Sunday, June 26, 2011

Quote of the Day: Thomas Sowell on the Cavemen

At Cafe Hayek, Don Boudreaux quotes economist Julian Simon:

“Natural resources are not finite in any meaningful economic sense, mind-boggling though this assertion may be.  The stocks of them are not fixed but rather are expanding through human ingenuity.”

Here's a related quote about natural resources from economist Thomas Sowell in his book "Knowledge and Decisions":

"The cavemen had the same natural resources at their disposal as we have today, and the difference between their standard of living and ours is a difference between the knowledge they could bring to bear on those resources and the knowledge used today." 

110 Comments:

At 6/26/2011 8:29 AM, Blogger Rufus II said...

Easter Island.

 
At 6/26/2011 8:31 AM, Blogger Rufus II said...

Infinite Resources on a Finite World. Whatta concept.

 
At 6/26/2011 8:48 AM, Blogger morganovich said...

this seems like sort of a tricky exercise in semantics.

there is only a certain amount of coal in the ground, no matter how good we get at extracting it. if you took the whole earth and broke it up into piles of it's constituent components, there would be X amount of coal. the amount we can use will always be kX where k<1.

but are we really interested in coal, or in energy? which is the real "resource". how we handle that definitional issue determines the answer we get to whether of not resources are limited. (at least in any practical sense, using a phrase like infinite is foolish)

the discovery of nuclear fission and the ability to harness it significantly increased the amount of usable energy in the world. a previously useless substance (uranium) suddenly became very useful indeed.

there is enough energy is a glass of water to power a city, we have just not figured out how to release it yet. (perhaps we will, perhaps we won't)

there is more energy in earth's system that we could plausibly need. (though it is still finite even if we convert every atom in the solar system into energy even if it is an unimaginably large number)

alternately, perhaps we will figure out how to make coal in the way we figured out how to make diamonds and therefore never run out. (though i can't really see how to do it and gain energy)

 
At 6/26/2011 9:09 AM, Blogger Rufus II said...

I have No doubt that as long as the Sun shines, and the world turns on its axis we will have plentiful energy. It just won't be wood, or coal, or oil, or nat gas.

Uranium is, almost, a different story, but at some point it might become more trouble than it's worth.

I like optimistic people. Heck, I'm known as an incurable optimist; but, damn, I hate sophistry.

 
At 6/26/2011 9:42 AM, Blogger Buddy R Pacifico said...

lord of the lower-case, morganovich, headlines at libertarian diner

 
At 6/26/2011 10:07 AM, Blogger Rufus II said...

Poppycock. Resources are finite. There's a time for contemplating the lint in your bellybutton, and a time for "gettin' busy."

We're drawing down our Strategic Reserves just to try and stave off recession. Time to "get busy."

 
At 6/26/2011 10:13 AM, Blogger PeakTrader said...

It won't be a smooth transition from (peak) crude oil into another form of energy.

Did you know? Crude oil saved the whales
2006/11/25

A clean-burning kerosene lamp invented by Michael Dietz in 1857 saved the whales from extinction. Prior to the 1800s, torches, candles made from tallow, and lamps which burned oils rendered from animal fat were in popular use.

In the late 1700s sperm whale oil was popular for lamp oils and candles because it burned with less odor and smoke than most fuels. However, sperm oil was very expensive. A gallon in the early 1800s cost about $2.00, which in modern values equates slightly over $200 a gallon.

The demand for whale oil took a tremendous toll on whales, and some species were driven to the very brink of extinction. In the Early 1800s whales were killed at a rate of about 15,000 per year. Sources estimated that there were 50,000 of various species of whales remaining in 1850.

Invention of the kerosene lamp had an immediate impact on the whale industry. Kerosene was easy to produce, cheap, smelled better than animal-based fuels when burned, and did not spoil on the shelf as whale oil did. Most people could afford kerosene; it sold for less than 7 cents a gallon.

The public abandoned whale oil lamps almost overnight. If it had not been for the invention of kerosene lamp and abundance of cheap kerosene the whales would soon have become extinct.

 
At 6/26/2011 10:24 AM, Blogger muirgeo said...

Yes and it's a good thing the caveman decided to form cooperative planned societal collectives to increase their chances of survival and to increase the chances that their altruistic genes would be passed on to future offspring. In this way came the wheel and the space station.

Those hominid species that set off on paths of rugged individualism are long since extinct.

 
At 6/26/2011 10:29 AM, Blogger Rufus II said...

They were called "Libertarians." :)

 
At 6/26/2011 10:30 AM, Blogger Rufus II said...

Libertarian:

An old caveman expression. Translated loosely means: Dumb as a Box of Rocks. :)

 
At 6/26/2011 10:32 AM, Blogger PeakTrader said...

muirgeo, yes, the invention of corporations made individuals much stronger to flourish in nature.

 
At 6/26/2011 10:34 AM, Blogger Buddy R Pacifico said...

Peak Trader, very interesting about switch from sperm whale tallow to kerosene. You make a very good point of economic substitution through human ingenuity.

Aside:

The next frontier of subsidised ag and could be a reversion to Whale Farming!

 
At 6/26/2011 11:04 AM, Blogger muirgeo said...

Peaktrader.... corporations are late to the scene. Societal collectives are what got us out of the caves.

You could be right though and we may be headed for a dreary dreary world dominated by authoritarian corporate control very suppressive of individual liberty and true market forces.

 
At 6/26/2011 11:15 AM, Blogger Jason said...

There is a scenario where resources can never be deployed in such a way where sustainability is possible. If a population grows (or I suppose shrinks to the point where systems break down) in rapid order, innovation will not occur quickly enough to compensate. Thomas Sowall's main point is dependent on a more or less stable environment and population.

 
At 6/26/2011 11:26 AM, Blogger PeakTrader said...

muirgeo, before corporations, economic progress was very slow, and without economics, I doubt the agricultural revolution would've yet began.

 
At 6/26/2011 11:31 AM, Blogger morganovich said...

buddy-

thatks for the link.

that really pissed me off.

not only does he quote me out of context, but he then goes on to steal the rest of my argument (right down to the glass of water example) and try to pass it off as his own.

i have just lost a great deal of respect for boudreaux.

that's plagiarism and misattribution.

you could get kicked out of university for pulling that stunt.

weak don, weak.

 
At 6/26/2011 11:50 AM, Blogger Sean said...

It's amazing how amazingly true a statement can be in it's ability to describe a trend, and yet how ignorant it can be in the final analysis. Do you also believe Moore's Law will really continue forever?

 
At 6/26/2011 11:53 AM, Blogger Rufus II said...

What would you charge someone to supply him with 3 kwhrs of electricity, per year, for 50 yrs? In, say, Phoenix, or S. Ca, or Texas? Oh, and during "Peak" daylight hrs?

That 50 yrs kinda makes the cheese a little more binding, doesn't it?

Would you do it for $20.00? $25.00?

Someone, along about the end of next year is expected to sign a "Guaranteed, Certified, Non-Breakable Contract" for $2.00.

How do you like his deal?

 
At 6/26/2011 12:00 PM, Blogger Rufus II said...

It's expected that some solar farms will be built next year with an "Installed" Cost of $2.00/Watt. No Subsidies.

 
At 6/26/2011 12:23 PM, Blogger PeakTrader said...

Rufus, the oil industry is betting on natural gas, to meet higher demand, while government is betting on the most expensive forms of energy, while promoting conservation.

 
At 6/26/2011 12:24 PM, Blogger morganovich said...

rufus-

expected by whom?

my understanding is that the sybac plant in gainesville is about the lowest cost facility built (it was finished in the last couple months)

cost was $3.50/wt the average has been more like $5-6.

also keep in mind - a 200 watt solar panel provides MUCH less power over a day that a 200 watt gas generator.

a 200 watt panel might produce 200 watts for 2 hours a day. it would produce some during the rest of daylight, and none at all at night.

you'd do well to get 1/3 of rated power out of it (and then only if it were sited well)

you can't think of them in terms of $/rated watt. (this is the big lie wind power uses) $/watt of actual output is the more important metric.

 
At 6/26/2011 12:33 PM, Blogger Rufus II said...

Here is what Solar did in California, Yesterday.

Here is what Solar did in California Day before Yesterday.

