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. General remark
    The book is at some risk of becoming an impossible Theory of Everything – always a risk for an eclectic mind. One strategy for dealing with this is the Tristram Shandy one: making a virtue of perplexity and confusion, an Anti-Theory of Everything. This supercharged irony is technically very hard to pull off, and somehow I don’t think it fits JQ’s style. The standard alternative is heavy-handed editing down the road to focus on a coherent narrative. That does leave space for paradoxes and unsolved problems, à la Hilbert.

    If anyone were rash enough to try to put a value on the content as well as the quantity of information, there’s a huge price index problem. T.S Eliot’s snobbery had a point: ”Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information?” Today we have to add “Where is the information we have lost in noise?“ Democracy is under siege from the retreat of large parts of the polity into nonsense information bubbles, sustained by recommendation algorithms on social media that just reinforce ignorance. The value of many such bubbles is negative. No political party anywhere is trying seriously to clean up the Great Murdoch Garbage Patch. For constructive ideas on this, I recommend Jack Balkin’s blog, search for “information fiduciaries”.

    My pennyworth: it’s not all bad. Music, sports and film are transitioning all right to the new infostructure. Many academics like JQ offer high-quality free analysis and popularisation of research, as a natural extension of their teaching function – and as with teaching, the traffic isn’t all one way. National and international governmental agencies flood us with good statistics; Wikipedia is a Global Treasure. The problem is a narrow one of political reporting, brought about by the collapse of local newspapers from the loss of classified ads, the shrinkage of professional reporting staffs, and the concentration of old media in the hands of reactionary and nihilistic tycoons. Plus irresponsible new tycoons in social media.

    Advert for old blog posts: and, plus a later walk-back on gift exchange

    Long-shot idea: take the late Iain Banks’ deservedly well-known Culture universe as a frame for comparisons. We are already close to several technical underpinnings of the Culture – plentiful and very cheap energy, powerful AI, and a stable population. Missing: transmutation and FTL travel, but the latter is more a literary necessity for space opera stories than an economic one. The Culture does have differences in status, which Banks did not explore much.

  2. “I’m struggling with some complicated problems here…” – J.Q.

    Indeed. And dare I say it? Without returning to a reconsideration of the ontology of economic objects, these problems certainly cannot be solved. That said, the Consequences of the Pandemic book is on a time-frame for understandable publishing reasons. [1]

    Might I seriously suggest Blair Fix’s paper once again for the umpteenth time? It directly relates to issues like “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.”

    Indeed Fix’s paper shows that “these models” don’t work well in many ways and not just when “information services … are becoming radically cheaper all the time”. That is a particular example of a far more general problem.

    Click to access 20190100_fix_the_aggregation_problem_bpearq_preprint.pdf

    I would also recommend Fix’s paper: “Can the World Get Along Without Natural Resources? ” on his site “Economics From the Top Down.” It does “straw-man” a bit but it still has a very considerable degree of validity.

    These two papers may suggest an approach. Of course, Bichler and Nitzan’s book “Capital as Power” is well worth reading too. J.Q., you could power read it in one or two days.

    I will stop harping on about these papers and book if even one person indicates on this thread that they have read one or more of them.

    I will not stop harping on about economic ontology. That’s another issue. 😉

    Note 1. Actually, emerging facts indicate that the full medical consequences of this pandemic will not be known for at least another 5 years and the full economic and geostrategic consequences not for another 10 years or more. This crisis keeps getting worse. It could even lead to the collapse of the West given its egregious failures to deal with the pandemic. The U.K. is the canary in the coal mine. Two new strains of COVID-19 have been identified in the U.K. over the last couple of days. One has an estimated 70% higher infectiousness and appears to be making children sicker than the standard strain. The effects of the other (a possible South African strain) are as yet unknown. The UK is facing a level of isolation which may threaten its food supply. We may see the need for humanitarian food aid to the UK. Lots of “mays” in that but it is not looking good.

    My prediction is that conditions in the UK and around the world will get far worse in 2021 not withstanding the vaccines. It will take a year at least to roll out enough vaccines to have any serious positive impact. My specific prediction is that the vaccines will fail or only have limited success. The mutation rate of COVID-19 is worryingly high and there is still no clear information on how long vaccine protection might last.

