77 thoughts on “Monday Message Board

  1. John

    I’ve recently received an email from Graham Turner CSIRO Ecology Canberra circulating a couple of his papers. A few years ago he revisited the Limits to Growth story quite comprehensively. He has now published some smaller summary papers one of which is:

    Turner, G.M., 2012. On the Cusp of Global Collapse? Updated Comparison of The Limits to Growth with Historical Data. GAIA – Ecological Perspectives for Science and Society 21, 116-124.

    The article seems a pretty good summary and is open access via:


    As this is essentially about environmental economics in the end I did a search but you dont seem to have had any discussions on his work and findings. Any chance of starting one on this theme. I am very curious as to what sympathetic economists make of the LtG story currently as well as this modelling. This always seems to me the real 600 lb gorilla in the room with the much debated climate change and carbon tax being a secondary story about the size of a rhesus monkey. But I would like to learn.

  2. These Max Keiser videos are worth viewing – despite some of his excessive mannerisms. His team obviously keep their fingers on the financial deathrows of capitalism. Here he provides some worthy limelight for capitalist-reformist Steve Keen.


    It is a pity that so many pundits appear to focus on the GFC as a financial phenonema. While much of events appear to represent nothing but various capitalists squabbling over surplus that has already been extracted, in fact the real problem is that the underlying system providing that surplus has reached a crisis point.

  3. @Chris Warren

    Thanks Chris – quite fascinating – he reminds me a bit of Robyn Williams.

    Vis a vie Steve Keen, much as I like much of what he had to say I was a bit surprised by his example of better directed research funding – asteroid mining.

    This suggests while he does excellent relatively divergent analysis on the Ponzi aspects of finance capitalism, he is still very conventional in his view of natural resource/ecological capital i.e. sort out the markets and money creation system and all will be well.

  4. Both De Long and Krugman have brought up the point in the last two days that the right-wing’s ire at the upcoming scheduled expiration of stimulative tax cuts (the fiscal cliff) is totally misplaced. If stimulus has been totally ineffective, then a reduction in that will not cause any negative effects on the economy. Cue shifting the goalposts towards another talking point – something something efficiency, something something growth, something deleveraging, zzzzz.

  5. Will: I would assume that the right-wingers in the US are worried about supply side effects from the tax increases, not demand side ones.

  6. @Newtownian

    Colour me unconvinced on this. Most of the graphs show steady improvements followed by a predicted collapse in the near future, supposedly due to resource constraints. But the only resource constraint mentioned is wrt oil, and peak oil per person (the relevant criterion given the analysis) happened 30 years ago. More on this here


    While it’s possible to read Limits to Growth in various ways, most discussion focused on claims that lots of mineral resources, not just oil, would be exhausted by around 2000. There’s no sign of that happening


  7. It is a common misconception that LTG forecast collapse or exhaustion of key minerals by 2000. This is incorrect. In a nutshell, LTG forecast from the assessment position of 1972, that we had until the year 2000 to change course or face collapse by about 2050 plus or minus 10 years. That is, it predicted we could follow our apparent growth trajectory until 2000 and still be able to “pull back” and alter course successfully. However, if we kept on the same trajectory after 2000 we would be past the point of safe return, as it were. As it turns out, 2000 was probably over-optimistic. About 1990 was the point where we needed to begin to change radically to non-fossil, renewable fuels, materials and processes and bring a halt to population growth.

    Allowing for a decade to change the momentum and direction of our system, we needed to start work in 1990 and have it all in place and operational (full global transition protocols) by 2000. Instead, the 1990s saw an acceleration of unsustainable consumption and everything deleterious and maladaptive about corporate and consumerist capitalism. Now we are in a dire position.

    It’s almost a line ball call now whether climate change (which is still a LTG) or standard resource LTG will start hurting us most first. Energy is probably not our major problem. Initially, I thought it would be but argument with Prof J.Q. and others led me to further private (admittedly amateur) research. The fungibility and/or substitutability (if those are the right terms) of energy along with energy savings and the viable EROEI of ubiquitous energy like solar and wind mean that energy is probably not our key problem but changeover is as we have started far too late on the renewable path.

    Nevertheless there are a lot of other key limits approaching (limits to potable water, irrigation water, aquifers, topsoil, arable land, the phosphorous and potassium cycles and so on. Not all limits relate to resources. Waste generated problems (like climate change) also represent limits to growth.