 
At 6/26/2011 12:34 PM, Blogger morganovich said...

"Someone, along about the end of next year is expected to sign a "Guaranteed, Certified, Non-Breakable Contract" for $2.00.

How do you like his deal?"

well, that depends.

if it comes from a small, money losing, cash poor organization, then it might not be worth much if they go BK in 3 years.

if it comes from GE, it might be quite interesting.

somehow, i suspect it is the former and not the latter.

who is the counterparty?


also note:

that price is what, 700% of the going rate right now? (average US price/kwh is 9.5c, so 3kwh = 28.5c)

i cant see a lot of folks lining up to pay 7 times as much for their electricity in hope this turns to break even 20 years from now. (note that that implies electricity going up at 10% compounded for 20 years. it would take 40 years a 5%, and at 3%, you'd still be paying WAY over market in 50 years.

 
At 6/26/2011 12:44 PM, Blogger PeakTrader said...

Rufus, I'd like to know what solar did to costs in California also.

 
At 6/26/2011 12:45 PM, Blogger morganovich said...

rufus-

ok, so that's about 1/2 of rated capacity. (and a best case scenario, see below)

that's much better than wind, but it does still mean that a $3.50/watt number is really $7/watt delivered.

but that's a best case scenario.

it's right at the summer solstice. these are the longest days of sunshine all year.

http://www.caiso.com/green/renewrpt/20110515_DailyRenewablesWatch.pdf

in may, you got 21% of rated.

in january, you got 15%.

http://www.caiso.com/green/renewrpt/20110130_DailyRenewablesWatch.pdf

if you average the year, you'll get maybe 1/3. thus, $3.50/wt is really $10.50/wt delivered.

i'm just pulling these at random, and there is sure to be some daily variation due to clouds etc, but that just highlights another problem: today is sunny, tomorrow cloudy. suddenly you get half the power. what do you do to make it up? big coal plants etc take days to bring up. keeping capacity in hot spin is expensive.

solar is interesting, but not the panacea some are making it out to be.

 
At 6/26/2011 12:46 PM, Blogger Rufus II said...

Solar implications: Bright days ahead?

What this means for the market could be momentous and far-reaching, said Mike Sheppard, analyst for photovoltaics and financial services at IHS. "This trend and milestone is significant in that it opens the door for certain installations to potentially drop to $2.00 per watt, in what one hopes would be an important driver for stimulating demand.

Historic Drop

 
At 6/26/2011 12:46 PM, Blogger PeakTrader said...

Anyone can spend $5 for something worth $1. Well, at least, the government can.

 
At 6/26/2011 12:50 PM, Blogger Rufus II said...

Morgan, That's a ONE-Time Cost of $2.00 to install a Watt of Solar.

In S. Cal, Arizona, Tx that should give you, on average, about 7.5 watt/hrs a day - a lot more in summer, less in Dec, Jan, Feb.

 
At 6/26/2011 12:58 PM, OpenID arbitrage789 said...

As Morganovich has pointed out, “this seems like sort of a tricky exercise in semantics”.

For example, the supply of CRUDE oil is indeed finite; and even the supply of natural gas (extensive though it may be).

At the same time, the supply of hydrocarbon-based fuel (that can be produced) is indeed unlimited; the energy for those fuels can come from sunlight and/or nuclear power.

 
At 6/26/2011 1:05 PM, Blogger Rufus II said...

I think I used 8 watt hrs to come up with 3 kwhrs/yr. Could be just a touch high. Easier to multiply 3 than 2.7.

Oh, PT, I can't remember which one it is, but the LA utility that utilizes the most wind/solar also has the lowest rates. They might own a couple of wind/solar farms that are "paid off."

 
At 6/26/2011 1:07 PM, Blogger Rufus II said...

They used to just figure the life of a solar panel as 20, 25 years - whatever the amortization of the loan.

Then, they started taking down 35 year old panels that were still within factory specs. Now, they don't have a clue how long the danged things will last.

 
At 6/26/2011 1:11 PM, Blogger Rufus II said...

Maybe I wasn't clear. I want to buy, and pay for, now, 150 kwhrs of electricity delivered at a rate of 3 kwhr/yr for fifty years.

What would you charge me?

 
At 6/26/2011 1:14 PM, Blogger Rufus II said...

Here's some more graphs on the Historical Trend in Solar Prices.

 
At 6/26/2011 1:22 PM, Blogger PeakTrader said...

Rufus, the high installation cost of solar doesn't fall much, if any.

 
At 6/26/2011 1:36 PM, Blogger arbitrage789 said...

Rufus @ 1:05

“the LA utility that utilizes the most wind/solar also has the lowest rates”

This is the first time I’ve seen you mention wind power. As much as I’m in the “drill, baby, drill” camp, I’m also an enthusiastic advocate of wind power. Boon Pickens wants to load up the whole Midwest with wind turbines. I actually think that’s a great idea; so much so, in fact, that I would even go along with a gasoline tax to help subsidize it.

The “lefties” seem very conflicted about wind power. They like the idea in concept, but not in reality. Probably nowhere is this more true than in Massachusetts where, it seems, they will accept nothing less than immaculate creation of energy.

 
At 6/26/2011 2:39 PM, Blogger VangelV said...

For example, the supply of CRUDE oil is indeed finite; and even the supply of natural gas (extensive though it may be).

Yes it is. And much of the oil and gas that we know is in place is not economic.

At the same time, the supply of hydrocarbon-based fuel (that can be produced) is indeed unlimited; the energy for those fuels can come from sunlight and/or nuclear power.

That is true. If government ever gets out of the way someone may come up with a solution that would help us transition away from the current system of production and delivery of fuel. But even here we have a major problem. Even if government gets out of the way, the public resists the temptation to put up barriers to producers, and producers come up with solutions we still have a structural problem that will have to be dealt with. Much of the capital that is in place is dependent on the availability of cheap liquid fuels that can power conventional engines, generators, and power plants. Even if we come up with substitutes we may have to write down massive investments that are no longer economically viable at a time when new investments are necessary to make the transition. I am afraid that the savings necessary to make those new investments are not available so we will have to muddle through for a while even under the best of scenarios.

The scenario that I see is not as bright as that of the optimists. While the long term should be fine and the standard of living should increase the path to new prosperity will be a difficult one.

I think that it is time for serious people to step away from the naive optimism and start to see reality as it is. Remember Mark's postings about the huge shale gas boom coming our way? All that cheap and abundant energy would make the Peak Oil pessimists look stupid, it was claimed. Well, we now see that the people who were skeptical may have been right. The NYT finally broke a story about the terrible returns in the shale gas industry and let readers take a look at insider e-mails and documents that shed a different picture than the one that was being sold by the EIA and the shale players, and the Wall Street analysts who are pushing the new bubble.

 
At 6/26/2011 3:10 PM, Blogger bix1951 said...

If only we could harness the energy
of all the blowhards in the world!

 
At 6/26/2011 3:21 PM, OpenID Sprewell said...

The problem with the people mouthing "it's finite, it's finite" is that that's not the question: the question is whether we'll run out in any time frame where we're likely to care. To illustrate this point more readily, I once pointed out that you could call this time period Peak Sun, as we have only, oh, 5 billion years of sunlight left. Sunlight is finite too. ;) Similarly, the real question is whether we'll still depend on oil or natural gas for energy in a couple hundred years when all the accessible reserves are gone, and I don't see any chance of that happening. We've only been extensively using petroleum and gasoline for 150 years now, I would rate the probability that we're still using them after another 150 years as practically nil.

Sean, Moore's law may end soon- I say "may" because it's always possible that it'll keep going much longer through new non-CMOS tech like carbon nanotubes- but again, the real question is whether we'll care whenever it does.

Vange, interesting NYT link backing up the point you've been making for a while about the bad economics of shale gas. At the very least, maybe it will give Mark pause about continually banging the drum for that sector. OTOH, maybe the tech is still improving like some in that article say, I certainly don't know enough about it to judge.

 
At 6/26/2011 3:30 PM, Blogger Rufus II said...

Arbitrage, I just got to looking at the actual costs of these technologies, and concluded that a lot of people were being fed a lot of hot air.

I predicted two years ago that we were only a couple, or three years away from $2.00 "Installed" Solar. I understood how the blue sueders were getting rich jacking up the cost of installation (and, riding the subsidy,) because I was involved in the Solar Hot Water business back in the Seventies.

