Growth & Energy
What if we should use more energy, not less?
Recently I’ve been reading the book “Where Is My Flying Car?: A Memoir of Future Past” by J Storrs Hall. Ostensibly a book about a promised future that never arrived, it’s a broader commentary on a technologically stagnating culture and society.
Although Hall goes into a great deal of depth on technologies like flying cars and nanotech — and why we don’t have them — a key takeaway for me has been the counter-intuitive realization that we’re living in an era of flatlining energy usage (per capita) in the developed world. And that this is perhaps one of the main reasons for the so-called “Great Stagnation” we’ve been experiencing during the past half-decade.
Given the overall increase in energy consumption (mostly due to the growth of the developing world), one can be forgiven for having missed this. Especially as we’re trying to deal with a warming climate by using less energy. But this drive towards efficiency and the resultant decline in energy usage among developed nations, at least according to Hall, maybe one of our biggest mistakes of the past half-century.
Stagnating energy usage, stagnating growth
The Great Stagnation is a term coined by economist Tyler Cowen used to describe the current period since the ~70s of declining economic and technological growth experienced by most developed nations. This is perfectly exemplified by the fact that almost every important piece of technology we use in our day-to-day lives and in industries where invented before the 60s. This includes things like refrigerators, freezers, vacuum cleaners, gas and electric stoves, and washing machines; indoor plumbing, detergent, and deodorants; electric lights; cars, trucks, and buses; tractors and combines; fertilizer; air travel, containerized freight, the vacuum tube, and the transistor; the telegraph, telephone, phonograph, movies, radio, and television.
Although this stagnation is surely a result of a wide range of social, economic, and technological factors; like the fact that we’ve already picked a lot of the “low-hanging fruit” of technological innovation since the start of the industrial revolution, or that most women have moved into the workforce since the second world war. According to (my interpretation of) Hall, the underlying cause of this stagnation is our stagnating energy usage. Or put differently, the decline in the growth rate of energy usage in advanced economies. Which is a result of a shift from a focus on progress in tech to a focus on the efficiency of tech.
In other words, we have had a very long-term trend in history going back at least to the Newcomen and Savery engines of 300 years ago, a steady trend of about 7% per year growth in usable energy available to our civilization. Let us call it the “Henry Adams Curve.” The optimism and constant improvement of life in the 19th and first half of the 20th centuries can quite readily be seen as predicated on it. To a first approximation, it can be factored into a 3% population growth rate, a 2% energy efficiency growth rate, and a 2% growth in actual energy consumed per capita. Here is the Henry Adams Curve, the centuries-long historical trend, as the smooth red line. Since the scale is power per capita, this is only the 2% component. The blue curve is actual energy use in the US, which up to the 70s matched the trend quite well. But then energy consumption flatlined.
Energy and Growth
The story of human progress is largely a story of how much energy we have been able to harness and put to productive use. Starting with our early ancestor’s ability to harness fire to the discovery that we could split the atom, and beyond.
Declining energy usage is therefore a problem because technological innovation and growth are tightly correlated with increased energy consumption, and technological innovation is one of the main drivers of progress. Or perhaps it would be more accurate to say that in order to drive innovation broadly, we have to use more energy because advanced technologies are generally more energy-intensive. All things equal, increased energy efficiency is great, but all things aren’t equal and we’ve traded growth for efficiency.
The extent to which a technology didn’t live up to its Jetson’s-era expectations is strongly correlated with its energy intensity. The one area where progress continued most robustly — Moore’s Law in computing and communications — was the one where energy was not a major concern.
The one notable exception to this is the computing revolution which birthed the Information Technology industry — arguably the only technological revolution we’ve had since the ~60s. Computing, driven by steady improvements in semi-conductor performance according to Moore’s Law, is perhaps the only area where increased energy consumption beyond what was available in the 70s hasn’t been needed to keep up with that growth trend. As such, it has been able to grow despite the flatlining energy usage in society at large. Not surprisingly, nearly all of today’s most valuable companies by market cap are tech/IT companies.
The Internet marks a grand paradigm shift, perhaps even bigger than the information revolution that followed the invention of the printing press, and we’re still in the early days of what the Internet has to offer humanity — which is largely something positive. Yet if we want to see continued improvements to our quality of life like previous generations have and continue to progress as a civilization, we need new technological revolutions in the world of atoms and not just in the world of bits.
No one captured this as eloquently as Peter Thiel when he said:
“We wanted flying cars, instead we got 140 characters.”
Nanotech, advanced construction, flying cars, electric cars, space travel, and probably a lot of stuff we have barely thought of yet; all those things are possible but they will demand a lot more energy in addition to less regulation, better academic institutions, and a culture that wants growth, according to Hall.