  3. John Quiggin,
    You state in your post: “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.”

    Where’s the energy coming from:
    * to mine the base materials for the devices and systems that are part of these “information services”, and ALL the other ‘machinery’ of modern human civilisation?
    * for agricultural, aquaculture/fisheries and forestry processes?
    * to transport the base materials and food produce for sorting, processing and manufacture?
    * to transport finished goods and produce?
    * to transport waste products/materials for disposal/recycling?

    These critical sectors (among others) are currently principally dependent on finite and rapidly depleting petroleum oil. If humanity cannot leave oil before oil leaves us, then I’d suggest civilisation will become energy starved and standards of living will decline. See my comment:

    JQ, where do you see the solutions that are available and affordable right NOW (NOT many years to decades away) to be deployed at large-scale to rapidly reduce humanity’s petroleum dependency? Something for you to ponder…

    Humanity cannot get along without energy – nothing happens without energy.
    Humanity cannot get along without natural resources, and that requires a habitable base planet.

  4. Geoff,

    You remind me of myself about 15 years ago. I mean that nostalgically in relation to me not judgmentally in relation to you. About that long ago, I wrote on Prof. J.Q.’s blog an essay entitled “Energy – The Master Resource” or something close to that title. Ever since, I have tried to understand
    Prof. J.Q.’s full position. The problem is his position is genuinely nuanced and thermodynamic physicalist fundamentalists like me do have some trouble understanding it. Nonetheless, there is something to be said for thermodynamic physicalist fundamentalism (i.e. all of hard science) but I will get to that.

    Perhaps it’s worthwhile to look at instances where J.Q. has been proven correct and I have been proven incorrect. I feel those instances do throw some light on problems where enlightened but still somewhat conventional economists [A] and people like us have problems agreeing.

    1. The limiting factor – Resources or Waste Sinks?

    I was one of those persons pushing the view that oil scarcity simpliciter would collapse civilization in the absence of renewable energy. So I was positing material resource shortage(s) as the limiting factor. J.Q. has stated, and I have no reason to doubt him, that he realized decades ago ( maybe 2 to 3 decades ago or more?) that waste sink limits rather than material resource shortages would be the problem. He has been proven correct in relation to fossil fuel energy. We have more recoverable oil, gas and coal than we can ever safely use due to the effect of CO2 emissions on the main sinks, the atmosphere and oceans.

    2. Would renewable energy supply a positive enough EROEI to run civilization?

    I had my doubts for a long time. I predicted solar convection towers would be the best solution. It seems I was wrong. Solar PV proved cheaper and more scaleable, small and large. Another one to J.Q. I predicted solar PV costs would not come down fast enough and their EROEI would be high enough to be genuinely deployable. I was wrong. Another two to to J.Q. I predicted capitalism as opposed to statism, would fail to deploy solar pv fast enough and fail to phase out fossil fuels fast enough. I’ve been right about that but I wouldn’t presume that J.Q. didn’t have concerns along the same lines.

    Overall, the fundamental issues still remain the same. Civilization and its economy is still a dissipative system out of equilibrium with the environment. Endless growth is still not possible in a finite system. These are the fundamental issues where I (and I presume you Geoff) remain at odds with J.Q. It’s not that he would deny these fundamental principles. It’s rather that he has a higher optimism that economic principles, perhaps especially the substitution principle, will or can prevail and give us a survivable or even a qualitatively improving standard of living without endlessly higher material and energetic throughputs.

    To this over-optimism, as I see it, I would put my caution succinctly thus;

    (a) Jevons Paradox;
    (b) Geostrategic competition; and
    (c) the continued dominance of not just neoliberal capitalism but capitalism itself.

    Though I do wonder to what end I would want to turn an optimist into pessimist? But let us not say pessimism. Let say hard-nosed realism. I consider that hard-nosed realism will give us a higher survival chance than extremes of optimism or pessimism.

    Note A. – J.Q. may object to the latter part of this description of his overall position.

  5. “1. The limiting factor – Resources or Waste Sinks?”

    These two are related. Waste aka pollution is caused by design faults, as is low productivity work. Pollution is simply an unused resource. If you are not adequately using your resources then you are going to have less resource availability and more pollution. So thats a design fault.