As for wind, I was surprised when I started looking into it at how much sense it Did make. Once you put Wind, and Solar, and Biomass/Biogas from cellulosic production, and you could just about run the whole country.

And, there's also Tremendous low-hanging fruit in the "waste heat from manufacturing" field. We truly are awash in energy. Unfortunately, the fossil fuel industry is exceedingly powerful, both from a Media, and a Political perspective.

But, it's just a matter of time. They can only keep the public misinformed for so long.

 
At 6/26/2011 3:36 PM, Blogger VangelV said...

Vange, interesting NYT link backing up the point you've been making for a while about the bad economics of shale gas. At the very least, maybe it will give Mark pause about continually banging the drum for that sector. OTOH, maybe the tech is still improving like some in that article say, I certainly don't know enough about it to judge.

We are talking about shale using the state of the art technology here. Art Berman was right but he wound up getting fired because there was too much money for the sellers and they wanted a new bubble to help soften the effects of the collapse of the last one.

The clues for me were found in the words on the conference calls. Companies were a lot more careful and hedged their statements with weasel words there than what was being said in the media.

 
At 6/26/2011 3:38 PM, Blogger VangelV said...

I predicted two years ago that we were only a couple, or three years away from $2.00 "Installed" Solar. I understood how the blue sueders were getting rich jacking up the cost of installation (and, riding the subsidy,) because I was involved in the Solar Hot Water business back in the Seventies.

Solar is a big fraud. Just look at Spain's experience and you will find out just how bad it is.

As for wind, I was surprised when I started looking into it at how much sense it Did make. Once you put Wind, and Solar, and Biomass/Biogas from cellulosic production, and you could just about run the whole country.

Maybe in Oz but not in this world. Out here the economics make absolutely no sense for either Wind or Biomass at this time.

 
At 6/26/2011 3:46 PM, Blogger Benjamin said...

The NYT story was also hedged: that production may not be profitable at current prices. Current prices are very low. So if prices rise a bit, then the whole NYT story falls apart.

Or, it may be only the more-efficient shale drillers will survive, those that know how to sink wells in the sweet spots, and are good at hydro-fracking.

Exxon is going big into shale--maybe they are a big dum-dums, but they probably know more than posters on this blog.

I have little doubt that we will enjoy lush supplies of natural gas for decades. They are finding the stuff everywhere, even off Israel. Some the well in Indonesia are the largest of all time.

We may even by glutted with oil again. At more than $100 a barrel, we see demand destruction, immediate and accumulating, substitution, and new supplies. Note the market could not sustain $100-again.

We may peek-a-boo above $100 a barrel for a long time, even decades--and all the while oil will be declining as a source of energy.

 
At 6/26/2011 4:18 PM, Blogger Rufus II said...

Why would I want to "look at Spain." I can add, and subtract, and look at California.

Benjamin, some people are surprised to find that I read the Oil Drum every day even after being cut off.

But, one reason I do is "Rockman." He seems to make eminent sense, and everything he's said that I've managed to research seemed to come out spot-on. Anyway, he thinks Shale Gas is, basically, a $6.00 to $8.00 kcf deal. If he's right, then Exxon's play makes a lot of sense. They get the huge reserves on their balance sheet, now (great for the stock price,) and a lot of good profitable leases in the future.

I don't know squat about the oil and gas bidness, but from all that I've read, his six to eight dollars just "feels" right.

I'm sure doing a lot of feeling, today. :)

 
At 6/26/2011 4:29 PM, Blogger Ron H. said...

"We're drawing down our Strategic Reserves just to try and stave off recession."

Let me fix that for you: "We're drawing down our Strategic Reserves in a desperate attempt stave off losses in the Nov 2012 election.

"What this means for the market could be momentous and far-reaching, said Mike Sheppard, analyst for photovoltaics and financial services at IHS. "This trend and milestone is significant in that it opens the door for certain installations to potentially drop to $2.00 per watt, in what one hopes would be an important driver for stimulating demand. "

How many weasel words can someone put in one short statement?

You can't be serious when you point to something like this factless statement of opinion as support for your claims.

 
At 6/26/2011 4:31 PM, Blogger Ron H. said...

"Did you know? Crude oil saved the whales."

Yes indeed. J. D. Rockefeller single-handedly saved more whales than Greenpeace can ever imagine saving.

 
At 6/26/2011 4:33 PM, Blogger Rufus II said...

IHS is a serious company, and, as I said, he's just reinforcing a thought that I've harbored for quite a while.

The exact timetable isn't important. The trend, and the velocity of the trend is very important. And, the Trend is definitely toward $2.00 "Installed."

 
At 6/26/2011 4:36 PM, OpenID Sprewell said...

Benjie says oil will decline as a source of energy and I was curious if this has already happened, so I checked. If you measure petroleum consumption per capita, it's actually been going up, from about 20 barrels per year per person in 1960 to 25 in 2006. However, if one looks at the overall energy budget including newer sources of energy, petroleum accounted for 39% of total energy usage in 2007, less than it did in 1960 because of the rise of natural gas and nuclear in the ensuing decades and of course because our total energy usage has gone up even faster. However, there are big changes on the horizon: I estimated earlier this year that oil demand would drop by 20-25% in the coming decades, because telecommuting is about take off. It is much more efficient to beam video of yourself to an office than to ship your fat butt to that location, which is why I find it funny when people make a big deal about the potential energy savings of a highly complex technology like self-driving cars, when we have a much more efficient technology in video-conferencing readily available today.

 
At 6/26/2011 4:39 PM, Blogger Ron H. said...

"Here is what Solar did in California, Yesterday."

Interesting. Should I take this seriously, and invest some money in solar?

Oh! Here's my answer from your cite.

"It is unverified raw data and is not intended to be used as the basis for operational or financial decisions."

Nice work, Rufus.

 
At 6/26/2011 4:39 PM, Blogger Rufus II said...

I'd bet almost anything that I could make good money installing solar farms for $0.20 Watt. If times were slow, and my back was against the wall I might even take a large deal for $0.10 Watt. That would be about $25.00/panel.

I'm talking solar "Farm," flat, level ground, not rooftop.

 
At 6/26/2011 4:52 PM, Blogger Rufus II said...

We are currently using 19.1 Million bpd - EIA

19.1 X 365 = 6,971,000,000 barrels/yr

That would be 22.49 barrels/per capita per yr.

We've come off some since '06.


Solar is a risky investment (stockwise,) Ron. The subsidies are going away Jan 1, and the stocks have been tanking, I think.

At the end of the day Solar Panels are like Ethanol - a Commodity. Hard to "get rich" on commodity stocks.

 
At 6/26/2011 4:57 PM, Blogger PeakTrader said...

Rufus, they may be better off buying Exxon-Mobil stock.

 
At 6/26/2011 5:19 PM, Blogger Ron H. said...

"Boon Pickens wants to load up the whole Midwest with wind turbines."

You understand that Pickens is a very shrewd businessman, as evidenced by his billionaire status.

He isn't at all interested without government subsidies and loan guarantees. Development of the massive windfarms he envisions give him essentially free access to his natural gas and water holdings, that are currently inaccessible. What could be better? Do you really believe he's interested in providing "clean energy" to the little people? Think again. He's a big time rent seeker, as are most promoters of wind and solar.

Those with child-like faith, like Rufus, see only good intentions and butterflies & rainbows.

 
At 6/26/2011 5:27 PM, Blogger Rufus II said...

It's hard to go wrong with Exxon stock, PT.

I would walk past a mile of solar stocks to pick up a couple of shares of Exxon.

Like I said, Ron, I can add, and subtract, and I have a small amount of "life experience." I don't need to "have faith." In anybody.

 
At 6/26/2011 5:48 PM, Blogger Ron H. said...

"At the end of the day Solar Panels are like Ethanol - a Commodity. Hard to "get rich" on commodity stocks."

Actually, it should be fairly easy to get rich on commodities if you understand what a commodity is, and which ones are actually demanded.

Solar energy is a commodity, but the panels use to convert it to usable form are not. Oil is a commodity, but refineries are not.


"The subsidies are going away Jan 1, and the stocks have been tanking, I think."

