Tuesday, March 1, 2016

Immigration: Can the economy "grow" with a static population?

A simple, graphic model of the discovery-exploitation-depletion-collapse cycle.
Conventional wisdom holds that our economy cannot grow without a growing population (and modest, monetary inflation).

Kunstler, Homer-Dixon and Dimond suggest that the conventional wisdom only tells half the story.  They recast history and re-tell it as cycles of resource discovery, exploitation, depletion and collapse.

The black star represents the body of a new resource.  The colors were chosen to represent a flammable material (black like oil or coal) and red/orange to represent flame-front and fire, respectively.

The length of the flame front grows at a modest pace.  Historians generally speak in terms of frontiers and lands that are subjugated.  It can just as easily describe the development of the technology...how to shore up a mine, better drill heads,  better shipping and refining techniques.

This narrative typically has a "break-out" moment when the growth rate increases at a stunning rate.

Hubbard's peak.  Life is about to change.  This is particularly traumatic if each one of these stages takes several generations.  The only "reality" for people alive today are the last two images...at least when we are discussing fossil fuels.

Adding to the insult of declining production are the logistical fragilities of long supply lines.  Midland, Tx and Tulsa OK are much closer to California and New York than, say, Iraq and Dubai.

Time to invest in stocking caps, quilts and bicycles.
An expanding population is desirable up until Hubbard's peak.  They are needed to cut mine shoring, lay rail, drill wells, weld pipeline and the like.

People are funny.  We are complacent as long as our prospects seem to be expanding.  It is easy to advance in a growing organization.  If it is growing quickly enough, an employee only needs a pulse and to have not embarrassed the organization in order to become a manager.  Peace is easy to maintain when everybody buys into "Tomorrow will always be better.  Don't rock the boat and screw it up!"

That up-draft slams into reverse when organizations start down-sizing.

Kunstler in particular, posits that massive, civil strife is inevitable as population over-shoot collides with the grim mathematics of resource depletion.

Kunstler contends that much of our schizophrenia is due to the piece-meal, gut-level realization of Hubbard's peak and the implication.  The citizens of the Middle-East and Latin America are more attuned to where we are in the exploitation-depletion cycle and they are bailing out.

The conventional wisdom in the west still subscribes to the growth model.  We believe that we are still in the expansion stages.  This is supported by our fantastic material wealth; wealth we accrued not due to our intrinsic abilities or growing resource base but due to our ability to "pull" resources from less robust economies.

We are caught like a small boy astraddle a picket fence.  Half the world is preparing for collapse and Armageddon.  The other half squanders wealth in enormous displays of conspicuous consumption (Example: "Poor people" paying exorbitant prices for branded apparel.)

Perhaps the more germane question is not "Can the economy 'grow' with a static population." but "How can peace be created in an environment of static or diminishing prospects?"


  1. The oilfield today has nothing to do with declining production. Supply has simply outstripped demand and prices are lower. I know three or four companies that have stopped production entirely until price increases.

    Actually, we've got more oil now than we ever had. The supply has increased exponentially over the past decade, in spite of Obama.In your star charts, you'd do well to increase the size of the star by a factor of six. We've got a hell of a lot more oil now than we believed possible 10 years ago.

    1. EROEI - or energy return on energy invested. The total barrels is, indeed going up (or at least barrel equivelent when talking tar sands and nat. gas) BUT the cost - in energy - of getting that product out of the ground is also going up. That's why the producers need more money per barrel. The price per barrel now, vs inflation adjusted price in the 1960s shows a significant increase, just not enough increase for all the fringe players yet.
      I see it as more a large number of those resource 'stars' used to illustrate the essay going on at once, some at slightly different points than others. There is not more sweet light west texas crude than ever before, instead there is texas and north dakota fracked crude just hitting the expansion potential if the price is right and the total amount available in those fields is sufficent, as soon as the price comes up for the crude they will be tapped - and begin to peak.
      We will float in a total energy plateau of MULTIPLE peaks of increasing choppiness until their is too much chop and the industrial economy begins to be swamped or broken - followed by massive unrest and large scale wars.

    2. I had a conversation today with a gentleman who believes that Dakota oil wells have a useful production live between 6 months and 18 months. The wells have such a short life due to the "tight" shale that holds the oil. Even with aggressive fracking, the producers need to drill more wells to tap the field compared to more favorable rock formations.

      Does he know what he is talking about? Maybe.