Scarcity and plenty

[Warning: half-formed thoughts ahead]
One of the most striking characteristics of the 21st century economy (divided into goods, human contact services and information) is that even very poor people have access to information-based services that were almost unimaginable 30 years ago. Given free wifi and a second-hand phone, someone lining up at a food bank can blog about the experience, and possibly attract readers all around the world[1]. Or they can entertain themselves with an endless supply of free books, news media, music and videos. That’s great, but it doesn’t change the fact that people in both rich and poor countries are going hungry.

Economics has traditionally been about scarcity. But now we have one part of the economy where scarcity remains dominant, and another, growing part, where it has just about disappeared. That raises a lot of different issues.

First, while we are accustomed to think of things like economic growth and inflation rates as objective facts, they are actually based on index numbers, which are the products of theoretical models. Those models don’t work well when an increasing part of the economy consists of information services that are becoming radically cheaper all the time. As a result, much of the debate about the desirability or otherwise of growth is misconceived.

A positive implication is that we can anticipate improving standards of living, because of ever-increasing access to information services, without economic growth in the 20th century sense of steadily increasing throughput of materials and energy, and correspondingly increasing environmental damage. T

A negative implication is that real incomes (that is, incomes deflated by a consumer price index) can increase, even as basic needs like food and housing become less affordable, because the price of inforamation related services is falling fast. I can’t find much that’s readily accessible on this – pointers would be appreciated. One notable fact is that the proportion of disposable income spent on food, which fell sharply between 1960 and 1998, has remained almost static since then. The price of food seems to have risen a little faster than the CPI over this period.

I haven’t talked yet about human contact services. Scarcity is just as relevant here as in the goods economy. Governments are heavily involved in funding and providing these services, and the quality of services is hard to measure. As a result, the kinds of services people get aren’t determined simply by their capacity to pay.

A question to which I don’t have an answer. Is there some way to exploit the massively increased productivity of information services to allow more, and more equal, provision of basic goods? This question underlies a lot of discussion about Universal Basic Income and similar ideas, but is rarely posed in a satisfactory way, let alone answered.

As you can tell, I’m struggling with some complicated problems here, so any thoughts welcome.

fn1. In the early days of blogging, thehomelessguy [Kevin Barbieux] did exactly this. His most recent site is here.

59 thoughts on “Scarcity and plenty

  1. mrkenfabian,
    You state: “I note, NOT the need to get to zero emissions; CO2 is not even mentioned as a problematic exhaust product, at least in the quoted part.”

    There’s a discussion in the referred paper in “4. Consequences of PGM Scarcity: Moving to Electric Transportation”
    See: https://www.mdpi.com/2075-163X/4/2/388/htm

    You also state: “Hydrogen production does require improved catalysts and there are some non-precious metal possibilities that show promise.”

    I’d suggest showing “promise” is now too late for the critical task of rapid GHG emissions reduction required RIGHT NOW – demonstrable affordable solutions available for large-scale deployment NOW are required. Sorry, mrkenfabian, I’d suggest “promises” of solutions “just around the corner” just won’t cut it. That doesn’t mean research is stopped – it means don’t put faith in it saving us in the required timeframe.

    You then state: “I doubt large scale H2 production will depend on Platinum or similar.”

    What evidence/data/analysis do you have to support that statement, mrkenfabian?

    Platinum group catalysts are at the active ingredients of proton exchange membrane fuel cells (PEFCs), converting the embodied energy of hydrogen fuel into electrical energy for potential applications including automobiles, stationary power, portable power pack, and logistics.
    https://link.springer.com/article/10.1007/s40243-019-0156-x

    Evidence I see indicates no way has been found, so far, to replace platinum with some other metal in low temperature fuel cells. Without a cheaper, more abundant substitute for platinum, the hydrogen-based economy remains ‘pie in the sky’ for transport, other than perhaps for small-scale niche applications.

  2. Neither of those articles directly addresses the quantitative question of how much of a constraint availability of platinum-group metals really would be in for scaling of electrolysis or fuel cells (beyond the obvious, that it is a real issue).

    The Ugo Bardi one is particularly useless: as far as I can tell, the sole reference cited in the paragraph on fuel cells is the wrong one to support the claim made. Also the number for platinum per kW in fuel cells also now seems to be wrong by about an order of magnitude (maybe it was OK on 2014?). Now seems to be about 0.25g Pt per kW of fuel cell.

    Basically, the peak-X people will probably be wrong about platinum for the same reasons they are wrong about rare earths and have been wrong about lithium. Being wrong is OK, but ideally you should avoid making the same mistake repeatedly.

    But anyway, even if hydrogen production only accounted for 10% of electricity use (there is more than enough platinum for this), that could actually make quite a useful dent in the stuff in the ‘too hard basket’ like steel production, fertiliser, and shipping, and create a market for electricity that would otherwise be curtailed.

  3. Ben McMillan,
    The referenced 2014 Ugo Bardi paper includes:

    “According to the United States Geological Survey [18], the total reserves of platinum group metals (PGMs) amount to 66 million tonnes, to be compared to a total combined use of platinum and palladium in 2011 of 400,000 metric tons. Hence, the ratio of reserves to production (R/P, with production assumed to be constant and equal to the present value), is of about 130 years. This result may appear comforting but the question here is not for how long we can produce PGMs in the unlikely hypothesis of constant future production, but how and if it will be possible to keep a sufficiently large production at costs compatible with the needs of road vehicles—i.e., at costs which would not destroy the demand for these elements.”

    An increased demand for PGMs would deplete these reserves sooner.