What, if anything can you deduce from that? Are the mean spirited oil companies at work here somehow? How about the mean spirited investors that aren't willing to risk their own money on a losing proposition?

 
At 6/26/2011 5:55 PM, Blogger VangelV said...

The NYT story was also hedged: that production may not be profitable at current prices. Current prices are very low. So if prices rise a bit, then the whole NYT story falls apart.

Not exactly. The problem is not the current prices but the negative return on the energy invested. If prices go up the higher drilling activity will drive up the rig rental prices and the companies will find themselves short of profitability again. Anyone who has been paying attention to the conference calls and the analysts should know just what a scam this really is.

Or, it may be only the more-efficient shale drillers will survive, those that know how to sink wells in the sweet spots, and are good at hydro-fracking.

That is the problem with the story. The drillers in the sweet spots of the right formations will make money while the industry melts down. The big picture requires that most of the players in most of the formations make money and get a positive return on the energy invested.

Exxon is going big into shale--maybe they are a big dum-dums, but they probably know more than posters on this blog.

Exxon id not making profits from shale gas drilling. It simply needs to hide the reserve depletion story by acquiring shale properties and are using the SEC rules to their advantage.

I have little doubt that we will enjoy lush supplies of natural gas for decades. They are finding the stuff everywhere, even off Israel. Some the well in Indonesia are the largest of all time.

There is lots of natural gas around because most of the non-North American and non-European energy companies were not interested in it until about two decades ago. The problem for Americans is that most of the easy to exploit natural gas in the US has been found and developed.

We may even by glutted with oil again. At more than $100 a barrel, we see demand destruction, immediate and accumulating, substitution, and new supplies. Note the market could not sustain $100-again.

Demand destruction does not create a sustainable glut in oil. All it does is signal that the real economy is in a lot more trouble than people like Mark like to admit.

We may peek-a-boo above $100 a barrel for a long time, even decades--and all the while oil will be declining as a source of energy.

Actually, unless there is a major global collapse very soon $100 will be the new floor for oil. Norway certainly is not pleased to see the EU conspire to reduce its revenues just as its North Sea production is in collapse and its economic model is no longer looking very sound. he Saudi citizens can't be bribed to stay compliant with $75 oil. And the Russians will not take kindly to EIA/IEA manipulation of the markets. But I am sure that the Chinese, who are filling a Strategic Reserve of their own, are happy for the gift that Obama has given them.

 
At 6/26/2011 6:06 PM, Blogger Robotech said...

Be very careful when looking at any claims related to solar power and photovoltaics. You have to make sure if you are doing any comparisons that you're talking apples-to-apples. For example, efficiencies might be rated for a single cell or an assembly, but is that with direct sunlight, or is a concentrator required?

The "installed" price per watt might be a better comparison, but what kind of installation is being talked about? An open field? (Land cost?) A rooftop? Did the rooftop installation require a structural upgrade as well? Does the price include power inverters? Are batteries used in the installation, and if so, how long will they last?

In my opinion, your best way of looking at a PV system from an economic standpoint is by how long it takes the system to pay for itself, how long you can expect to get usable power from it after that, and at what, if any, continuing costs. Even in 2003, when I was working in the field, between installation cost, regular energy costs, and various incentives, in parts of California the payback time was as little as 5 - 7 years! This answer will always be location specific.

As for life expectancy, most systems are warranted for 20-25 years at a stated percentage of peak output, but they don't just die after that. The thin-film PV laminates I worked with were actually expected produce that level of power for closer to 50-years, and accelerated testing indicated that they'd still probably be providing usable power at 100-years. Does it make sense to remove older modules that are already paid for, or do you plan ahead for adding a few more later to make up the difference?

Solar power is just one piece of the puzzle. It's a very viable part of the energy solution, but you'll still need other sources of energy or ways to store it. Burning petroleum is one of the most wasteful things to do with this resource that is so important in the making of so many other products.

 
At 6/26/2011 6:08 PM, Blogger VangelV said...

Why would I want to "look at Spain." I can add, and subtract, and look at California.

Good. California is a total basket case, just like Spain, and has wasted scarce resources on renewables while driving energy costs higher. It is now losing businesses to other states and to other countries.

But, one reason I do is "Rockman." He seems to make eminent sense, and everything he's said that I've managed to research seemed to come out spot-on. Anyway, he thinks Shale Gas is, basically, a $6.00 to $8.00 kcf deal. If he's right, then Exxon's play makes a lot of sense. They get the huge reserves on their balance sheet, now (great for the stock price,) and a lot of good profitable leases in the future.

Rockman does not seem to be a particularly bright individual. In fact, he often says the type of things that you would say. I think that you might do better if you listen to the conference calls at pay attention. At $8.00 kcf most companies will have to report losses after all of the costs are accounted for. That number is fine for some of the sweet spots but there aren't enough of them to make a huge difference to the national oil supply.

I don't know squat about the oil and gas bidness, but from all that I've read, his six to eight dollars just "feels" right.

I agree. You don'k know squat about oil and gas.

 
At 6/26/2011 6:09 PM, Blogger VangelV said...


You can't be serious when you point to something like this factless statement of opinion as support for your claims.


That is all he has to support his opinions; factless statements.

 
At 6/26/2011 6:14 PM, Blogger VangelV said...

However, there are big changes on the horizon: I estimated earlier this year that oil demand would drop by 20-25% in the coming decades, because telecommuting is about take off. It is much more efficient to beam video of yourself to an office than to ship your fat butt to that location, which is why I find it funny when people make a big deal about the potential energy savings of a highly complex technology like self-driving cars, when we have a much more efficient technology in video-conferencing readily available today.

First, why not simply move the work to India, Ireland, Iceland, or some other nation with a cheap but competent labour force?

Second, I agree with your comment that US consumption will go down. Given the trouble that the country is in and the huge debt loads I doubt that the US can afford to use as much oil as it does. Countries with third world finances can't afford a first world lifestyle for very long.

 
At 6/26/2011 6:27 PM, Blogger VangelV said...

Even in 2003, when I was working in the field, between installation cost, regular energy costs, and various incentives, in parts of California the payback time was as little as 5 - 7 years! This answer will always be location specific.

I doubt that any installation paid for itself in 7 years without a massive subsidy that covered most of the panel costs or favourable repurchase agreements. The solar business has never been profitable without massive subsidies.

 
At 6/26/2011 10:10 PM, Blogger Robotech said...

Yes, California in general, and local incentives for different cities, brought the costs down, plus the cost of electrical power from the utilites, made the payback much faster.

At the same time in 2003, a 3-4kw array here in SE lower Michigan (Where PV power is still practical even if it isn't in the rest of the State.), would have had a payback time of 20-23 years, and that was without incentives of any kind.

 
At 6/26/2011 10:35 PM, OpenID Sprewell said...

Vange, the work has already been moving to India, though a lot more has yet to move. There will always be work in the US though, people will just find different things to do. As for the notion that we can't afford the oil much longer, we spent more than half a trillion on those barrels of oil last year, which may seem like a lot but is less than 5% of the US economy, so it isn't breaking our budget. The question is whether we'll want as much oil going forward and my point is that rampant telecommuting will mean that we won't want to use as much, ie demand will go down for technological reasons.

 
At 6/27/2011 8:25 AM, Blogger morganovich said...

"Morgan, That's a ONE-Time Cost of $2.00 to install a Watt of Solar. "

no, it's not.

first off, i don't believe your $2 number. it's more like $3.50 as a best case. despite being asked, you have provided no evidence at all for $2.

second, price per rated watt is irrelevant. it's price per watt of output that matters. this triples the number.

this makes that payback on panels (at current energy prices) around 10 years before you even factor in line losses etc. t hat alone makes the payback more like 13 years.

then you have to factor in operations costs, repair, replacement etc. what's the useful life of these panels? is it over 15-16 years? because it would have to be before you ever broke even.