    The planetary boundaries approach is worth checking. “… scientists identified nine Earth system processes which have boundaries that, to the extent that they are not crossed, mark the safe zone for the planet. However, because of human activities some of these dangerous boundaries have already been crossed, while others are in imminent danger of being crossed.” – Wikipedia.

    The boundaries relate to;

    1. Climate change.
    2. Ocean acidification.
    3. Ozone depletion.
    4. Nitrogen cycle.
    5. Phosphorous cycle.
    6. Freshwater use.
    7. Biodiversity loss (extinctions).
    8. Land use.

    Other boundaries were left out as they cannot be accurately modelled yet. Climate change is already over the boundary but two are off the chart, biodiversity loss (not surprising) and the nitrogen cycle (does not normally get much of a mention).

    “The intrinsic limits to the amount of resources and environmental services that humanity can extract safely from the Earth System cannot be eliminated by wishful thinking, denial, or omission from official sustainable development conference statements. It is simply the nature of the planet we inhabit.” – Will Steffen.

    Economists appear to have no formal training in recognising environmental limits or even recognising that economies are a sub-system of the biosphere and as such strictly subject to the laws of thermodynamics and general environmental limits and boundaries. It seems very hard for even economists who are well aware of environmental issues to properly integrate them into their economic thinking. Their training and standard methods so hermetically seal economics from natural world flows (of energy and materials) that almost all economists have a conceptual blind spot with this whole issue, IMO.

  8. @Ikonoclast

    I was around at the time, and most of the discussion of LtG focused on mineral resources. The link in my comment above shows that the book was marketed in terms of imminent (within two or three decades) exhaustion, not problems that would arise 80 years in the future.

    I can remember observing around 1980 (before my every observation was recorded for posterity on the Internets) that the real problem was that of the assimilative capacity of the environment, which can be broken down into the “boundaries” approach to which you refer.

  9. Conceivably LTG could arrest emissions growth and thus climate change after a lag. If so it means all the weighty deliberations over carbon tax were irrelevant and the wheels were already in motion but unseen to slow emissions. Examples of possible negative feedback mechanisms are
    1) the West buys less from China who then burns less coal to power factories
    2) high cost coal fields like Alpha can’t afford to diesel to run trains and trucks

    The trouble is zero growth stagnation won’t achieve the really big emissions cuts (say 40%) that world wide depression could achieve. I guess the idea behind carbon prices is that the economy has enough forward momentum to pay for carbon alternatives. Stagnation could be a worst of both worlds scenario … say stuck on 1980s level emissions and not enough spare cash make deeper cuts.

  10. @John Quiggin

    Thanks for responding John.

    1. In posing this topic I was wondering about where you and esteemed bloggers were located on this matter – not to start a dispute (there have been plenty of these) but rather to explore how far apart the different academic and related communities are and how much effort at ‘harmonization’ is being made. My experience is its been relatively little despite the critical issue at hand but one can hope.

    2. Addressing your concerns (hopefully):
    – #Near future collapse# – Turner is pretty apologetic about how rubbery the predictions are – and your comment still begs the question of when mainstream economists see a steady state economy in terms of energy and resource use arising? Clearly eternal exponential growth is impossible – but what range are we talking here?
    – #Oil is not yet running out# – Ikonoclast pings this one with the EROEI issue – ecologists are very interested with energy/resources for maintenance as well as growth. With past cheap oil this wasnt an issue but we are moving beyond that. A traditional economics answer is the technical fix of mining bedrock for minerals and the sea for Uranium – the trouble is the energy sums are unfavorable for many resources – or the sums say this would be to turn the planet into a giant quarry.
    – #Possible to read limits to growth in various ways# – ecologists generally dont have models as their primary touchstone. Rather they are decision support and integrating tools to explore more basic observations and mass balance work. A classic example is Vitousek, P.M., Ehrlich, P.R., Ehrlich, A.H., Matson, P.A., 1986. Human Appropriation of the Products of Photosynthesis. BioScience 36, 368-373. This along with documents like the USGS Minerals survey say simply we have already appropriated a huge chunk of the planet for stuff and there isnt much left. LtG provides a narrative on the path of resource depletion but its not a primary source of information.