    So if you don’t collect and sell the eggs that the chickens lay that becomes pollution. Plastics burned at normal fire temperatures are an unacceptable carcinogenic pollution. But burned at the right temperature, in the right device, they could be a fuel. Or they can be recycled to other plastics. You might have a lot of fruit trees and be too lazy to gather the fruit, leading to pollution in the form of too many insects. Or you could run some pigs to fix that all up and you get bacon. So both scarce resources are a symptom of the same problem, which is poor design. And we can no longer, if we ever could, rely only on the price mechanism to fix it all up. We need a bit of oversight and enablement to get the job done.

    Of course once the right investments have been made to solve a pollution problem, then the price mechanism can handle matters from there. But at the moment with our current business ecology, we need the moral suasion, regulation and investment resources to sort things out.

  6. The UN has something to say about technology, basic needs and food.
    Beware the IMF reverse JQ… ‘to exploit the massively increased productivity of information services to allow more, and more provision of Fintech’!?

    “Your Credit Score Should Be Based on Your Web History, IMF Says

    …” Yes, the idea of every move you make online feeding into your credit score is creepy. It may not even be possible in the near future. The IMF researchers stress that “governments should follow and carefully support the technological transition in finance. It is important to adjust policies accordingly and stay ahead of the curve.” When’s the last time a government did any of that? ”

    IMF says:
    “Fintech’s potential to reach out to over a billion unbanked people around the world, and the changes in the financial system structure that this can induce, can be revolutionary.

    “Recent IMF and ECB staff research distinguishes two areas of financial innovation. One is information: new tools to collect and analyse data on customers, for example for determining creditworthiness. Another is communication: new approaches to customer relationships and the distribution of financial products. We argue that each dimension contains some transformative components.”

    “Calibrating technology to tackle sustainable development challenges in Africa
    11 December 2020

    An Assault on Poverty: Basic Human Needs, Science, and Technology

    Panel on Technology for Basic Needs of the United Nations Commission on Science and Technology for Development

    Publisher(s): UNCTAD, IDRC
    ISBN: Out of print
    300 pages
    e-ISBN: 1552500268
    Available formats
    PDF eBook

    “Does science and technology (S&T) truly have a part to play in meeting basic human needs? Can S&T help the world’s communities secure adequate nutrition, health care, water, sanitary facilities, and access to education and information?

    “The role of science and technology in development is certainly one of the most complex and delicate issues facing policymakers and development practitioners today. In An Assault on Poverty, the Panel on Technology for Basic Needs of the United Nations Commission on Science and Technology for Development offers analyses of poverty eradication and the role of S&T with respect to sustainable human development, technical and vocational education, health, and small-scale economic activities, among other issues. The panel’s findings reaffirm that S&T does, indeed, offers great potential in eradicating poverty. Realizing this potential will, in the words of panel chair Arnoldo K. Ventura, depend on “social and political will, sufficient moral purpose, enlightened self-interest, and acceptance of the unity of all members of the human family and its precarious position on this planet.”

  7. Geoff Miell: suggest you check out Mark Jacobson’s Solutions Project. There is no killer technical obstacle to a rapid and pretty comprehensive energy transition that will save money over time. EVs have just passed 20% new market share in Germany.
    Iko: Reputable citation wanted for your claim that the new Covid strain in the UK makes children sicker. Please do NOT spread rumours.

  8. People with a more doomy outlook often think both:
    1) Any significant reduction or increase in cost in energy production would be an economic disaster, because energy is so critical.
    2) Jevon’s paradox will mean improvements in efficiency actually increases demand for energy.

    But the problem is that point 1 implies that energy demand is very inelastic, whereas point 2 can only occur if energy demand is very elastic.

    So basically, if we are in a world where Jevon’s paradox is a major problem, you can put a whopping tax on carbon without it impacting people’s welfare very much, because demand is highly elastic. A world with elastic energy demand has much easier paths to decarbonisation.

    Would suggest that the real problem is energy poverty caused by inequality. There are a bunch of people jetting around using exorbitant amounts of energy while others lack even basic lighting.

  9. “Geoff Miell: suggest you check out Mark Jacobson’s Solutions Project. There is no killer technical obstacle to a rapid and pretty comprehensive energy transition that will save money over time. ”

    That is great. But “The Problem Is the Solution” If CO2 is the problem is Mark Jacobson looking at CO2 as the solution also? Maybe he is only looking at one side of the balance sheet.