 
At 6/27/2011 8:32 AM, Blogger morganovich said...

arb-

"I’m also an enthusiastic advocate of wind power. Boon Pickens wants to load up the whole Midwest with wind turbines. I actually think that’s a great idea; so much so, in fact, that I would even go along with a gasoline tax to help subsidize it. "

wind does not work and never will. pickens has gotten MAULED on this venture.

the problem with wind is that energy across blade sweep is a 4th power function of wind speed.

thus, a turbine optimized for 25mph will only generate 40% of faceplate at 20 MPH, and 13% at 15 mph.

worse, it will have to shut down entirely at about 27mph or you'll blow the generator. (at 30, it would be banging out 200% of rated)

you can adapt to this a bit by feathering the blades etc but nobody is getting more that 15-20% of rated power out of windmills.

worse, it's unpredictable. this makes it useless as baseline power.

solar may have a shot, but wind will never be a prime time energy source. i'd look to geothermal, and possible wave and tides long before wind.

 
At 6/27/2011 8:42 AM, Blogger Sean said...

Sprewell,

Sean, Moore's law may end soon- I say "may" because it's always possible that it'll keep going much longer through new non-CMOS tech like carbon nanotubes- but again, the real question is whether we'll care whenever it does.
There are improvements to be made beyond silicon CMOS, but I don't accept that those improvements will follow the same exponential curve past maybe another 15 years tops.
We may not care much as consumers because "good enough computing" will have arrived at reasonable cost points, but the point is that upwardly sloped exponentials aren't really sustainable.
As to your point about peak sun and such, yes, it's like Morganovich started talking about: there really is a lot of energy around as long we use it wisely. But Computer science has taught me one thing: there is no abundance of power so great that stupidity cannot consume it.

 
At 6/27/2011 8:48 AM, Blogger morganovich said...

sean-

moores law is like to end not because of what is possible, but because of what is practicable.

to get too much smaller in feature size, the etch technologies you need to use get VERY energy hungry.

when a a 12nm geometry 300mm wafer fab needs it's own dedicate nuclear power plant just to run the etch tools, that's where you'll start to see moores law derail.

we can build smaller, but it will likely not be economic to do so.

 
At 6/27/2011 10:16 AM, Blogger morganovich said...

fair play to don b.

i e-mailed him about his selective quotation and mischaracterization and he posted this in response:

"UPDATE: morganovich e-mailed me to point out that the rest of his comment (referenced above) at Carpe Diem goes on to make a point similar to the one I make above. I apologize to him for reading his full comment too quickly. (I especially like his point there about the amount of energy in a glass of water.)"

 
At 6/27/2011 12:43 PM, Blogger Ron H. said...

"despite being asked, you have provided no evidence at all for $2."

What? Don't you accept someone's use of words like 'potentially' as evidence?

 
At 6/27/2011 12:50 PM, Blogger Sean said...

morganovich,

moores law is like to end not because of what is possible, but because of what is practicable.

to get too much smaller in feature size, the etch technologies you need to use get VERY energy hungry.

It's certainly possible that energy costs will make shrinking things further impractical before it becomes impossible, but at some point it really does become impossible: you simply can't make a 1-atom length transistor gate and expect it to work. And any subatomic technology is going to be quantum-effect limited really quick. The Heisenberg uncertainty principle effectively places hard limits on compute density that aren't *that* far from actually mattering.
You can still grow effective computing density through certain techniques like 3D layering, but then you have severe cost and thermal problems to solve without a real breakthrough (and you still don't really get faster single thread computation).

 
At 6/27/2011 1:14 PM, Blogger Ron H. said...

"Why would I want to "look at Spain." I can add, and subtract, and look at California."

Adding and subtracting aren't the problem you have. It's multiplying, dividing, and percentages you have trouble with; also the numbers you start with and your assumptions about the future are a problem, not to mention your weak grasp of physics and your lack of a sense of scale.

Why look at Spain? Well, on the one hand, you have optimistic, perhaps even unreasonable assumptions about the future, which include such vague words as 'potentially', and on the other hand you have the actual experience of Spain, which wasn't good. Rather than trusting the Tooth Fairy, it might be wise to ask what went wrong in the real world, and try to learn from that.

California is another Spain in the making, so it is a good idea to watch California. You must see the whole picture, however, not just the things you like about it.

 
At 6/27/2011 1:24 PM, Blogger Ron H. said...

"Heisenberg uncertainty principle effectively places hard limits on compute density that aren't *that* far from actually mattering."

That's OK, I'm already used to not getting predictable results from my computer. Why would anyone expect repeatable results? :-)

 
At 6/27/2011 2:14 PM, Blogger juandos said...

Here's a potential lesson for rufus and other believers in the myth (due in large part I'm guessing in the lack of the right technology) of renewable energy...

From the Australian National Affairs Journal: Cutting-edge energy promises just hot air

 
At 6/27/2011 2:26 PM, Blogger Sean said...

Ron H.,

That's OK, I'm already used to not getting predictable results from my computer. Why would anyone expect repeatable results? :-)
Man, I wish that statement didn't make sense as a serious observation!

 
At 6/27/2011 5:52 PM, Blogger Ron H. said...

"Here's a potential lesson for rufus and other believers in the myth (due in large part I'm guessing in the lack of the right technology) of renewable energy...

From the Australian National Affairs Journal: Cutting-edge energy promises just hot air
"

juandos, I think Rufus has already admitted to this, based on his earlier comment on this thread.

"Arbitrage, I just got to looking at the actual costs of these technologies, and concluded that a lot of people were being fed a lot of hot air."

 
At 6/27/2011 9:36 PM, Blogger markbahner said...

"Do you also believe Moore's Law will really continue forever?"

All Moore's Law needs to do is continue for another ~4 decades, and a $1,000 computer will be more intelligent than the entire human race.

 
At 6/28/2011 1:39 AM, Blogger OBloodyHell said...

>> Infinite Resources on a Finite World. Whatta concept.

The only finite resource is the one between your ears. And that's infinite if you apply it correctly.

 
At 6/28/2011 1:47 AM, Blogger OBloodyHell said...

>>> Poppycock. Resources are finite. There's a time for contemplating the lint in your bellybutton, and a time for "gettin' busy."

We're drawing down our Strategic Reserves just to try and stave off recession. Time to "get busy."



Not in any sense that applies economically.

As things get scarce, the human brain gets to work to find alternatives.

Copper for wires getting scarce? Switch to glass fiber made of silicon, aka "sand" to do the job.

If you doubt the notion of "infinite resources" you fail to grasp that the only resource that matters is the one between your ears.

Human ingenuity towards solving problems is as infinite as time.

The only problem is when you squander it chasing idiotic chimeras like "solar" power and "wind" power, that fail to grasp that functional power derives from differences in what physics and engineering call "organizational state", and neither solar nor wind are particularly organized.

There's a lot of energy in a lightning bolt, but it's pretty much useless (yes, I'm waiting for some two-bit con artist to get everyone on board for "lightning energy" next) because it's in a highly disorganized state.

 
At 6/28/2011 2:15 AM, Blogger OBloodyHell said...

Rufus:

An old caveman expression. Translated loosely means: Dumber than a Box of Rocks. :-/


A properly organized society needs a good balance between the societal straight jacket and rugged individualism.

You want people free to
a) prosper from their own efforts.
b) direct at least part of those efforts to solving society's problems as well as their own.
c) Take personal responsibility and not attempt to create more problems for society.

The flowering of the European Greek heritage, first under England, then under America's respect for the rights of the individual to make both societies the richest and most powerful in human history shows the benefits of a balance. If one side wins out too strong, anarchy is the result. When the other wins out too strong, creativity is strangled in its cradle.

The thing which makes Rufus dumber than a box of rocks is that he cannot grasp the difference between libertarianism (small-l) and anarchy.

Anarchy believes all government is evil. It is rugged individualism gone off the deep end.

Libertarianism recognizes the benefits of government, while grasping that it's a dangerous process, with deep pitfalls to both sides of it as a process. It is, in colloquial terms, "A necessary evil". It seeks a balance in recognizing that "the government solution" should generally act as the carrot and stick to move the social cart along ... not as the donkey itself.

 
At 6/28/2011 2:54 AM, Blogger Ron H. said...

"Anarchy believes all government is evil. It is rugged individualism gone off the deep end."

Well, all government IS evil. Sometimes a small amount is necessary.

Anarchy doesn't equal chaos.

 
At 6/28/2011 3:09 AM, Blogger OBloodyHell said...

>>> You could be right though and we may be headed for a dreary dreary world dominated by authoritarian corporate control very suppressive of individual liberty and true market forces.


Geez. *sigh*.

I'll explain this once again:

Society is currently in a transitional state.