    3. Caveats and where next?:
    – A big problem in this is the opacity of the LtG model and its assumptions (like so many other models its all about ‘trust us’) – so your scepticism is perfectly reasonable.
    – Nevertheless there is a strange contrast between the urgency over climate change and the defence of science shown by many economists – in contrast to the LtG story which does not get the same treatment even though the basic science is just as sound and I’m willing to bet LtG has a similar level of consensus among the ecology/environmental science community.
    – Perhaps the solution is for mainstream economists to chat with ecologists socially which begs the question of whether you and Ove Hoegh-Guldberg talk about this ever over a drink?

    *declaration of interest -personal position comparable to Ikonoclast’s – essentially that mainstream economists ‘frame’ environmental limits differently to ecologists, environmental managers etc. leading to huge misunderstanding – no offence.

  11. @Hermit
    “Conceivably LTG could arrest emissions growth and thus climate change after a lag.”

    That sort of happenned after the collapse of the Soviet Union. But then it got started in earnest again and Kyoto despite being less controversial than today oversaw and emission from ca 3 gigatonne/y (1994) to 8+ gigatonne/y (2010).

    A few other devil in the details points:
    – There is more than enough alternative/unconventional fossil fuels to keep the present system going well passed totally catastrophic climate e.g. 6+ degrees of warming.
    – To stabilise CO2 levels requires near complete decarbonisation (globally about 2% of Australia’s current per capita emissions – ref. Stern) and we cant even sort out the first easy bit of the first few percent.
    – Kyoto despite being less controversial than today oversaw an emission from ca 3 gigatonne/y (1994) to 8+ gigatonne/y (2010). So while gas is less C intensive, replacing coal completely still wouldnt get us back to Kyoto levels! After Doha you have to wonder.

    And you rightly point to the other dilemma that no growth in the present system means depression.

    – A final sting relates to John’s comment on ‘assimilative capacity’ – the more you push biophysical processing systems the less capacity they may have. If you are conventionally economically inclined the following may be of interest : Thampapillai, D.J., 2010. Perfect competition and sustainability: a brief note. International Journal of Social Economics 37, 384-390. Thampapillai, D.J., 2012. Macroeconomics versus environmental-macroeconomics*. Australian Journal of Agricultural and Resource Economics 56, 332-346.

  12. @John Quiggin
    Quickly and further to your comments on ‘Assimilation Capacity’ – a colleague just sent me the following:

    ‘Rockström, J., Steffen, W., Noone, K., Persson, Å., Chapin, F.S., Lambin, E.F., Lenton, T.M., Scheffer, M., Folke, C., Schellnhuber, H.J., 2009. A safe operating space for humanity. NATURE 461, 472-475.’

    In case you dont have it, it indicates essentially a current opinion on these assimilation boundaries – separate to resource use. Basically we are over quota on 4 proposed boundaries, a close on 5 others with two not determined.

    If taken seriously this arguably would produce the mother of all cap and trade schemes and lots of fun and profit for the brokers whatever happenned to us.

  13. @John Quiggin

    I was around at the time too but I debated it very little with other people. I read the book and thought the logic was irrefutable. Exponential growth cannot continue indefinitely on a finite planet. Case closed. Doom assured. Crack another cold beer. I was a bit like that at that time.

    Because I debated it very little with others my memory is focused on the text and graphs within the covers. In the standard run it is very clear;

    1. Food per capita peaks in 2008.
    2. Industrial Output per capita peaks in 2010.
    3. Pollution peaks in 2031.
    4. Population peaks in 2050.

    These projections are consistent with my characterisation it as predicting “collapse by about 2050 plus or minus 10 years”.

    Updates of LTG show the standard run is performing not too badly as a broad predictive guide.

    I am defending this interpretation of the original LTG not to be Ikono-Pedant vs. Prof. J.Q. but to defend the original scholars Meadows et. al. against the slurs of the Cornucopians, Neocons and Glibertarians who always totally falsely deride LTG “as predicting disaster by 2000” and thus being “proved” wrong. It gets up my nose that the reputations of good scholars who did irrefutable work should suffer these slings and arrows from such outrageous, mendacious fools.

  14. @Newtownian

    You mention “A traditional economics answer is the technical fix of mining bedrock for minerals and the sea for Uranium – the trouble is the energy sums are unfavorable for many resources – or the sums say this would be to turn the planet into a giant quarry.”