    So suppose we have an invasive species called “African Olive” Its just grows everywhere and crowds out everything else. But in Ireland they are importing deliberately grown African Olive as a firewood. They are importing it from Africa. So if we say “The problem is the solution” then the alleged invasive species becomes an awesome energy source. And we need government to make the problem the solution. With just a few small programs, some moral suasion, a bit of finance here and there, and the problem becomes the solution.

    You just change your thinking. And the alleged problem becomes a magnificent asset. But it takes a lot of investment to bridge that gap.

  10. On the OP: I’m pessimistic that ‘improved access to information-based services’ will turn out to be massively positive.

    That is, the primary problem is usually not access to information-based services, but those services actually being effective in promoting the well-being of humans and the society they live in. In other words, getting the basics of the education system right is massively more important for human well-being than everyone having access to the internet at all times.

    Tech doesn’t directly solve the main problems, which are largely about politics and the infrastructure of society; physical infrastructure and the environment, justice, healthcare, education, personal and societal happiness.

    I kind of agree though that the increasing dominance of the information economy will allow massive ‘economic growth’ in nominal terms. It allows you to add other things to the ‘basket of goods’ used to measure inflation, which will get cheaper over time, while basics like housing and food get more expensive, and manufacture a lower inflation rate. You can claim, e.g., that modern cars are much better than previous versions because of all the embedded tech, so the increase in price is not actually inflation; this isn’t completely false, but is pretty much a judgement call. There is very strong pressure to make that judgement call in a way that gives politicians a positive story. And voila, growth has occurred.

    But obviously that ‘growth’ is a terrible measure of improvement in real human welfare.

    The story is perhaps a little different in the developing world though, where new tech (like smartphones) are not just replacing wired infrastructure, but bringing it to people who never had it to start with. Clean tech will make a big difference to dirty towns. Electric bikes versus two-strokes, electric stoves versus wood or dung. And how much of the rise of the university sector and high tech manufacturing in the developing world has been enabled by the internet? Are things like the Khan Academy able to give access to education and not just information?

  11. James Wimberley,

    My apologies. I did not intend to spread rumors. It appears I may have conflated two news strap-lines which appeared on ABC TV, Australia. The new UK strain is estimated to be more infectious by about 1.5 to 2.0 times and this infectiousness ratio appears to be affecting all age groups. A new South African strain related to the new U.K strain appears similar in infectiousness rates to the new UK strain plus there are some reports that it may be causing more serious illness in children.

    UK variant:

    This has a link to the entry on the South African variant.

    I take the general view that the public and governments of many nations globally have been too complacent about both preventing COVID-19 spread in the first place and about the follow-on risks of permitting the spread to such a currently uncontained level. One of the risks of permitting wide spread is what we are seeing right now: the rise of multiple troubling new variants with multiple mutations. Some of the mutations are already clearly of concern. Other mutations appear to be of little consequence for humans.

    In other words I see complacency rather than the voicing of serious concerns as the problem. I see underplaying the crisis as a much greater cause of danger than overplaying the crisis. This is the same as the attitude I take towards the climate crisis. Both crises are turning ever more serious at accelerating rates: rates even worse than those which the most serious scientists and the most pessimistic of lay doomsayers predicted. It is time to be alarmed into the most serious measures.

  12. Iko: ..” there are some reports that it may be causing more serious illness in children.” You are just repeating the rumour, without sourcing. Who? Where? In epidemiology, anecdotes are useless. Note that if the new strain is more infectious – as multiple credible sources say – this is based on modelling from greater viral loads, not observation. You would expect to see more cases among children automatically, n more serious cases, with no change in inherent severity.

  13. Does scarcity imply the natural need for unlimited consumption by individuals or perhaps only distribution problems (even with 8 billion of us here) ?. Economics can be used offensively ,to protect a wealth distribution pattern ,or defensively to change the pattern .Maybe in practice its more of a social science than a hard science . I like improving medical technology but really I am not sure I am any happier today (due to computerisation or greater consumption in general) than I was decades ago. If I am happier its just because I am older. A very basic level of material security is needed for the possibility of happiness but for me happiness has clearly come from interacting with the human ,animal and natural worlds in pretty basic ways – not from fancy toys. Real unhappiness comes from threat of losing the basics .Would it feel better to increase your consumption or to help others raise theirs to a basic level ? . I might be a bit weird and way out on a limb with this sentiment but I am not alone .Sure we are living longer and consuming more but I dont think there is any evidence that humanity is generally happier now than any time in the past .If anything I would suggest the reverse. Computerisation per se isnt the cause of this but does contribute . Maybe there is no place for measures of happiness in economics. I remember when I was young the promise of increased productivity was increased leisure time – it didnt work out that way.

