The steady-state economy

I'm mostly recovered from my carpal tunnel surgery. While I was busy being incapacitated, I got quite a few books read, including two books by an economist named Herman Daly, called For the Common Good and Steady State Economics. I highly recommend the first, as well as the first half of the second (the second half, consisting of several essays where Daly interacted with various critics, were a bit repetititititive, and therefore only recommended to the hardcore).

So, what is The Steady State Economy? I think the best way to start is by describing the neoclassical model, to which the SSE is intended to be an alternative. In the standard model, you have consumption and production, with an arrow going from production to consumption, and another going from consumption to production. When you buy something that has been produced, you're consuming, and the money you pay goes to finance more production. It's kind of like The Circle of Life you saw in The Lion King, if Disney had hired Milton Friedman to write the screenplay.



The first thing that Daly points out is that the diagram shows a perpetual motion machine, which thing cannot exist according to the Second Law of Thermodynamics. The Second Law says that you can never get as much useful work out of a system as you put into it[1]. So if you find a system that gives the appearance of running forever, you have to look and figure out where new useful energy is being fed into it, and where the waste energy is being deposited.

The Steady State model does exactly that, adding two more arrows and two more nodes. An arrow points from resources to production (because you need to obtain natural resources from the environment in order to produce), and another points from consumption to "waste sinks", because you cannot consume any service without some amount of waste to the environment.
These two additions don't just save the model from charges of blasphemy by physicists; it also returns the concept of "environment" to the field of economics, which has otherwise been sluggish to pay attention to the ecological supports that prop up our economic activity.

In the neoclassical picture, economic growth is an easy sell; why have less when you can have more? Choosing less economic activity is tantamount to choosing poverty. Resource limits are unimportant, because a lack of natural capital can always be offset by greater intellectual capital. In other words, if there is a shortage of some resource X, we can overcome it merely by devoting more study to the problem of making Y perform the same function.

This is the core of the problem: while relative prices is a great mechanism for optimally distributing a given set of resources among a set of people, it has no way of regulating the total resources to be distributed. Say you have an ocean that can produce a thousand tons of herring every year without impacting future catches. What happens to the price of an additional ton of herring once the quota is caught? The price goes down a bit, but certainly nothing in the price of ton 1001 indicates that any sort of important limit has been reached.

To put it another way: if there were but one breeding pair of Bengal tigers left in the world, if there was just one acre of forest left, there would still be a market-induced incentive for harvesting them.

Daly compares the economy to a cargo ship. The market distributes resources relatively efficiently, which is akin to loading the ship evenly to prevent it from tipping and capsizing. But no matter how perfectly the weight is distributed, the ship can only carry so much.

The main question that needs to be asked is: which of the two economic visions can best provide for human happiness? Daly argues that his model is better, and I'm inclined to agree simply because it better represents the physical reality of our situation. But he made one point that really drove me to his side on this question: future people cannot bid in current markets. No matter how useful a member of the graduating class of 2107 might find a certain barrel of oil in the ground (say they'd be willing to pay $500 for it) they can't actually make that exchange, because somebody from the present bought it out from under them for $50.

For any given resource that future humans might need, the only way to ensure that it will be there for them is for present humans to draw from the resource pool at a rate that can be sustained into the indefinite future.

But that leaves us with far fewer resources to work with in the here and now, and that will have a huge impact on our current standards of living. I see that as a problem with the lifestyle itself, not for the economic theory. Still, Daly proposes the beginnings of a solution, which derives from his distinction between growth (aggregate size of the economy, as measured by resource use) and development (an increase in the fulfillment of human desires). Using a given resource stream, development occurs when manufacturers find ways to make their goods more durable, more recyclable, and more efficient at delivering the intended service. The circle in the middle of the diagram is still expanded, but without altering the flows that enter or leave the system.

Unlike the neoclassical model, the steady-state economy requires that an upper limit be placed on the number of people that can be allowed to share the globe at the same time. Just like the last paragraph, this fact makes steady state a tougher sell, but doesn't alter its fundamental truthfulness. Daly supports a plan by one of his fellow travelers, which suggests that each woman be given a certain number of credits, each bestowing the ability to bear one tenth of a child. Collect ten, and The Man won't give you any grief about your spawn.