    Prof. J.Q. mentions, “I can remember observing around 1980 (before my every observation was recorded for posterity on the Internets) that the real problem was that of the assimilative capacity of the environment, which can be broken down into the “boundaries” approach…”

    I want to draw these two thoughts together. First, John Quiggin showed considerable foresight in intuiting so early the assimilative capacity issue. Thinking of assimilative capacity as a potential system wide problem (economically and environmentally) is a good way further down the road than just worrying about pollution on a case by case basis. I was certainly stuck in the latter mode, re pollution in the 1980s, and long after. I have tended to focus on (possible) energy and materials shortages.

    Somewhere else on this blog I posted a screed of mine about ubiquitous resources. I am not good at finding my old posts. Suffice it to say, it may be that resource shortages can be addressed by changing our economy to use ubiquitous, renewable resources.

    “Ubiquitous Resources are found everywhere (e.g., air, light, water). Localized Resources are found only in certain parts of the world (e.g., copper and iron ore, …” – Wikipedia.

    A ubiquitous resource economy would use solar power, wind power and water including desalinated water from cheap solar/wind energy. It would also make great use of silicon and carbon (amongst the most common elements on the planet) plus sodium, chlorine and a couple of other minerals economically recoverable from the sea. Many items (e.g. car bodies) may be made from epoxies and strengthened by glass or carbon fibre rather than being made from metals. All the chemicals for epoxies can be made from the ubiquitous feedstocks mentioned (esp. carbon, water and chlorine) with enough energy.

    In this case of a conversion to a ubiquitous resources renewables economy, the flows of waste and their assimilation/recycling by natural systems would be the limit. Alternatively, harvestable energy for useful work of all types would be the limit if we undertook energy-hungry breakdown and recycling within the economic-industrial system rather than dumping the wastes into the biosphere.

  15. Energy may be derived from many sources; food production still has much room for innovation; waste disposal and recycling, ditto. These issues are “soft” in the sense that they are not typically limited by “hard” constraints, but by “soft” constraints. A hard constraint is the mathematical equivalent of falling smack onto concrete, to apply a messy analogy.

    The big issue is the one of how we are blithely extinguishing all the big life forms on this planet, apart from people and our favourite domesticated edible animals. Same goes for big botanical life forms. Once a species meets its demise, we cannot bring it back: it’s the ultimate biological hard constraint.

    Perhaps many years from now, some insanely talented scientists, with a goodly collection of genomic sequences at their disposal, can manage some kind of species resurrection, though I very much doubt it.^fn1 The whimsical question I pose is what will an Earth be like for us in a future with such greatly impoverished ecology?

    fn1: People have talked of using “woolly mammoth” DNA to clone one, implanting the genetic material of the nucleus from a living mammoth cell into an embryo from a similar enough species, like an elephant. Aside from several major technical challenges, this assumes that we have another non-extinct species, the females of which can hopefully carry a clone to term. In the case of the woolly mammoth, once elephants are extinct we aren’t left with (m)any alternatives for surrogacy. We can all imagine an artificial womb, but this is currently in the realm of science fiction.

  16. @Ikonoclast
    You make lots of good points. A few quick responses hopefully constructive.

    1. Have a look at the Nature article mentioned above. Its about ultimate ‘assimilative capacity’ boundaries – one take on it at least – not the last word but still useful.

    2. I’ve always hated the concept of ‘assimilative capacity’ – it promotes a debilitating utilitarian view of nature as a kind of sewage treatment system, a precise example being Constructed Wetlands technology. Though such engineered ecosystems look better than a concrete vat they are shadows of natural ecosystems – like golf courses, wheat fields or pine plantations – they look green but are biological deserts/monocultures. The countryside around Lismore may look verdant but they are a wasteland beside the rainforest known disgustingly as the Big Scrub reduced from 150,000 ha to 35 ha today.

    This devastation of the natural world is still not poorly incorporated in the vocabulary of mainstream economic analysis except in utilitarian ways like hedonic pricing even from the good ones like JQ. Why such anthropocentrism? Maybe its the way of looking at the world economists unconsciously have constructed for themselves whether they be nominally capitalist or socialist. What social scientists called narrative and framing.