    A covid variant that is twice as infectious would be a considerable problem .There are some worrying long covid effects noted from the Australian experience too. 40% having symptoms 3 or 4 months later – thats 40 % of all cases in the study , only one or two were ever hospitalised .

  14. James Wimberley,

    I had better take my reply to the Sandpit. I have taken this thread off topic.

  15. Blair Fix’s paper, linked to below, points out the dimensions (literally) of the aggregation problem in conventional economics with respect to the ecological sustainability and biophysical issues of the real economy.

    Click to access 20190100_fix_the_aggregation_problem_bpearq_preprint.pdf

    Those issues are special cases of the general case of opportunity cost. Conventional economics’ claim to deal with scarcity (to make efficient use of scarce resources) also fails upon a consideration of the aggregation problem. These considerations actually amount to a comprehensive scientific refutation of the entire foundations of conventional (classical and neoclassical) economics.

    My challenge to people is to read Fix’s paper and then ponder why I make the claims above. How is the aggregation issue linked to (and refuting of) applied opportunity cost reasoning and applied scarcity reasoning, in the money metric, in conventional economics? If you figure that out, you will fully understand why conventional economics and the system it advocates and supports, capitalism, cannot succeed in dealing with global problems like limits to growth, ecological unsustainability, scarcity and inequality. Fail to explore these questions and you remain mired in the ideological and Numéraire-metric ontological falsehoods of conventional economics.

  16. Ikonoklast, thanks for the Fix paper, which is very much along the lines I’ve been arguing for a long time. Thanks also for your thoughtful observations on the discussions we’ve been having hear for many years.

  17. Iko I resolve to read that paper but am busy for a few weeks now so will get back to it .I am no economist but I just had a quick look ,I think I will like it .In my less optimistic moments I think I am so far away from normal that I shouldn’t make judgements about humanity at large or the prospects for change. Although I know there are alot of atypical people about, at those less optimistic moments I feel its a small minority – too small. Then I read something by someone with recognised credibility that gives me hope that things could be otherwise and that lots of people could be able and ready for change given the right circumstances. The normal or typical person then seems like a fiction. Change before disaster would be good.

  18. “Or they can entertain themselves with an endless supply of free books, news media, music and videos.” The ability for poor people to do this is already being constrained. As advertising-funded internet publishing gets less and less viable, information/entertainment will increasingly stop being free. Indeed the high quality news and entertainment that often used to be available through free-to-air TV is now limited in many cases to cable TV or paywalled internet sites.

    In other words the era of apparently limitless free stuff is likely to be short-lived, as generators of content find innovative ways to use technology to control access to and monetize it. Future generations will listen enviously to tales of being able to view an opera at the Met or read that day’s ‘New York Post’ with a simple click of the mouse, just as today’s do to stories of a simpler time when we could watch test cricket free of ads just by turning on ABC TV.

  19. JQ,

    Thanks. I try to be useful as some level. If I could manage to do that that without being so opinionated and tactless that would be good. Hmm, sounds like an idea for a New year’s resolution for me.

    I am always interested in links and references to your extant works where you have addressed those “Fixian” style concerns and the general issue of economic ontology. Of course, the highly mathematics-oriented parts will be beyond my ability to understand.

  20. «There is actually a lot about this, plenty of “cornucopian” books argue that while physical productivity since the 1970s has not been that awesome, metaphysical productivity has been awesome.»

    As to this some quotes:

    Mish Shedlock of Global Economic Analysis: “The most current figure I have for hedonic adjustment to the GDP is 2.257 TRILLION dollars which is roughly 22% of the GDP.”

    “the extent to which differential productivity growth characterizes our economy is, I think, sometimes underappreciated. The Bureau of Labor Statistics normalizes the consumer price indices at 100 in the period 1982 to 1984. Below are some recent values of the Consumer Price Index (CPI) for 2012. […] Television sets at five stand out. That is obviously a reflection of a rather energetic hedonic effort by the Bureau of Labor Statistics. One suspects that equally energetic hedonic efforts are not applied to every consumer price.”

