story behind ‘secular stagnation’ > Comments

The biophysical story behind ‘secular stagnation’ : Comments

By Jonathan Rutherford, published 27/2/2017

Most economic analysis blames influences inside the system for decline in growth, but what about influences outside, like the environment?

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I am an ‘accidental biophysical economist’ (being neither a biophysicist nor an economist), having hit upon and written about the connection between GDP and energy consumption over a decade ago. The connection should come as no surprise to people who think like engineers and technologists. The notion that energy, combined with human ingenuity and inventiveness, is a lever for increasing the quantity of goods and services that humans can produce is easy to believe. And the quantitative relationship shown in the various data in this article demonstrate that notion clearly.

Rutherford’s problem is not convincing folk of those truths but in persuading them to live simpler lives. They just don’t want to, or if they claim they do then they have no idea of how to achieve that aim. The data are clear. The only way to use less energy (and this must in principle be true for other earth resources) is to become poorer. Individual consumption choices make no difference. A family earning say $80,000 per annum will account for about the same amount of energy regardless of what they do with their money, unless they actually burn it. Heading for the bush and living in a shack won’t cut the mustard. However one spends the money, energy will be consumed. That’s what the data say.

Promoting poverty is a hard sell. On the bright side (for some, that is) more expensive energy helps reduce living standards. And energy must become more expensive as we move away from fossil fuels towards low-emissions energy. The irony is that environmentalists keep cheering on the claimed ‘plummeting’ costs of renewables and the battery storage they require. They should really be urging for the opposite.
Posted by Tombee, Monday, 27 February 2017 8:20:23 AM
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THE ENVIRONMENT? STAGNATION?

Well talk about confronting issues both blindfolded and with the ears completely plugged!? Just look at the recent fair pay decision that cuts the income of folk already well below the poverty line!

Why? Because diabolically dumb green activists won the day and replaced manufacturing etc, with tourism.

And just as it had to happen and has happened elsewhere, too many people became dependant on the tourist dollar to survive. Thereby allowing too many operators, some none too sharp, to overpopulate the industry!

And as one might imagine, too many operators means they have to get costs down in order to make a quid!

So what's first? Water, energy, transport costs and taxes?

No!

The penalty rates of folk already living well below the poverty line!

Cutting the fat from folk who just don't have any! And that in turn may well result in some of our best and brightest, being deprived of a higher education!

And so the chain of consequences become a never ending circle that makes the environment the very last concern!

Thus ends the biophysical story behind 'secular stagnation'!
Alan B.
Posted by Alan B., Monday, 27 February 2017 8:53:23 AM
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Tombee, we have enough thorium in our dirt to power this planet for a thousand years and thousands more when we mine thorium from igneous rock.

When you are the one expected to hand wash everything for a family of four with water you first have to fetch and carry; then heat with firewood you went far and wide on foot to cut, collect and carry? (up to two thirds of humanity) You might begin to understand two things?

This can never ever be a case for poverty unless and until it is universally applied to all, but particularly those who propose it!
As in do unto others etc/etc!

If I were to step outside my door and gather dirt, enough to fill a one cubic metre box, then using ultra simple gravity separation extract from it the most energy dense material on the planet, thorium and around 8 grams of it, and from almost anywhere and any paddock or backyard!

It'd cost me around $100.00 dollars to dig and process, then and without enrichment or further processing, use that 8 grams of thorium in a walk away safe molten salt reactor, I'd have enough energy to power my house and car; and an abundant lifestyle for around 100 years!

Do the sums, that's just a dollar a year and the principle reason for not having it, as it would decimate the (4 tillion a year plus) fossil fuel/coal fired and current nuclear industry!

And already tried and test and not found wanting fifties (carbon free) technology abandoned in the seventies, because, there was no weapons spin off and no prospects of any ever!

Take a butchers at U tube and google tech talks, to listen to eminent scientists, as Kirk Sorensen and others make an undeniable case for thorium as far forward into our future as is possible to foresee.

Recent advances in very low cost desalination, which if coupled to the cleanest safest lowest costing energy on the planet, simply make a complete and utter nonsense out of socially engineered poverty, just the very opposite!
Alan B.
Posted by Alan B., Monday, 27 February 2017 10:28:43 AM
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While our politicians are simply facilitators of corporate globalism, at the expense of consumers which ultimately drive the growth, nothing changes till the ship hits the rocks!
And how I love the glib example of the Asian economic phenomena and its place in the great money making scheme.

Most parts of Africa are a good example of a deserted global economy. This will be the way of the West.

There is a bottom line and there are plenty of global examples to draw on.
But it defies logic to believe that the way forward is to promote a fire sale mentality, in order to prop it all up!
Posted by diver dan, Monday, 27 February 2017 10:56:41 AM
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The evidence to refute the "biophysical story" is pretty clear.

As acknowledged in the article, oil prices are low. Therefore it can't be credibly argued that they're the current limiting factor for economic growth. So Jonathan Rutherford resorted to arguing that "it was a consequence of fundamentally sick global economy, worn out under the weight of 14 years of almost continuously high oil prices and ever growing debt – the upshot being that investors and consumers simply could no longer afford the higher price". But that too fails to stand up to scrutiny: it was the subprime loans crisis, not an oil shock, that caused the GFC, and the problem since then have been financial not technical.

Jonathan (and indeed Gail Tversberg, whose article he links to) have failed to notice that debt repayments aren't a constant; they're a variable which gets adjusted by central banks as needed.
Posted by Aidan, Monday, 27 February 2017 11:49:29 AM
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While there is much in what you say Adian, and the house price bubble burst being the last straw on the camel's back. Nonetheless every western style economy rests on just two support pillars, energy and capital. And when the combination of over abundant credit created to offset energy prices that have become unaffordable, collapsing economies are the inevitable foreseeable result. And assisted by the sheer madness of concentrating to much of our finite or shrinking wealth in too few hands.

Now you seem to think we can just create debt forever and a day, as a way to prop up the economy? Well that's already been thoroughly debunked by the on the ground results in prewar Germany, Italy and basket case economy Zimbabwe, where you needed a barrow load of cash to pay for a loaf of bread. While keynesian economics works with largely borrowed cash or huge deficits, there's limits beyond where we should not go! And often defined by overvalued over leveraged assets!

Moreover energy is critical given nothing is planted, grown, harvested, processed, manufactured, pumped or transported without an essential energy component!

So the price we pay for it is reflected in everything we buy or grow, with irrigation and the obligatory energy consuming pumps! I mean I've read estimates that calculate, that it takes 55 gals of water to produce an egg?

Water is critical and central to most manufacture. And indeed central to steel production.

That said, there's good debt and that debt is almost as limitless as the income earning projects we can build with it. And it helps if you still own your economic sovereignty or are able to reclaim it without going to war!

You should move to Zimbabwe mate where you'll find plenty to agree with your limitless debt economic theory, just don't expect any more success with hoodoo economics mark two than mark one. Did you say or infer you were a CPA?
Alan B.
Posted by Alan B., Monday, 27 February 2017 3:36:41 PM
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