It's certainly better than, say, a strict "one child per family" policy, which doesn't make any allowances for personal preferences. It also encourages the blessed state of affairs where children are being raised by the people who most want to take on the role. But lots of people find any sort of government meddling intolerable when it comes to such deeply personal choices. Of course it's a deeply personal choice with society-wide implications. I certainly sympathize. However, if population limits are needed (and it's hard to argue otherwise), this plan seems to offer the best hope for allowing people to make the choices that best suit them.

Steady-state Economics is an amazing book, and I don't think I'll look at economics quite the same way again.[2]


Notes:

[1] I don't remember where I read it, but I once came across a very handy shorthand for the Laws: 1) You can never win. 2) You can never break even. 3) You can never leave the game.

[2] For the Common Good also touches on this topic, but in addition it provides interesting material about politics and community. I should probably address it in another post.

That whooshing sound overhead?

It may in fact be the sound of a joke whizzing by.

Last week, singer Sheryl Crow unveiled a plan to help save the Earth and all the fluffy critters on it: limit toilet paper usage to a single square:

Now, I don't want to rob any law-abiding American of his or her God-given rights, but I think we are an industrious enough people that we can make it work with only one square per restroom visit, except, of course, on those pesky occasions where 2 to 3 could be required. When presenting this idea to my younger brother, whose judgment I trust implicitly, he proposed taking it one step further. I believe his quote was, "how bout just washing the one square out."

She was clearly joking, but her humor was a bit too subtle and nuanced for many commentators on the right, who reported it as an earnest suggestion.

So Sheryl Crow, singer turned anti-global warming warrior, wants to limit everyone’s toilet paper use to “one square per restroom visit.” Surely she jests. -- Margery Eagan

Now from a website branding itself as "the intelligent alternative":

That said, let's get on to your other tasteless and calculatedly sensational grab for publicity. Come on, Sheryl, you cannot honestly believe that someone like yourself, who travels in high society, actually practices what she preaches, in claiming that everyone must save the planet by using only one sheet of toilet tissue per bathroom visit, no matter where or when it's made. -- Joan Battey

Good name, Ms. Battey.

The best coverage had to come from the crack team over at Newsbusters. The story was important enough to require no fewer than five separate updates. Ken Shepherd spent a lot of time today thinking about Sheryl Crow's butt. I suppose it's a nice gig, if you can get paid for it.

Spend even a minute in the story's comments, and you lose all hope for both Newsbusters and for humanity in general. It's all "Don't shake hands with a liberal!" and "No wonder Lance Armstrong dumped her!" Classy crowd over there. Almost nobody has the simple sense to wonder if maybe Crow wasn't being entirely serious[1].

No, Crow must think she's come up with a powerful, world-saving idea all by herself, utter nitwit that she is. Amazingly, one guy marvelled at how oblivious she must be to not notice that her own brother was poking fun at the idea.

All this raises the question of why so many failed to notice the tongue in the cheek. My theory is that the proposal fits the right-wing mythos of out-of-touch, wealthy, emptyheaded eco-nuts telling other people how to live. It's a useful stereotype to distract people away from serious proposals like mine:

1. Before eating potatos or lemons, wire them into your house's electrical system until they're fully discharged.
2. Compost things rather than throwing them out. Compostable items include dryer lint, newspaper, copies of Ann Coulter's Treason, your neighbor's SUV, and surplus children. This population problem isn't going to just solve itself.
   
3. Solar powered helicopters!

Addendum:

Best. Coverage. Ever.

Surgery went well, but until I get these braces off, I can only hunt 'n peck. It's frustrating.




Notes:

[1] The one guy who brought up the possibility then spent a couple of paragraphs detailing why a TP-rationing law would be difficult to enforce. So he's still a bit thick.

typng wth nose

crpltunl srgry noblog 4now

I do tend to ramble.

I wrote yet another I-can't-believe-you-can-believe-it's-not-global-warming rant in response to Paglia's latest article. It's the longest letter I saw in the comments section, and it probably got starred for that reason alone. But hey, a star is a star.

Mainly it was in response to her overall attitude that, hey, it's a big universe, and we're all tiny-puny. It's the attitude I was trying to dispute in my WWJD post. So if you like one of the rants, you might like the other.

On an equally self-involved note, I started a personal blog called Banned Sorcery. That's where I'll be stashing the non-environmental stuff.