The future is getting farther away
What is then the cause of this decline in the growth of energy usage? Probably the drive for efficiency over effectiveness, a culture that’s often opposed to technological progress (like the green movement and the counter-cultures of the 60s), and stricter regulation of science and technology starting from the middle of the 20th century, especially of many energy-producing industries like nuclear.
Of course, not all regulations are bad or unnecessary, but it’s not very clear that strict regulation actually makes us much safer and healthier overall, and in fact, the opposite may be true:
“Economists John Dawson and John Seater recently published a study in the Journal of Economic Growth, “Federal Regulation and Aggregate Economic Growth”, [82] that put some hard numbers to these observations. The result is startling: America’s median household income is now $53,000. If we had simply maintained the amount of regulation we had in 1949 since then, our income would now be $185,000 per household.”
In turn, these phenomena also coincided with or were preceded by another important shift: that oil and coal became prohibitively expensive starting in the 60s and 70s, in particular after the 1973 oil crisis. The declining growth rates of the past 50 years are then a manifestation of a society at the tail-end of an S-shaped growth curve that was initially enabled by the exploitation of the fossil fuel energy paradigm (that sparked the industrial revolution). This whole paradigm is now nearing the end of its shelf-life and we haven’t yet been able to innovate ourselves out of it.
Where are our flying cars?
In retrospect, the utopian science fiction from the first half of the 20th century looks ridiculous. Flying cars and robot maids perhaps best illustrated by the Jetson’s cartoon is something we laugh at today. But when you plot the growth trends from that era it was perfectly reasonable to predict its continuation for many more decades or centuries. In fact, the economist Alex Tabarrok (a colleague with Tyler Cowen) made just this point in a recent blog post on Marginal Revolution, The Future is Getting Farther Away:
“If total factor productivity had continued to grow at its 1957 to 1973 rate then we today would be living in the world of 2076 rather than in the world of 2014.”
While we probably can’t expect growth to continue forever, it’s not at all a given that it must decline now. And the better tech we have, the more smart people (and machines) there are, and the better our political systems, the better our chances of dealing with that eventuality.
It’s quite clear to me that the current myopic and dystopian narrative that’s captured a large part of the western zeitgeist is largely explained by our declining growth, just like the perhaps overoptimistic extrapolations of the early 20th century are explained by that era’s ever-increasing growth trends.
Nevertheless, if we look at our (economic) growth trajectory on the time frame of many thousands of years, we’re still in the early stages of hypergrowth, and judging by the trend, we can expect it to continue for some time — which is a cause for optimism.
Endless growth in a finite world?
As growth has continued to stagnate, it seems like the flatlining of energy usage is having a profound effect on our current predicament. Given how our modern society and political systems work, steady economic growth is likely crucial for the continued existence of peaceful and prosperous civilizations because stagnation or “degrowth” leads to zero-sum competition for resources. The effects of stagnating growth may even be more detrimental than the effects of climate change in the short to medium term. And faster technological progress may be just what we need in order to deal with climate change, rather than less progress and less growth.
A popular critique of modern economies and the way they measure progress is that many quality-of-life and product quality improvements aren’t captured well by growth metrics like GDP. Moreover, economic phenomena like Baumol’s cost disease mask a lot of quality improvements in services we consume more of today (like health care and education) and aren’t reflected well by productivity metrics like GDP. Are we naïve to measure growth in that way? While there’s more to the story of improvements in human wellbeing and growth than what is reflected by GDP, in the grand scheme of things, it correlates quite well with quality-of-life improvements and it’s not as bad a metric as many people make it out to be.
The need for growth in a finite world is often criticized as a greedy and selfish impulse, but I believe we need continued growth exactly to solve some of our most pressing problems, including climate change, poverty, and a stagnating quality of life. And to do that, we must dare to use more energy, not less.
Obviously, we don’t want to burn more fossil fuels than we are doing yet we shouldn’t minimize the importance that fossil fuels have played and still play in our society. Luckily, we already have a viable technology that provides clean and reliable energy with zero emissions: it’s called nuclear energy.
Although we should and have to continue improving other alternative energy sources (including solar, wind, and even nuclear fusion!), and stop using fossil fuels asap, we can only do that if create the right incentives and provide the right mechanisms for technological innovation. The conclusion to me, then, is that our drive towards efficiency before we’ve reached some sort of technological maturity may be undermining the long-term potential of our civilization and the near-term viability of our modern societies.
P.S. Tyler Cowen has recently said that he now thinks we might be coming out of the great stagnation in the near future, something mainly driven by innovations across various fields of technology and science like computing, AI, Space tech, biotech, etc; that all may converge into general-purpose innovations within the not-to-distant future.
Originally published in Sképsis.