    3. A lot of things dont assimilate except over geological time – classics being pesticides, heavy metals and PCBs.

    4. Re. ‘ubiquitous resources’ – the complement needed is to come from the other direction and also consider resources which are rate/economy limited e.g. In freshwater biologists first is phosphorus – in seawater its iron hence this mad proposal for fertilizing the oceans. For us energy is one.

    5. Re. alternative materials like epoxys – certainly they are a good idea and lie at the heart of the line Amory Lovins and Brundtland push – through efficiency and smart thinking its possible to have a healthy wealthy equitable world for 10 billion. Personally though I think they are in la la land for reasons like the following:
    – such a world has been technically possible for decades with what we already had – smaller cars, houses, better design, cooperation, a slower pace of life etc. But this isnt how we function as a species at least at the moment – and that’s the real problem.
    – governments of all flavours seem completely locked into growth despite all the signs – is there a government anywhere that isnt? – Norway is subsidized to the gills by oil revenues and so is a non transferable exception.
    – even progressive mainstream economists dont seem to have solution to the problem of how to change – case in point Tim Jackson. His book “Prosperity without growth” appears a great plain english analysis of the problem of growth – but there doesnt appear to be a single solution other than aspirations proposed by the hippies 40 years ago.

  17. I want to ask people about a particularly insidious form of political messaging. It may not have spread beyond NSW. Yet.

    Every bill for every small retail electricity customer has the following message included –

    “NSW Govt estimates that the Federal carbon tax and green energy schemes add about $315 a year to a typical 7MWh household bill – see ipart.nsw.gov.au ”

    It’s apparently a licensing requirement imposed by the NSW gov’t on electricity retailers, to be put on electricity bills after July1 2012.

    I wrote to the ACCC about it – thinking this was political messaging of the energy companies themselves. It turns out it’s not, although I strongly suspect they are more than willing to put this kind of thing on power bills; it is a politically partisan message by the NSW LNP government. It seems clearly designed to inculcate dislike and opposition to the Carbon Tax and to measures intended to induce change in the electricity supply sector. There are other reasons besides ‘green’ schemes and carbon taxes for rising energy costs, but those were not printed in red on peoples power bills.

    So, how is this kind of politically partisan messaging allowable? Does mandating it by law, as has happened, somehow make it alright? Is this in breach of political advertising regulations?

  18. “1. Food per capita peaks in 2008.
    2. Industrial Output per capita peaks in 2010.
    3. Pollution peaks in 2031.
    4. Population peaks in 2050.”

    That’s pretty much my recollection of the kinds of projections that attracted most attention, and those projections don’t look too convincing today.

    As regards #1, there are problems with food, but output per capita is growing. Here’s the FAO

    Despite higher prices, rapid income growth has supported robust increases in per capita food consumption in most emerging and developing countries (Figure 32). Eastern Europe and Central Asia experienced the strongest growth in per capita food consumption since 2000 at 24 percent, followed by Asia at almost 20 percent. In sub-Saharan Africa, per capita consumption grew quickly from 2000 to 2005, but higher prices in the latter part of the decade appear to have limited further growth, and per capita consumption in the region was only 11 percent higher in 2012 than in 2000. Not surprisingly, per capita consumption of food has been stagnant in Western Europe and declining in North America, given the already high consumption levels.

    I don’t see any evidence of #2, despite the best efforts of the Global Financial System

    As regards #3, most of the kinds of pollution being talked about in the early 70s have in fact declined in developed countries, and even places like Beijing are less polluted than, say, London used to be. Of course, CO2 threatens to cancel all of this out, but I don’t think the LtG people mentioned it.

    On #4, it’s pretty much dependent on #1, which doesn’t seem to be happending.

  19. @Newtownian I’m not a huge fan of assimilative capacity either, but if you want to fit the discussion into the framework of LtG, that’s what’s on offer. There’s nothing at all in LtG to suggest that massive species extinction would be a bad thing if the adverse effects on food production systems could be avoided.

    BTW, I hope to have an article on all this coming out in Aeon fairly soon.

  20. @Ken Fabian

    NSW Govt estimates that the Federal carbon tax and green energy schemes add about $315 a year to a typical 7MWh household bill – see ipart.nsw.gov.au

    AIUI this figure is somewhat controversial. I’d like to see someone do an independent analysis of the net impact. As has often been pointed out, there is compensation in the package and of course people can choose to use less.