We want a free ride

UTA is planning a massive redesign of Salt Lake's bus system, eliminating lots of routes and apparently reducing the number of buses traveling to and from the University of Utah. Then they're going to raise rates just as my school transit pass expires. Nicole over at Where's my bus, UTA has been working hard to raise public awareness. Unfortunately, I haven't been able to attend most of the public events UTA has scheduled, but I did manage to fire off a public comment taking them to task for the poor job they're doing engaging the public.

It's been more than a little disillusioning to see our public servants in action. They didn't bring the public into the process until they had decided on most of the details of the service cut, and at best they seem interested in minor tweaks to their awful plan, not comprehensive critiques. I asked how we'd know that our comments had been taken seriously, and their representatives basically said to look at the differences between the current proposal and the final proposal. That advice is only a bit more helpful than telling us to consulting an Ouiji board.

UTA has also dragged their feet in providing information that should have been made public from the beginning (ridership statistics, facts about the overall changes in bus capacity, surveys of bus drivers, etc.). They seem to believe that the less the public knows, the more easily they can ram the proposal through. That's never a good sign.

So I'm here to suggest a disruptive alternative to the current fare structure. It's a much simpler structure, and it's sure to promote the primary goal of increasing ridership: everything is free. Let's call it the FreeUTA plan.

You may say I'm a dreamer, but I'm not the only one.

There are several key advantages to free service. The first and most obvious is that you no longer have to collect fares. If ten people get on at a stop, and they each spend six seconds just putting change into the machine, that's a full minute delay. As a frequent bus rider, I've seen people fumble for change, drop change (sometimes straight out the bus doors), miscount change, argue over change, beg other riders for change, and get thrown off for having insufficient change. All that sturm and drang takes time, time that could be better spent moving people from place to place. Free service is faster service.

Other people use tokens, which are much faster. I use an EdPass, which is the fastest because I just flash the card at the driver as I amble on. TRAX riders buy their tickets before the train shows up, and fares are (occasionally) checked as the train is moving. The downside of that is that you end up paying police officers to ride TRAX all day, checking for fares and issuing citations.

The current fare structure effectively penalizes short trips. If you can hop a bus to get yourself four blocks, but to do so you have to pay as much as if you'd ridden it all the way downtown, you probably feel like you've gotten less service for your money than you should have. But four blocks is still further than most people want to walk[1], so most likely people will hop in their cars. Any time a person is weighing the decision of how to get somewhere, and their solution is "the car", it should be seen as a small transit system failure.

It should go without saying that the FreeUTA plan is a huge incentive for riders. But the disincentives in the current structure need to be pointed out. If you double the cost of a bus ride (as the current proposal does), you're getting into territory where there is little reason for car owners to take the bus. A trip downtown, including all-day parking, might cost the driver five bucks. For the bus rider, it would cost four bucks. That's hardly worth the hassle, and for new customers who haven't mastered the whole mass transit experience, there isn't much of an incentive to learn.

UTA is trying more and more to run the transit system like a business. But the simple fact is, it's not a business, it's a public service. Transit users are heavily subsidized -- fares only account for about 20% of UTA's operating budget -- which only makes sense, since many of the benefits being purchased fall on people who aren't paying fares. Drivers benefit from decreased congestion. Everyone in the Salt Lake Valley benefits from better air quality. Everyone everywhere benefits from reduced CO2 emissions. Employers benefit from increased access to employees who might not be able to afford or drive a car, and businesses get a similar benefit from greater access to customers. Downtown Salt Lake and the University of Utah both benefit from less demand for parking spaces[2]. It's only right that riders -- who don't reap all the benefits of the system -- shouldn't pay all the costs. In fact, if the public benefits alone are enough to justify a given mass transit plan, then charging fares seems counterproductive at best.

I don't have hard numbers to back up my intuition that a 100% subsidy would be a net gain (even without the other benefits I mentioned). But I do know it is pure insanity to see riders as "customers" who we should extract as much money from as possible. That's just the approach UTA seems to be taking.