    A more recent USGS publication titled “MINERAL COMMODITY SUMMARIES 2020”, published Jan 2020, includes pp124-125 for Platinum Group Metals (PGMs), that includes stats on US and world production and reserves for PGMs

    Click to access mcs2020.pdf

    You state: “Now seems to be about 0.25g Pt per kW of fuel cell.”

    How do you arrive at that figure, Ben? Ultra-low Pt loading on electrodes still has its challenges, per the Springer (MSRE) paper:

    “During continuous operation of fuel cell, there will be a loss in ECSA due to dissolution, agglomeration, and Ostwald ripening. So, catalyst stability and durability are being decided by ECSA loss before and after operation of specified hours. Most recent catalyst systems with ultra-low loading present very high mass activity (30 × higher mass activity vs. Pt/C), but they fail at high current density targets. For example, core–shell (Pt@Pd/C)catalysts exhibit higher mass activity but undergo some degree of base metal dissolution [71]. So, new catalyst development with the focus on ultra-low loading of precious metal and stability at high current densities (HCD) is required even though they exhibit higher mass activity.”

    Small particles are highly active, they move, react with each other to form larger particles, and, eventually, the electrodes no longer work. There are tricks to stabilize small particles: platinum alloys – but eventually they ‘de-alloy’ and the catalysts no longer work. Not the right kind of behavior for something that you expect to work on a commercial vehicle for at least ten years.

    You state: “But anyway, even if hydrogen production only accounted for 10% of electricity use (there is more than enough platinum for this)…”

    IMO, that’s not analysis – more like wishful thinking.

  4. Geoff: why don’t you read the USGS document you linked and see if Bardi’s numbers agree with them?

  5. Ben McMillan,
    USGS publication titled “MINERAL COMMODITY SUMMARIES 2020”, p125 shows world production figures for 2019 (estimated):
    Palladium (Pd)_ _ _ _ _ _ 210,000
    Platinum (Pt)_ _ _ _ _ _ _180,000
    Pt + Pd _ _ _ _ _ _ _ _ _ _390,000 **

    PGM estimated reserves:
    USA _ _ _ _ _ _ _ _ _ _ _ 900,000
    Canada _ _ _ _ _ _ _ _ _ 310,000
    Russia _ _ _ _ _ _ _ _ _ 3,900,000
    South Africa _ _ _ _ _ _63,000,000
    Zimbabwe _ _ _ _ _ _ _ 1,200,000
    Other countries _ _ _ _ _ _ _ _ NA
    World total (rounded) _ 69,000,000 **

    What I’m unable to see in the USGS publication for the tabled data are the units – is it kilograms or tonnes or what? A possible clue is the following statement:

    “World resources of PGMs are estimated to total more than 100 million kilograms. The largest reserves are in the Bushveld Complex in South Africa.”

    IMO, the USGS data is sloppy – the dimensional units are ambiguous.

    The numbers in the Bardi paper aren’t that far from the USGS 2019 tabled data numbers marked ** – “total combined use of platinum and palladium in 2011 of 400,000” and “total reserves of platinum group metals (PGMs) amount to 66 million” – but the units used are in question. The Bardi paper has taken the units of the numbers as tonnes, which may not be the case.

    The R/P is unitless. 2019 Pt + Pd data R/P is 69/0.39 = circa 177 years.

    Catalytic converters contain:
    * for cars, light-duty trucks, and motorcycles, the average total is 2-6 grams;
    * for larger-engine SUV’s and trucks average total can range anywhere from 6-30 grams.
    https://www.websitewithnoname.com/2015/10/how-much-platinum-palladium-rhodium-in.html

    “A catalytic converter in a diesel passenger vehicle typically uses three to seven grams of platinum compared with around 30-60 grams currently needed for a fuel cell for the same vehicle, according to analysts.”

    “The best selling fuel cell vehicle, Toyota’s Mirai, is expected to cut platinum by two-thirds to around 10 grams per vehicle in its next version, down from 30 grams in the current model, according David Hart, director of E4tech consultancy, based in Lausanne.”
    https://www.reuters.com/article/us-platinum-week-bosch-fuelcells-exclusi-idUSKCN1SJ0FG

    Based on the numbers above, I’d suggest PGM production would need to be of the order of more than double to tenfold increase to support a major ramp-up of production of hydrogen fuel cell electric vehicles (HFCEVs). Whichever way you look at the numbers, known primary global supplies of PGMs could be depleted within a few to several decades. Secondary supplies rely on recycling that can never attain 100% return – there’ll always be some losses.

    The evidence I see suggests limited PGM primary supply, together with battery electric vehicles (BEVs) being more than three times more energy efficient than HFCEVs, likely constrains HFCEVs and other fuel cell applications to niche markets only.

  6. Food prices: at first glance looks like ‘food price inflation higher than headline inflation’ is only true because of increased eating at restaurants, rather than the price of (at home) food itself.
    https://fred.stlouisfed.org/graph/?g=zpoO
    (graph shows US CPI index prices since 1990, have indexed them all to 100 in year 2000 to make growth since then easier to see. Three lines are inflation, food inflation, and food-at-home inflation)

  7. R: Thanks for this. I was too lazy (or busy) to do this work myself. Is there an index number for restaurant meals? Assuming the food price index is a weighted average with food-at-home, restaurant meals must have risen a bit faster than CPI.

  8. For US, not that I can see. The numbers I linked before leave it unclear if restaurant prices are growing faster, or just that they are higher and composition of food consumption has shifted towards restaurants and away from at-home.

    For EU it appears there is a separate price index just for restaurants.
    https://fred.stlouisfed.org/graph/?g=zpOY
    It shows restaurant prices outpacing headline inflation (HICP is standard measure used by EU).
    [For data availability reasons base year is now 2001]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s