  21. @John Quiggin

    I hope you read down to the point where I said I am not trying to be Ikono-Pedant vs. John Quiggin. Rather, I am sticking up for the sholastic repuations of Meadows et. al. against the Cornucopians, Neocons and Glibertariians who mis-characterise the LTG standard run and then claim it is already refuted.

    1. “Growth cannot continue indefinitely in a finite system.” is an irrefutable truth.

    2. The standard run like any extrapolation is subject to many uncertainties and potential errors even though the truth underpinning the work is irrefutable.

    3. The standard run is now looking a bit inaccurate. This is not something to surprised at given the nascent state of systems analysis and mainframe computing power at the time of that work.

    4. Exponential growth has the characteristic of coming up against limits very quickly in an iterative or generational sense.

    5. A twenty or thirty year error margin (one human generation) in prediction is not fudamentally signifiant when you are dealing with exponential growth.

    6. The fundamental principle still holds. The exponential growth cannot continue. The limits (be they resource or assimilative) will be hit.

    7. Further, the limits will be hit soon in generational terms. You and I might see them. Our children will certainly see them.

    8. You have said before the issue is not limits but near limits. In exponential-generational terms all limits are near.

    The key issue now (IMO) is the possibility for creating a soft landing into a steady state world economy (in quantitative terms). You see limits as more “stretchable” but not infinitely so, and resources and processes as more fungible and substitutable. I hope you are right. This would mean that once it dawns on the world populace that we do have an existential crisis then we would still have the wriggle room to make some kind of relatively soft landing in the face of resource and waste assimilation limits.

    AGW (and maybe some of the other “boundaries”) are still a particular worry because of natural amplification, tipping points and runaway effects. But that is another thread.

  22. The LTG people are certainly qualitatively right; they just may have gotten their sums wrong. Resource use on planet Earth must peak eventually. Surely the takeaway from all this is that we should be doing all we can to reduce population growth so our per capita sustainable use peaks as high as possible.

  23. @Sam

    They haven’t got their sums wrong nor the fundamental premise wrong. Their other assumptions may be a bit wobbly and their error margins a bit wide. Not surprising, as I said, given the nascent state of systems analysis and mainframe computing power at the time of that work. I could have added that resource reserve estimates were more rubbery then than they are today.

  24. This arrived in an email with the note “someone is going to hell for this”. So here it is for anyone who has not seen it.

    PriestOff advertisement.

  25. @John Quiggin

    Tks John – I will be interested to see this article.

    Regarding your concerns about the initial LtG story.

    1. I agree the numbers are rubbery and subject to many uncertainties which arent well documented and couldnt be modelled back then. Some subsequent developments are notionally positive depending on your perspective – for example the potential for increasing crop yield through genetic engineering if the social decision to go this road occurs.

    2. But the numbers are still useful in that they beg the question if these paths are incorrect when will levelling off happen – 2060, 2100? These dates are a little way off, but not that far. So it seems reasonable to ask what alternative dates mainstream macromacro economists might propose and what are their assumptions might be.

    3. Regarding total industrial output levelling off – I agree. But how much is actually net benefit industrial output per capita. Is this in fact levelling off. This goes back to the issue of how much resources should be allocated to the Red Queens Race of running fast to stay in the same place – one familar example of pretty useless industrial production is the inputs to the 3 hour commute in our big cities as against the optimum of 30 minutes which prevails in Hobart.

    An interesting off shore example is industrial production in China – nominally at 8-10 % increase per annum, but the degradation to the production environment e.g. SO2 driven acidification of their soils is not counted. Perhaps they have fixed that a bit – but their rivers are certainly going backward.

    4. Regarding food – production may be increasing but the cost curves are a worry http://www.indexmundi.com/commodities/?commodity=food-price-index&months=240 as is the cost of rock phosphate and nitrogen – a case like/linked to oil – of more resources being put into staying in the same place.

    I suspect Graham Turner would argue that its the trend that should be explored as much as the absolute numbers. But that’s not the real issue for me – its more about the need for mainstream economists to seriously engage with scientists over this LtG matter – the climate change example is an obvious model. Happily there are signs that this is happenning driven not so much by tree hugging but by the corporate dawning that wasting resources is about wasting money. Doh! That said the US president candidates (Bachmann?) in promoting freedom to use inefficient tungsten bulb did show such basic commonsense is still rationed.