Instead, the goal should be to get as many people out of their cars as possible. In the long term, that's going to require a major rethinking of our current land use policies. Sprawl makes effective mass transit virtually impossible. And walking. And biking. And pretty much every conceivable not-car solution. In the near term, however, we should be making mass transit as attractive as possible to riders. The FreeUTA program is going to take a good deal more money than UTA's budget has. I'd always figured that such a change would have to go through the state legislature (unlikely, given that the legislature is filled with road-happy chimpmonkeys), but I've heard a couple of proposals floated where the Salt Lake City government would pay UTA to maintain the service the city needs.

Update: I've just received a copy of the market research on which UTA based the redesign. I'm only a few pages in, but it's giving me a better understanding of what the people at UTA are thinking.


Notes:

[1] I'm a bit of an exception in that regard. I don't really consider walking a burden for the first six blocks or so, and I'm willing to walk as much as ten blocks if I've got the time.

[2] As Nicole points out in this post, service to the University will be effectively reduced under the proposed changes. Parking space is already at a premium up at the U, and many of the roads up there are already heavily congested during peak hours. If we don't stop the current plans, and begin improving transit service to the University, we'll be forced to pay anyways, for wider roads and more parking.

Deep Economy

KQED San Francisco had an outstanding interview with ecology author Bill McKibben [here]. Available as an MP3 or audio stream. The high points:

1. To avoid nasty, pointy death, we need to start consuming far, far less.
2. That sounds scary, but it's really not. All our excess consumption isn't making us happier.
3. In fact, it's done a lot to erode our sense of community, which significantly harms our quality of life.
   
4. Part of the solution involves rebuilding local, small-scale economies (farmers markets being a good example).
5. The McKibben family is facing a Beanie Baby overpopulation crisis.

The silver bullet is aimed at us.

Silver bullets are great things. When a big, slobbering werewolf crashes through your door and gives you that look that says, "Yay! I won't have to raid the chicken coop tonight!" the availability of a silver bullet can mean the difference between survival and a scene of blood and gore that your nearest and dearest won't be eager to clean up after.

We relish the idea of having that sort of decisive, 30-caliber effectiveness in real life. It's an especially compelling hope when the problems you're faced with seem overwhelming. But when it comes to technological solutions to environmental problems, all too often the ideal is the enemy of the good.

Why invest in improved mass transit when the "antimatter economy" is just forty years off? Why build wind farm capacity today, when by 2107 roving bands of nanobots will be hunting down carbon dioxide molecules and beating them up in back alleys? Why eat a responsible diet today if you figure that tomorrow holds a cheap pharmaceutical cure for your every ill?

Some solutions really would make a huge difference, like nuclear fusion. It's clean, it's fueled by one of the most abundant substances on Earth, and it's been just-a-couple-of-decades-away since 1950. While I think that is partly due to chronic underfunding, the truth is that we can't base our future on the assumption that it will pan out in time.

Other solutions, like the much-touted "Hydrogen Economy" strike me as overhyped and impractical. Why would auto makers be excited to build a hydrogen car in 2020 when they claim they can't survive even moderatly increased fuel-economy standards today? I believe that the Hydrogen Economy exists primarily for the purpose of siphoning interest away from alternatives that are viable right now.

There is one last category of silver bullets, which are highly worrying to greenies like me, but excite the business world. Genetically modified organisms and nanotechnology hold tremendous promise, but also the potential for huge -- some would say "disastrous"[1] -- consequences if handled improperly. Now, some will tell us that Our Corporate Masters(TM) are going to be careful about what technologies they introduce and mindful of the potential consequences. It's safe to say that these people are on crack. Given our current corporate structures and incentives, it's perfectly reasonable for a corporation to look at a memo from one of their research teams entitled "If We Release This Product, Saber-Toothed Cows May Overrun New York" and delay the rollout only until their legal team assures them that they won't have to foot the bill for the cleanup.

Potential negative effects don't matter as much to corporations as they ought to, because the decision-makers and investors are shielded from most of the consequences. Nothing short of outright fraud can put a CEO in jail, and the worst that can happen to investors is that the value of their stock drops to zero.

Okay, I'm headed off on a big fat ranty tangent here. Instead of continuing down this path, I'll simply recommend that you read William Grieder's The Soul of Capitalism. It should explain why I don't believe corporations -- as presently constituted -- have the necessary incentives to properly weigh the broader consequences of their actions.

