Hey, The Goldilocks Economy Can Handle $500 Oil And We'd Still Be Richer Than UK, Canada, Sweden
Study of the long economic history of the world suggests two things. Cheap fossil fuels actually explain little of how we got rich since the Industrial Revolution. And after an initial period of painful adaptation, we can live happily, opulently and indeed more healthily, in a world of permanent $100-a-barrel oil or even $500-a-barrel oil.
UC-Davis economist Gregory Clark explains in today's Sacramento Bee.
(HT: Marginal Revolution)
7 Comments:
...Our income would still be above the current living standards in Canada, Sweden or England...
is what the author of the subject article actually wrote.
Having an income above what is required to maintain someone else's living standards does not mean that one's own living standards are better.
The author goes on to talk about how our homes would get smaller, our neighborhoods darker and so on. An outcome that even Goldilocks might find unappealing.
Good article. Great read. Stuffed to the brim - like a Christmas stocking - with interesting facts and with an optimism fit for the season. $500-a-barrel oil won't be the end of the world, that's true, not many things are, and Americans would still be better off than Canadians or Swedes! Hmmm. That's something I guess.
What do we make of this survey published a few days ago from creditcards.com that leads with: "For perhaps as many as 27 million American adults, keeping warm this winter will mean borrowing money and 20 million will use credit cards to be able to afford their heating bills." The article is here http://finance.yahoo.com/banking-budgeting/article/104038/One-in-Five-Expect-to-Borrow-to-Heat-Homes-This-Winter
I am a Canadian and I approve this message.
Leo
Leo, what that will mean is more people in the future turning away from heating oil, and towards cheaper and more efficient ways to heat their homes. However, the article makes no bones with the fact that the short term effects will not be pretty.
leo,
You act as if in Canada everyone is rich and noone needs to borrow money to meet essential needs.
What do you make of the report by the United Way of Greater Toronto that estimates that 30% of families in Toronto are living in poverty. And this is not just a Toronto problem. Although Toronto's poverty rate is higher than in the rest of the country, the nation's poverty rate stands at a shade under 20%. Here is a link to the article about this:
http://www.economist.com/cities/briefing.cfm?city_id=TO
In comparison, despite popular belief about American income inequality, the poverty rate in America stands at a shade above 12%.
Canada's solution? Increase the minimmum wage. Lovely. Instead of making next to nothing, Canada is about to doom its poor into really making nothing.
This is definitely looking at the silver lining of $500 oil. It won't make me feel any better that I still will be living better than people in the UK, Canada, or Sweden. The scenario posited in the article is possible, and not that bad I guess, but I don't think it will happen.
Innovation, through human ingenuity, will solve this problem like it has so many others. Why is everyone so hung up on oil as the only solution? In the time it takes oil to reach $500, other types of energy will be available for less than that and their use will be growing like mad. If I had to bet, I'd say worst case we're looking at a future of $100 oil or the equivalent in other energy forms. My persona is bet is ultra low cost solar, at $1/watt, as the company NanoSolar is trying to produce. At these prices it will be even cheaper than coal or natural gas based electricity. But we'll see....
Machiavelli,
You need to get your facts straight.
You said, “…30% of families in Toronto are living in poverty…” but in fact that figure applies only to families raising children. Not to all families as you inferred.
You said, “…the nation's poverty rate stands at a shade under 20%…” but in fact Canada’s poverty rate is 10.8 per cent as of 2005, the most recent year for which numbers are available.
You said, “…In comparison, despite popular belief about American income inequality, the poverty rate in America stands at a shade above 12%…” you make it sound like the U.S. has a lower poverty rate but in fact Canada’s poverty rate is only 10.8 percent and a full 16.7 percent LOWER than the U.S. poverty rate of 12.3%!
You said, “…Canada's solution? Increase the minimmum wage…” but in fact the article you cited stated, “The mayor of Toronto, David Miller, responded to the findings by calling for an increase in the minimum wage” a mere mayor calling for an increase in the minimum wage carries no weight and is nothing more than a political statement designed to make him appear to care.
Next time you want to try to use facts to trash someone or someone’s country get your facts straight.
You’re welcome.
libertatemamo you mentioned NanoSolar and $1/watt in the same sentence so I thought you might be interested in this press release.
Ava Solar is building a new 200-megawatt factory, (in Colorado) expected to employ up to 500 people and produce PV panels for less than $1.00 per watt.
http://www.avasolar.com/news/pressDisplay.php?i=12
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