  26. Fran, the estimate is certainly open to challenge but it’s not the calculation of those alleged costs that upsets me; it’s a form of partisan political messaging that’s been mandated by law and reaches every household in NSW who pays for electricity. It looks like a form that is particularly able to hit the ‘hip pocket nerve’ and has no ‘fair and balanced’ provisions. There’s no place on those bills for the other causes of rising energy costs – which exceed those of the Carbon Tax and green energy schemes. There’s definitely no place for estimates of what failure to adequately address the climate/emissions/energy problem could be expected to cost. Is anyone challenging O’Farrell’s government over this?

  27. Nothing to do with climate emissions, but perhaps of interest:

    I have been lately told, by two experienced journalists in separate circumstances, that The Australian no longer pays most of its columnists at all. People like Henry Ergas now consider the notion of having a platform in The Oz to be adequate compensation for the fact that they don’t get paid for their articles. This seems extraordinary, yet I have no reason to doubt my informants.

  28. We live in strange times, Orwellian times. And the “Truth” Ministry does not even have to pay its minions.

  29. Federal labor is both stupid and gutless. At least, that is my thesis. A local paper, “Bayside and Northern Suburbs STAR” carried an article on Page 3 titled “Protesters march to save Eventide aged care facility” back on Nov. 28th.

    Right in the middle foreground is Wayne Swan, member for Lilley and Federal Treasurer. The Federal Treaurer marches in supplication begging Cambell Newman not to close Eventide! This is when the Federal Govt holds almost all the funding purse strings!

    Surely, he should simply announce a Federal takeover and full funding of Eventide. Then he could slip in “and we will be taking the full cost out of the Newman govt’s allocation of GST monies. If Newman wants to act like a silly bugger he will be treated like a silly bugger.”

    The fact is the Federal Govt holds (virtually) all the purse strings. They should have the guts to call the tune on recalcitrant states.

  30. http://noahpinionblog.blogspot.com.au/2012/12/macro-what-have-you-done-for-me-lately.html

    Since any comments with more than two links will go into moderation, I’ll simply link Noah’s post because he had also linked other economists’ input on this issue.

    I usually considers Noah to be a bright, thoughtful and unbiased (or less biased compared to other economic commentator), however I am very disappointed by this piece. Perhaps not just at Noah Smith, but at Simon Wren-Lewis as well. First I should disclose that I started my economics training as a Neoclassical Keynesians (mainstream macro textbook models), although I now have significant disagreement with Neo-Keynesians, there might be some bias towards the New Classical school in my comment.

    Noah claims that there is less disagreements now with “Saltwater” and “Freshwater” economics within the younger faculty. I’d assume that he would be refering to the New Keynesians school and the New Neoclassical Synthesis models. In this case, he is right of course, that New Keynesians do accept ‘rational expectations’ but have disagreements in regards to the flexibility with price, wage and that the market does not self adjust at least in the short run with the New Classicals. A good example of a convergence of thoughts would be the Credit Rationing Theory (people can check on the internet what this theory is), when this theory is built on the basis of ‘rational expectations’, it is very difficult if not impossible for a New Keynesian economist to answer/explain what triggered, or contributed the GFC using his/her model.

    While I agree with Simon Wren-Lewis’ point that the increase in the number of policy tools for managing the economy is a good progress. The main point in Noah post (and Simon Wren-Lewis’ post) that I was disappointed at was that they don’t seem to think that the convergence of thought between the different schools is a problem (this is one of the biggest problem that I personally fear). At the moment, there is large disagreements on what policy should be used to tackle the recession/depression in EU, US and Japan, this is mainly due to the large difference in the theories of the Keynesians and New Classicals. They can be classified as the old “saltwater” and “freshwater” economics which Noah correctly notes there are large disagreements. Despite the fact that New Classicals keeps failing in the real world with their prescribed austerity, the prediction of hyperinflation from QE keeps failing to come true, they are considered as a large school of thought in mainstream economics.

    But what of the “younger faculty”? Not only that New Keynesian school is problematic at the present, but how will that school develop in the future when it accepts ‘rational expectation’ is also an important question. Noticing how much supply-side and neoclassical theories have affected the mainstream theories, it is worrying if the “younger faculty” sees less of a conflict.