Without heavy (perhaps even stifling) standards for proving the safety of these new products, we're faced with a situation where each problem we try to solve may end up causing three new ones. Of course, biotech has enormous potential applications for creating new medicines, cleaning up toxic chemicals, sequestering carbon, and making agriculture more productive. But we need to tread very cautiously. Look at the problems we caused ourselves with ordinary pollution, and then imagine how much worse it would be if the toxic agent was no mere molecule, but a self-reproducing organism.

For most people, it's easy and comforting to believe that technological progress will step in to preserve our current way of life. The alternative -- contemplating major reductions in our consumption -- is downright scary. But I think it's absolutely necessary, and probably healthier for us in the long run.

I'm absolutely not implying that we shouldn't be pursuing new technologies. Instead, I'm saying that true silver bullets don't exist. When cars were introduced, they seemed like a perfect solution to our transportation needs. We didn't predict the side-effects of global warming, sprawl, urban flight, or social fragmentation. But they still occurred, and we're dealing with the consequences. When we finally figure out nuclear fusion, what will be the consequences? Will our energy problems be solved, or simply magnified by the subsequent reliance on new industrial processes with high energy inputs? It depends primarily on what we choose to do with it.

Maybe in twenty years, we'll discover some tremendous, completely unintended consequence of a new technology, but -- as with automobiles today -- we'll be so dependent on it that we can't possibly turn it off again. Unexpected problems will arise because we're so eager to let new technologies transform our society over and over again. The attitude is, once we've gained some new capability (such as those provided by cars, or the Internet) we tend to use it to the hilt, heedless of the dangers. Why not grow all our food in Iowa, produce a city's energy five hundred miles away, get all our manufactured goods from China and have all our critical documents stored on a server in Palo Alto [3]? There's no chance these systems could be disrupted, leaving us stranded, right?


Notes:

[1] Upgrade that to "cataclysmic," and a Hugo-winning sci-fi story can practically write itself.

[2] There is no two.

[3] I'm lookin' at you, Google Docs.

What Would Jesus Drive?

As an environmentalist living in a state where "liberal" is a dirty word, I think I've come to recognize -- and maybe even understand -- the patterns of thought that hinder our progress.

1. The world is very big, while humanity and its needs are tiny by comparison.
2. Environmental restrictions are an onerous restriction on personal freedom.
3. Technological progress and human ingenuity will save us from any environmental excesses.

I believe that -- at least to a first approximation -- the first idea has its origins in a very specific conception of God. According to this conception, God had a plan to establish humanity as the dominant species on the planet, and [preferred deity gender pronoun] created the Earth to fulfill the needs of the species. Environmentalism is therefore seen as a repudiation of the commandment to use the Earth as we see fit, and the sustainability movement seems to imply that God screwed up by not anticipating our current needs.

Maybe this is a shamefully misleading caricature of my opponents. But my reason for suspecting that is that it's so easy to refute this depiction, that it hurts my brain to think that anyone could actually believe it. The words of actual anti-environmentalists only lend support to the idea. Here's Rush Limbaugh's take:

In fact, that passage [by Michael Crichton] is one of the things that helped form my whole thinking on the concept of the complexity of all of this that is our planet and the impotence that we really have to do anything about it. The idea that by improving our standards of living, that those characteristics of our existence will destroy us, is, frankly, just absurd. I contend you cannot believe in God and believe what the global warming crowd believes. You can't. The two do not go hand in hand. You have to actively not believe in God and believe in something else as a replacement, in order to hold this catastrophic climate crisis view that they all have. [source]

Of course, I do believe in global warming, and I don't believe in God. But it's not necessary to be an atheist; you simply have to not believe in the same conception of God that Rush does.

Well, I promised that this viewpoint was pretty easy to take apart, and I guess it would be rather anticlimatic if I didn't demonstrate the fact. It seems to me that their conception of God is a right-wing, consumerist convenience not derived from any scriptural source. This god could not have merely provided us an inheritance that could bring us happiness if used responsibly. No, sir. The only logical course of action was for the Creator to provide a canvas big enough to support all the desires and cravings of as many descendants as humanity could ever want to bear.

