Living With Scarcity

A friend recently brought up the Club of Rome, and their arguments on the end of growth. While I was dismissive of this organization in the past, I didn't know that they revisited the original model. Recent reviews of their forecasts were essentially right.

Their statements on the coming era of scarcity are visible everywhere. The challenges of technology, debt, demographics, energy and climate are perfectly real and serious. We will have to structure economic policy to address them directly, which would be a huge step forward from the last decade of putting our heads in the sand. The key is probably something you've mentioned, but didn't focus too much on: social change.

The question of ordering a society under conditions of low growth (I won't go so far as to say no growth, since we do have favorable institutions and the possibility for productivity gains) most likely boils down to how dramatic of a change is necessary. The classic American liberal idea of an active government pushing significant investment and leading public-private partnerships is, in itself, a very significant change in social organization from what we have already. It means providing more public goods and broader safety net, while foregoing the extreme rewards of our current meritocracy.

I'm not sure if it's enough, or even politically feasible (yet). But we can avoid those issues for now.

With relatively low population growth combined with greater international movement of labor, I'm not sure if you will need relatively high economic growth in order to provide a generously high standard of well-being in the US. Demographic change will eventually stabilize and people can adjust to life of more intense scarcity. This can be managed with better efficiency: pretty boring things like urbanization, better public transportation, collaborative consumption and broader recycling efforts can stretch the resources we have far past their current "limits." You don't need to look very far to see shocking amounts of waste in America, and I wouldn't be surprised if much of the 21st century is about dealing with it.

You can see the beginning of this age of efficiency already. Solar power production follows moore's law; it won't be too long until it's cheaper than coal. Scientific American says that in 10 years, solar will cost half of what we pay for any current energy source. This is what I mean by growth through efficiency. There's also some crazy ideas about using bacteria to produce tremendous amounts of energy, which was one of the weird projects that got included in the stimulus.

Breakthroughs like this will become more normal in the future, but none of this will be possible without the three basic principals I kept hammering on about in a previous post: experiment, invest in technology and innovate. Not to belabor the obvious, but social reorganization is obviously an innovation too.

Questions like this always remind me of the end of the buggy and the beginning of the car, often generally referred to as the great horse manure crisis of 1894. All transportation at the end of the 19th century was animal powered, which meant that cities were bustling with tens of thousands of horses. This form of transportation produced millions of tons of manure every day, so much that urban life was quickly becoming intolerable. Predictions about the future of London in 1894 imagined a city with feet of horse shit covering every inch of public space.

Of course, we found a solution to this problem, even though extermination by manure seemed like a perfectly reasonable forecast at the time. Businesses have already learned the importance of resource efficiency, it seems likely that we can apply the same ideas to society as well. Despite the fact that our problems become larger and more complex with each passing year, humanity always increases its capacity to solve them. The solutions might be more radical than saying trust the market to solve everything, but they'll be uncovered and put into place, regardless. It's the nature of progress.