First came Agricultural Enclaves -- city states, and their final form -- the Feudal Enclave, with its leaders, the Lords, Ladies, and Handfast Men. Note the inherently hierarchical organization. Land and Food are its central products, and its metric for wealth.

This began to peak with the formation of nations.

Second came the Industrial Revolution, and its final form -- the Corporation, with its leaders, the CEOs, the Presidents, and the Corporate Manager. Once more, note the inherently hierarchical organization. Factories and Goods are its central products, and its metric for wealth. Note that this outmoded, somewhat, the former notion that all wealth was derived from "The guy who owned the land", and instead became from "The guy who owned the factory".

Notice how, as The West completed industrialization, the place became filled with "landless nobles"... as their role in creating and doing things became usurped by the Corporate Entities. There was no more wealth to be derived, really, from farming. The end result was the slow demise of the classical "family farm". All significant farms are now run by agricultural conglomerates -- that is, corporations. The margins became increasingly cutthroat until, nowadays, most farms are either appealing to niche markets ("organic" farms, ginseng farms, and so forth) or they are big massive giant things... because, in the end, the margins are too small for the average person to deal with the ups and downs in price.

Note also the dislocations that were produced, as mechanized agriculture reduced the manpower demands of most agriculture to a fraction of its former requirement, to the point where, nowadays, the entire food requirements of the world could nominally be filled by something like 2% to 4% of its population. The Great Depression was one of the results of this as Those In Charge failed to understand how The Nature Of Money changed in the new Industrial System.

Around the late 60s and early 70s, as Western society became fully industrialized, they began to refer to "post-industrial society". The term "post-xxx" usually means "what follows 'xxx', but we don't have a handle on it yet".

In other words, what comes AFTER industrial society? What's "The Third Wave", to use Toffler's term for it?

I think it's becoming increasingly self-evident -- What follows an Industrial Economy appears to be, in human terms, an "IP & Services Economy". That is,
a) Roboticization, in the long run, is going to replace the classic man-intensive factory with robots. At some point, an auto factory will work pretty much like the one in the movie Minority Report. This is in-line with the same thing happening with MechAg and the farm.
b) Dislocations are to be expected, as all those people formerly used in factories get phased out -- just as all the farm workers got dislocated by the finalization of the process of MechAg.
c) "Shipping jobs overseas" is a very temporary thing -- ATM, some foreign labor is cheaper than robots -- as the living standards in those societies rise, this will not maintain itself. Indeed, there are already forces for roboticizing even in Brazil and China. Some of the newest factories there are very heavily robotic.

...(continued next comment)...

 
At 6/28/2011 3:13 AM, Blogger OBloodyHell said...

...(continued from above)...

Now, note a key difference between our Third Wave Economy and the prior two waves... the requirements of the TWE are non-heirarchical. The flow of information... knowledge... is paramount to the proper function of this Economy. What interactions are needed to create new IP 'x'? What kind of feedback is needed about what kind of IP is desired? What kind of feedback is needed to produce the services desired? Is it cost-effective?

Hierarchies are only as smart as their dumbest node. One incompetent petty bureaucrat, one in-fight between departments, and suddenly the flow STOPS DEAD. And this Knowledge Organization is suddenly out of sync with what it needs to create, or what options it has in creating it.

I put it to you that a TWE is going to be modeled on, not a hierarchy, but a network. An effective TWE is going to deal with blockages by routing around those blockages to get the info where it will be the most use.

Hence, just as Lords and Ladies retained their titles for decades after their utility had disappeared, so, too, will the modern corporate entities, the CEO and the President. The job of "manager" will change, and become a very different job with the individual operating far less a form of CONTROL as much as a facilitator and idea trigger. The job of "manager", will alter to become someone who helps recognize who, precisely, it is, that has the answer to a problem of someone else. The best managers will be those who remember a wide array of things well, and connect random ideas and people together most effectively. and the nature of management will be changed itself, as you get far more dispersed control structures.

The corporation will either morph or alter in such a way as to break down that hierarchichal organizational structure or it will fall by the wayside to be replaced by a different entity, just as the Feudal Enclave disappeared decades, if not centuries, ago.

I considered the late 1990s protests of the WTO to be hilariously stupid. The WTO is interested in Goods, not IP&S. The real "theft" of things was being attempted down the block at the WIPO meetings, where they attempted to establish a World Copyright Regime, and at which the abortion known as the DMCA was pushed for. Thankfully, it largely failed, though it has been nominally adopted in some areas, including the USA. Much like Carbon Credits, it's currently mostly dead in the water, with only limited attention paid to its precepts. For now, at least, the free flow of information isn't tremendously hamstrung.

Now, note a couple more details --
a) The Knowledge Worker isn't a stupid group-thinker -- He/She needs to be bright, independently able, and either well educated or very common-sensical. This is anathema to the current teaching regime, which aims to produce good factory workers -- cattle. I think this was best suggested by a beer slogan of the 90s: "Don't ask why. Bud dry". Allow me to translate: "Don't ask why you should buy it. Do it because We Tell You To. Now moo like a good cow. Thaaaat's it..." Now, the government LOVES factory workers. The ideal factory worker doesn't think too much, doesn't ask lots of questions about how and why something is done. They have a role, pretty much as human cog in the big factory machine. Not a role requiring a great deal of intellectual ability.
b) The Knowledge Worker needs to be individualistic. If they see something that seems wrong to them, they have to have the balls to stand up and make waves in order to fix it. Not extreme waves -- they may be wrong -- but they need to be able to understand how to argue why it is that they are right and everyone else is wrong, and to be willing to do that. Again, not cattle. "Yes Men" need not apply.

There's a lot more to this, but I'll let it percolate in a bit, as it's non-trivial to really Get It.

...(continued next comment)...

 
At 6/28/2011 3:14 AM, Blogger OBloodyHell said...

...(continued from above)...

Society is going to undergo a massive change, just as big as that from the Feudal System to the Corporate System. Bigger, even.

And the nation or people which really grabs at it first is going to Eat The Lunch of every other nation/people.

The USA is uniquely suited to take advantage of this... but it may well lose the game if someone else figures it out before we do.

 
At 6/28/2011 3:28 AM, Blogger OBloodyHell said...

>> Anarchy doesn't equal chaos.

No, Ron, anarchy is, pretty much by the definition of the word, "chaos".

It is a system where there is no government by force.

It has nice qualities as an ideal, but anyone who has read R.A.Heinlein's "Coventry" should be able to understand what it inevitably devolves to -- might makes right -- just as anyone with a clue can see what Communism/Socialism inevitably devolve to.


Anyone who claims for anything else is actually just debating how strongly libertarian they want to be.

How much governmental power they will concede is necessary, and what kinds of checks and balances on that power they believe are needed.

I'd argue that the American System is awfully damned good.

You DO realize, that, despite all the scoffing about how "young" the USA is, its government is, among the major nations**, the oldest contiguously unaltered one on the face of the earth.

Think about that -- even the UK has changed from an absolute monarchy to a figurehead monarchy with a semi-elected head of state (The PM). France? Multiple Revolutions. Russia? Two major shifts, possibly another on the way. China? Uncounted radical changes. Japan? Not less than three. Germany and Italy did not even exist in their current forms. Keep going. I think you'll probably have to get down to something with notably less than a couple percent of land area and/or population before you can find anything that is unchanged for as long as the USA has been largely unchanged (lots of minor shifts, and the sum of those shifts is moderately significant, but nothing even as big as the UK's, much less wholescale revolutions).

The FF's created something remarkably stable and workable that, combined with an enterprising and capable people has been incredibly effective at harnessing human creativity for the betterment of all mankind.

Certainly we've failed at places to live up to our ideals, but on the whole, America has done an amazing job in the history of mankind of avoiding the traps of both anarchy and fascism.

===============================
** Not arguing about "Lichtenstein", "Andorra" or whatever. I'm speaking "nations that matter in the large, planetary scale of human affairs".

 
At 6/28/2011 7:05 AM, OpenID Sprewell said...