Why should we believe that, though? Understand that this is the same God who promised the Israelites a land flowing with milk and honey, then stuck them in the one spot in the parched, sandy Middle East that doesn't have significant oil reserves[1]. Okay, cheap shot. But I can't recall any scriptural support for the idea that God will protect us from the consequences of our own stupid actions. A quick glance through the annals of history would similarly reveal a God who often steps aside and lets humanity reap what it has sown. So why this loophole that protects our environment from the consequences of the pursuit of material gain? Why don't the anti-environmentalists say what they really think: God loves us and wants us to have SUVs?

There is some evidence, of course, that any Creator would want and even expect some level of economic development for our own benefit. How else to explain the digestive tract? We need "stuff" to survive, and that stuff invariably comes from nature. But one solitary verse about "replenishing" and "subduing" [2] can hardly be bootstrapped into a comprehensive environmental and economic policy. If the Lord Almighty didn't specify One True Global Carrying Capacity, we should assume that we're supposed to figure out the limits of creation for ourselves, rather than assume that no such limits exist.

This conception of God also ignores ample evidence that our happiness in this life isn't supposed to come from ever-expanding material consumption. It's supposed to come from things like loving your neighbor, doing good works, and smiting the enemies of the Most High.[3] I disagree with quite a few religious ideas about how to live happily, but there are some valuable ideas to be mined, ideas which some self-proclaimed religious people seem to have rejected in favor of "The Cult of More".

The Cult of More is the fundamental idea, lodged deep in the American psyche, that the solution to all our problems, from the environment to poverty to that deep, abiding sense of purposelessness that infects the lives of so many. It also considers American-style, cutthroat capitalism to be the ideal means of achieving economic growth. Environmentalism, anti-corporatism, and anti-consumerism all threaten the tenets of The Cult of More, and therefore constitute a grave threat to the happiness of every American.

The Cult of More offers false promises of salvation, and provides the first line of defense for the greediest and most socially damaging practices of modern corporations. The truth is, there simply isn't enough planet to raise everyone's standard of living to that of the average American. That standard of living is even less attainable when we start trying to figure out how to achieve it for future generations, and it falls pathetically short of the lavish lifestyle that our society promotes as ideal.

If you're like most religious people, you must have been taught somewhere along the lines that values like service, sacrifice, kindness, and compassion would bring more happiness than material wealth. As we live our lives in a world that risks being drowned in the sea of our wants, we need to settle on a new set of priorities that will let us achieve greater happiness at less ecological cost.

I'll be covering the other two articles of faith (Regulation as Anti-Freedom and Technology as Savior) in separate posts.


Notes:

[1] According to Wikipedia, Israel produces about 2700 barrels of oil a day, or enough fuel to power three Hummers. They also note that the population of African elephants has tripled in the last six months.

[2] Genesis 1:28

[3] We seem to have the smiting bit down pat. In fact, our government spends $400B a year on smiting-related expenditures. Can we please work on the other two for a while?

Paean to the 'lectric cars

My letter to Salon.com, in response to someone complaining that a switch to electric cars would make us even more dependent on coal. My main point was that, if built properly, electric cars could act as grid storage devices, making wind power far more reliable as an alternative. But, as usual, I got all long-winded about it.

Soylent green is people!

That's all I could think when I read this story about Ventria's new genetically modified rice with human genes.

Of course, the joke doesn't quite work, because the rice is intended solely for manufacturing medicine, not consumption. But I'm convinced that the ultimate goal here isn't to make medicine for third world countries, as the article suggests. Had that been the true goal, they would have put the genes in crabgrass or plankton or sardines. You know, things nobody would consider eating.

No, this is a shot directly across the vegetarians' bow. Put enough human genes in your vegetables, and you end up with carrots that scream when you try to eat them.

Meanwhile, PETA is trying to shame Al Gore into adopting a vegetarian lifestyle. That makes all kinds of sense to me. There are billions of cows on this planet, each belching out methane (a stronger greenhouse gas than CO2) at a prodigious rate. Also, vast swaths of land are being deforested to create grazing land in South America, so they can ship beef northward to feed our already chubby butts. A worldwide shift to a vegetarian diet would probably reduce the amount of economic activity needed to feed humanity by an order of magnitude. Plus, rodeo clown unemployment would skyrocket. So really, there are no downsides!

Mister Gore, as one of the most influential people in the environmental movement, you could do great good by drawing attention to the environmental effects of the meat industry. Also, it would be a great personal favor, as I'm currently heavily invested in tofurkey futures. Put down the burger and back away slowly!