  31. @Tom

    Yes, all the empirical evidence shows that neoclassical economics is comprehensively wrong. It is ideologically driven nonsense masquerading as mathematical modelling.

    The piece is basically saying;

    1. Let’s all agree (i.e. pretend) that neoclassical economics is correct.
    2. Let’s all agree (i.e. pretend) that everyone agrees with statement 1.

  32. Ikonoclast:

    Exponential growth in per-capita GDP can continue indefinitely provided that there is a similar exponential reduction in resource inputs per unit of output.

  33. @Tim Peterson

    With the proviso the statement is alright. I am not sure if the reduction in inputs needs to be an exponential reduction but it might need to be.

    I am not sure that GDP will be all that important a measure in the long run. It is a very crude and semi-meaningless measure even now and all sorts of negative events increase GDP. A burnt down house can lead to an increase in GDP when a new house is built.

    A more meaningful measure would count GDA (Gross Domestic Assets) and GNA (Gross Natural Assets) as well as GDP.

  34. I should have added “but any exponential cannot continue indefinitely within a finite space.”

  35. @Ikonoclast

    GDP is relevant in macroeconomics because it is the measure of aggregate activity that corresponds most closely to employment (eg Okun’s law).

    It is less that ideal as a measure of income. Net national product, net of (physical and ecological) capital consumption would be a better measure.

  36. @Tim Peterson

    It may be the aggregate measure that corresponds most closely to employment, but how is it closer than ABS “hours worked” data?

    Real GDP is equal to the market value of domestic goods and services.

    “Market value” consists of, or is corrupted by, debt funded price levels. Competitive market prices also embed profits which in effect separate GDP from the household incomes available to purchase the annual product of goods and services.

    There is also the issue of imputed rents – explained here:


  37. Tim Peterson

    It may be the aggregate measure that corresponds most closely to employment, but how is it closer than ABS “hours worked” data?

    Real GDP is equal to the market value of domestic goods and services.

    “Market value” consists of, or is corrupted by, debt funded price levels. Competitive market prices also embed profits which in effect separate GDP from the household incomes available to purchase the annual product of goods and services.

    There is also the issue of imputed rents – explained here:


  38. I was referring to the GDP as a measure of overall health of the economy. I was pointing out that the overall economic health (even crudely) must be a function of total national assets plus total annual national production plus total natural assets and their condition (forests, rivers, land etc.) If high annual GDP is purchased at the cost of destruction or neglect of these assets then it must be discounted appropriately.

    If high GDP is purchased at the cost of inequality and destruction of human lives and potential (as is the standard in exploitative capitalism) then again it must be discounted as being in reality worth much less than the national accounts figure. Finally, if it is purchased at the cost of destruction of the biosphere’s capacity to sustain civilization then its value is actually negative. In this case, the net production of a sustainable nomad culture is higher after accounting for biosphere damage.

  39. @Chris Warren

    Hours worked in not a measure of activity.

    I don’t understand what you mean by “debt funded price levels”.

    The retained earnings of corporations are reinvested, injecting the money not payed out to households back into the circular flow of income. Distributed profits are available to households for consumption.

  40. @Tim Peterson

    If paid labour is not the basis for GDP, what is?

    If prices are $100 without debt, the same goods can be sold for $110 if there is $10 of credit.

    $110 is a debt funded price level.

    If profits are available to households for consumption we would not be suffering the global economic catastrophe that is spreading across the earth.

    But then this would not be capitalism.

  41. @Ikonoclast Brad de Long has a nice quote on the labour theory value (LTV): ‘the LTV was like LSD in the ’60s–it ruined a lot of good minds’.

    De long also notes that “Marx’s labor-theory-of-value-schema makes no distinctions between profits on capital that have their origins in luck, theft, and choosing the right parents on the one hand; and profits on capital that have their origins in sacrifice, industriousness, or flashes of genius on the other.”

  42. @Jim Rose

    Subjective theory of value is like heroin – it posits that irrespective how much a commodity cost to produce that someone can be found who will pay more because they value it based on a subjective basis (utility). Once one commodity is sold on this basis, and an artificial profit realised, the capitalist demands more and more and more just to get the same hit

    This led to predatory wars as the capo-addicts necessarily sought out new lebensraum.

    Your capitalism ruined a lot humanity and threatens worse.

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