OBloodyHell, nice exposition on the shift to an information economy that's coming, mirroring thoughts of my own. I think you're dead-nuts on. :) I have some quibbles with a few peripheral points, as I'm an anarcho-capitalist myself and I think you may overrate the intellectual ability of the average knowledge worker, but you are certainly correct in your broad thrusts. Which raises the question, what are you doing to capitalize on this insight? I myself am trying my hand at some entrepreneurial ventures and the goal is to organize them in less of a hierarchical manner. I find that even the most successful tech companies are pretty clueless about these issues, which is unfortunate but I also see it as a huge competitive advantage for me going forward. Their ignorance is one of the reasons why I see big changes coming soon.

 
At 6/28/2011 7:46 AM, Blogger VangelV said...

All Moore's Law needs to do is continue for another ~4 decades, and a $1,000 computer will be more intelligent than the entire human race.

Computers are useful tools and make nice toys. That is about it. Yes, there will be many advances just as there always have been advances. But they will not be able to offset the damage caused by the accumulation of bad financial and policy decisions.

 
At 6/28/2011 8:15 AM, Blogger VangelV said...

Not in any sense that applies economically.

As things get scarce, the human brain gets to work to find alternatives.


Yes, that is true. But when you have society at a level that depends on a certain amount of resource to be available and the supply of that resource is falling sharply there will be massive dislocations that will make the transition much more difficult than the naive optimists imagine.

Copper for wires getting scarce? Switch to glass fiber made of silicon, aka "sand" to do the job.

But you need savings for that. What happens when you live in a country where savings are scarce and the transition is very expensive? And the last time I looked we still had the problem with transmitting electricity. We still need massive amounts of copper at a time when supply is getting tight. The solution to the problem will not come from new supply or some new great alternative but more likely from price increases that squeeze out the marginal users and/or an economic contraction. The problem with the contraction scenario is that it will hit supply hard because marginal mines will be closed down and lower grade deposits will not be developed.

 
At 6/28/2011 8:31 AM, Blogger VangelV said...

You want people free to

a) prosper from their own efforts.
b) direct at least part of those efforts to solving society's problems as well as their own.
c) Take personal responsibility and not attempt to create more problems for society.


Productive individuals try to solve their own problems by trying to provide a service or good that will benefit benefit consumers. They can do that most effectively when there is no restraint on voluntary transactions. That means that the only possible role for government is to protect people from aggression and nothing else.

The flowering of the European Greek heritage, first under England, then under America's respect for the rights of the individual to make both societies the richest and most powerful in human history shows the benefits of a balance. If one side wins out too strong, anarchy is the result. When the other wins out too strong, creativity is strangled in its cradle.

The West advanced because there was no large power to control people. There were hundreds of petty princes and municipalities competing for the skills of productive individuals who could vote with their feet, and by doing so kept the ruling elite in line. And if you look at history you will find that individuals did a good job as setting up rules long before governments got into the act of using legislative power to control individual behaviour so let us not give credit where none is due.

The thing which makes Rufus dumber than a box of rocks is that he cannot grasp the difference between libertarianism (small-l) and anarchy.

No doubt that Rufus is not very bright. But I fear that many so-called libertarians have some of the same problems as he does because they do not understand anarchy either.

Anarchy believes all government is evil. It is rugged individualism gone off the deep end.

Government is evil because it initiates force against individuals. There is nothing controversial about this statement.

Libertarianism recognizes the benefits of government, while grasping that it's a dangerous process, with deep pitfalls to both sides of it as a process.

Now who is off the deep end?

It is, in colloquial terms, "A necessary evil". It seeks a balance in recognizing that "the government solution" should generally act as the carrot and stick to move the social cart along ... not as the donkey itself.

You have made an error. No evil is necessary. And government is not the solution. It is the problem.

 
At 6/28/2011 8:31 AM, Blogger Sean said...

markbahner,

All Moore's Law needs to do is continue for another ~4 decades, and a $1,000 computer will be more intelligent than the entire human race.
Ah, but it won't. :)

 
At 6/28/2011 8:34 AM, Blogger Sean said...

VangeIV,

Computers are useful tools and make nice toys. That is about it.
I find that view naive, as we attempted to discuss before.

Yes, there will be many advances just as there always have been advances. But they will not be able to offset the damage caused by the accumulation of bad financial and policy decisions.
This is true. There is no resource so abundant that it can't be rendered expensive through stupidity or mismanagement.

 
At 6/28/2011 8:46 AM, Blogger VangelV said...

There was no more wealth to be derived, really, from farming.

Actually, I would argue that there is a great deal of wealth to be earned from farming and agricultural related activities.

The end result was the slow demise of the classical "family farm".

Consumers need and want food at the best price possible. They don't really care about the size of the farm that produces it. And the 'classical family farm' died off because farming is a tough business with low margins and a great deal of volatility. The farmers' children figured out that they could make a better life for themselves by moving to cities. There was nothing wrong with this process.

The Great Depression was one of the results of this as Those In Charge failed to understand how The Nature Of Money changed in the new Industrial System.

It was the result of too much government meddling that prevented the liquidation that was necessary for a recovery to take place.

I think it's becoming increasingly self-evident -- What follows an Industrial Economy appears to be, in human terms, an "IP & Services Economy".

Yes, our future stability will be based on most people working to program computers or serving fries.

The corporation will either morph or alter in such a way as to break down that hierarchichal organizational structure or it will fall by the wayside to be replaced by a different entity, just as the Feudal Enclave disappeared decades, if not centuries, ago.

Well, if you look around you will find out that we are already well down this path.

a) The Knowledge Worker isn't a stupid group-thinker...

You are talking about human nature here, aren't you? Look around universities or most high tech companies. Most of the knowledge workers believe in group-think at various levels. For example, they are much more likely to fall for scams such as AGW or Modern Art.

b) The Knowledge Worker needs to be individualistic.

Try that if you work in any kind of bureaucracy and see how long you last.

 
At 6/28/2011 8:47 AM, Blogger VangelV said...

Society is going to undergo a massive change, just as big as that from the Feudal System to the Corporate System. Bigger, even.

And the nation or people which really grabs at it first is going to Eat The Lunch of every other nation/people.

The USA is uniquely suited to take advantage of this... but it may well lose the game if someone else figures it out before we do.


Open your eyes. The US is sliding towards becoming a tyranny where government controls most economic activities. As I keep arguing over and over again, it is hard to claim to be a free society when you can go to jail for making a toilet tank that hold five gallons of water.

 
At 6/28/2011 8:51 AM, Blogger Sean said...

VangeIV,

As I keep arguing over and over again, it is hard to claim to be a free society when you can go to jail for making a toilet tank that hold five gallons of water.
Excellent quote!

 
At 6/28/2011 9:17 AM, Blogger VangelV said...

No, Ron, anarchy is, pretty much by the definition of the word, "chaos".

That is the view of those that do not understand the ideas of anarchy and think of it as monolithic. It isn't.

It has nice qualities as an ideal, but anyone who has read R.A.Heinlein's "Coventry" should be able to understand what it inevitably devolves to -- might makes right -- just as anyone with a clue can see what Communism/Socialism inevitably devolve to.

You are making a big jump. Just look how far the idea of limited government has fallen once a central government was permitted to rule over the states.

Anyone who claims for anything else is actually just debating how strongly libertarian they want to be.

There is no such thing as a weak libertarian. Once you make too many compromises you get on that slippery slope to authoritarianism.

I'd argue that the American System is awfully damned good.

Let me see. A massive military that has bases in more than 100 countries around the globe. Wars in Libya, Afghanistan, and Iraq. Unfunded liabilities that are close to ten times the annual GDP. An education system that has failed to educate. A massive welfare state that encourages dependence. The world's biggest incarceration rate with much of it coming from victimless crime. Sorry but it is not working very well.

 
At 6/28/2011 9:27 AM, Blogger VangelV said...

Think about that -- even the UK has changed from an absolute monarchy to a figurehead monarchy with a semi-elected head of state (The PM). France? Multiple Revolutions. Russia? Two major shifts, possibly another on the way. China? Uncounted radical changes. Japan? Not less than three. Germany and Italy did not even exist in their current forms. Keep going. I think you'll probably have to get down to something with notably less than a couple percent of land area and/or population before you can find anything that is unchanged for as long as the USA has been largely unchanged (lots of minor shifts, and the sum of those shifts is moderately significant, but nothing even as big as the UK's, much less wholescale revolutions).

Before you go off the deep end again let me remind you that the US government can throw people in jail for installing showers that allow too much water flow or toilets that have tanks that hold too much water. And that your jails are full of people found guilty of victimless crimes. The US used to be a free country but it isn't any longer.

 
At 6/28/2011 9:36 AM, Blogger VangelV said...

I find that view naive, as we attempted to discuss before.

Why? Computers are good tools and great toys. But they are not what many of the optimists try to make them out to be. They will not create new processes and find new resources for us. Only humans will do that.

This is true. There is no resource so abundant that it can't be rendered expensive through stupidity or mismanagement.

But that is where we are now. We do not live in republics where individuals are free to mind their own business as long as they do not initiate force or commit fraud against others. We live in social democracies where only the most corrupt can thrive in the political system. And that system is big at meddling in economic activity.

 
At 6/28/2011 9:54 AM, Blogger Sean said...

VangeIV,

Why?
Because I don't view the very basis of thought and logic as a matter of deep mystery. It can be understood and replicated. It's tricky and will take a great deal of time, but in the end, anything that nature can do, we can copy.

Computers are good tools and great toys. But they are not what many of the optimists try to make them out to be.
Of course they aren't yet, but they can be.

They will not create new processes and find new resources for us. Only humans will do that.
Again, you think of humans as something different than nature, outside of it. But our brains run by physical processes, and the nature of logic and learning is not a metaphysical mystery, but simply a physical process that is complicated, but not incomprehensible.

 
At 6/28/2011 9:56 AM, Blogger Sean said...

VangeIV,

. And that system is big at meddling in economic activity.
Yes, social democracies are big on legislating redistribution with the delusion that they care legislating production into being.

 
At 6/28/2011 10:08 AM, Blogger Sean said...

^^^^
Correction:
... that they are legislating production into being.

 
At 6/28/2011 12:53 PM, Blogger Tom said...

The solar capacity rating in Florida is about 17%. It is dark half the time. Clouds are present 60% of the time. BS is always plentiful from those who think they are smarter than the free market; and they are always wrong.

 
At 6/28/2011 1:53 PM, Blogger Hydra said...

Some natural resources are not finite, others are.

With enough energy, we can make a lot of things, but we can't make something out of nothing.

 
At 6/28/2011 1:56 PM, Blogger Hydra said...

"...the invention of corporations made individuals much stronger to flourish in nature."


You mean corporations like governments?

 
At 6/28/2011 2:49 PM, Blogger VangelV said...

The solar capacity rating in Florida is about 17%. It is dark half the time. Clouds are present 60% of the time. BS is always plentiful from those who think they are smarter than the free market; and they are always wrong.

Doesn't Florida get hit with strong storms on occasion? Imagine what happens to the panels after one hits a solar farm.

 
At 6/28/2011 6:04 PM, Blogger VangelV said...

Because I don't view the very basis of thought and logic as a matter of deep mystery. It can be understood and replicated. It's tricky and will take a great deal of time, but in the end, anything that nature can do, we can copy.

Even if this were true there is a long way from here to there. And many people are not in a position to make it.

Of course they aren't yet, but they can be.

We don't live in Never Never Land but in the real world. What can be is an interesting speculation but what really matters is what is. And right now I don't see the hype as reflecting reality.

Again, you think of humans as something different than nature, outside of it.

They are not outside of nature. But their brains certainly are very unique.

But our brains run by physical processes, and the nature of logic and learning is not a metaphysical mystery, but simply a physical process that is complicated, but not incomprehensible.

But it is pretty much incomprehensible. Any one element can be studied but the entire system is too complex to model and replicate at this time or anywhere over the next few decades.

 
At 6/29/2011 8:57 AM, Blogger Sean said...

VangeIV,

We don't live in Never Never Land but in the real world. What can be is an interesting speculation but what really matters is what is. And right now I don't see the hype as reflecting reality.
This is the perspective I simply don't understand. 40 years from now is not Never-Never land for me; I will live to see it, most likely. And if it's 50, I've still got a pretty good shot.
How can a libertarian, a follower of a philosophy that has been partially tried but never has really succeeded in all of history, take the perspective that if it doesn't exist today, it's not real?

 
At 6/29/2011 2:00 PM, Blogger Ron H. said...

"With enough energy, we can make a lot of things, but we can't make something out of nothing.{"

The FED can.

 
At 6/29/2011 6:26 PM, Blogger VangelV said...

This is the perspective I simply don't understand. 40 years from now is not Never-Never land for me; I will live to see it, most likely. And if it's 50, I've still got a pretty good shot.

You are making an assumption that you can look out over the horizon and see what will happen in 40 to 40 years. I believe that is being very naive.

How can a libertarian, a follower of a philosophy that has been partially tried but never has really succeeded in all of history, take the perspective that if it doesn't exist today, it's not real?

I don't get your point. What isn't real? History? Perspective? Libertarian Philosophy?

 
At 6/30/2011 7:06 AM, Blogger Sean said...

VangeIV,

You are making an assumption that you can look out over the horizon and see what will happen in 40 to 40 years. I believe that is being very naive.
A reasonable criticism. I understand it, but in this case I agree only in that the dates and details will be unpredictable.

I don't get your point. What isn't real? History? Perspective? Libertarian Philosophy?
Libertarian philosophy seems to me to be an attempt to predict a more equitable potential future and make it occur based on some interesting theory and trending evidence that says more freedom is good if you have little. That's a long way from empirical evidence that the model as a whole will work.

 
At 6/30/2011 8:12 AM, Blogger VangelV said...

A reasonable criticism. I understand it, but in this case I agree only in that the dates and details will be unpredictable.

I am very confident that the details and timing will be unpredictable. As will the eventual outcome. But my point should be very clear. It is a long way between here and there and the transition will be horrible for those people who counted on things remaining much as they have been for decades and are not prepared. So while I can be optimistic about the future, I am not very optimistic about those that are unprepared in the present.

Libertarian philosophy seems to me to be an attempt to predict a more equitable potential future and make it occur based on some interesting theory and trending evidence that says more freedom is good if you have little.

Actually libertarian philosophy has nothing to do with equity but with individuality. It is based on very simple but true principles and has developed from there. Unlike other philosophies it is morally sound and defensible in its strong form.

That's a long way from empirical evidence that the model as a whole will work.

Libertarians are not under any illusion about political success. They know that current society is dominated by thugs in the political arena who love power and wealth and will do nothing to benefit the individual by permitting liberty to be the standard that determines what is permissible. If you thought otherwise you are mistaken.

 
At 6/30/2011 9:08 AM, Blogger Sean said...

VangeIV,

So while I can be optimistic about the future, I am not very optimistic about those that are unprepared in the present.
Absolutely! I completely separate speculation about the long term from analysis of and preparation for the short and medium term. It's good to know what to watch for: if AI really takes off, I'll be glad to have given it some thought, for example. But yes, it's unwise to make big bets on effects that are too far into the future to be certain.


Unlike other philosophies it is morally sound and defensible in its strong form.
It holds together well enough, but I don't like some of its effects in the strong form. But I don't want to get into that deep rathole now.

They know that current society is dominated by thugs in the political arena who love power and wealth and will do nothing to benefit the individual by permitting liberty to be the standard that determines what is permissible. If you thought otherwise you are mistaken.
I can't disagree that the political arena is filled with thugs. But most of the enemies of libertarianism are not thugs, but people who think some offshoot of Utilitarianism is a better measure than simply freedom. I don't think most people fully understand the high costs of too little freedom.

 
At 6/30/2011 12:31 PM, Blogger VangelV said...

It holds together well enough, but I don't like some of its effects in the strong form. But I don't want to get into that deep rathole now.

That is the problem. The critics make an emotional statement that they cannot defend with logic so they avoid it. They compromise the principles because it makes the philosophy a better sell but by doing so abandon the principles that make it morally correct and consistent.

I can't disagree that the political arena is filled with thugs. But most of the enemies of libertarianism are not thugs, but people who think some offshoot of Utilitarianism is a better measure than simply freedom. I don't think most people fully understand the high costs of too little freedom.

It is worse. The biggest enemies of the libertarian position are libertarians who compromise principles and allow the state to argue that the initiation of force is a necessary evil for some purposes. Once they give in there, there is nothing left to support the libertarian ideal other than weak utilitarian arguments.

 

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