    Joe Stiglitz: “For example, while GDP is supposed to measure the value of output of goods and services, in one key sector – government – we typically have no way of doing it, so we often measure the output simply by the inputs.
    If government spends more – even if inefficiently – output goes up. In the last 60 years, the share of government output in GDP has increased from 21.4 percent to 38.6 percent in the U.S., from 27.6 percent to 52.7 percent in France, from 34.2 percent to 47.6 percent in the United Kingdom, and from 30.4 percent to 44 percent in Germany. So what was a relatively minor problem has now become a major one. Likewise, quality improvements – better cars rather than just more cars – account for much of the increase in GDP nowadays. But assessing quality improvements is difficult. Health care exemplifies this problem: Much of medicine is publicly provided, and much of the advances are in quality.”

    Out blogger’s musings raise two different issues:

    * What do traditional indices like GDP and CPI measure or should measure?
    * Given that they are only proxies for “growth”, are there better indices to measure “growth”, and in what sense are they better?

    Traditional indices like GDP, GDI, and CPI are supposed to measure objective physical quantities:

    * GDP is supposed to be a list of physical (not necessarily material) quantities of gross *final* output, such as tons of steel, kms of transportation, hours of teaching, movies screened, lathes made.
    * GDI (which is often called “GDP”) is supposed to be a sum of all gross nominal money incomes.
    * A CPI (there can be several, unlike GDP or GDI, which should be in principle uniquely measurable) is supposed to *some* average of nominal price changes.

    Those indices are meant to be pure objective metrics of objectively measured quantities; what they “mean” is subjective. Does growth in GDP “mean” better enjoyment of life? Does growth in GDI “mean” better standards of living? Those are up for debate.

    If GDP, GDI, CPI are or at least should be just clear, objective, physical
    metrics, so what should we use to measure “growth in living standards”?

    Well, that is a political question. Because the answer to that is “*whose* living standards?”, because obviously there is no such thing as “average living standards”, because living standards just like “ofelimity” are very diverse and largely incommensurable.

    And this leads to the next point: that as to better indices to measure “growth”, that is inevitably a political question depending on distribution.
    Consider for example finance: in current GDI accounting it is accounted for as as a final output, but that is clearly ridiculous, because (nearly) nobody does finance for the hell of it, only because as an input to something else.

    Consider the contrast between finance and healthcare, which in some countries both account for 8% of GDI: while healthcare is something that most people do want to consume for its own sake, because it makes them better, finance is something they could care less, and they buy it only for instrumental reason, like say accounting or car axles or lathe maintenance, which like finance are all inputs to the production of some final output.

    The only reason I can imagine why national statisticians include finance among final outputs in GDI, instead of as a cost, is that finance is a powerful vested interest, much more powerful than car axle or lathe maintenance businesses, and they want to pretend that the expanding share of finance costs on GDP is actually a generation of outputs.

  21. «Here’s my first article on this topic, from the 1990s “International comparison of living standards and tastes: a revealed preferences approach”»

    Good stuff, but what has that kind of stuff got to do with GDP, GDI or CPI, which should be basic, measurable quantities?

    It is not wrong to attempt to compare incommensurable as in “International comparison of living standards and tastes” if done by explaining the arbitrary assumption made to make them comparable and why they are useful or interesting for which political (that is distributional) purpose, but that is rather different from replacing GDP, GDI and CPI with some such arbitrary attempt.

  22. As your book is almost certainly going to be attacked by the “do nothings” and the “still living in the ’70s” mobs. I recommend you carefully define your terms! You do talk about basic food items which is good because food covers many levels of necessity – as was shown in the GST debates- but some food are examples of STAPLE GOODS. These goods are NOT covered by normal price theories. Demand for staple items does not change with price changes – inelastic demand is said to approach perfect inelasticity. As for information services some are essential – like emergency updates in bushfires, COVID alerts and floods. But most are non-essential services. I compare the use of smartphone to access free information to “window shopping”. Now in the past such behavior was excluded from economic analysis after a definition was given to consumer demand specifying that it must be effective demand. In other words, most economists do not normally take notice of window shopping because it does not lead to a market outcome in the market period. A lot of needs to be carefully defined by the economist. As for wants this is a convoluted area for any analysis. For example, want satisfaction has perplexed economists for two hundred years.
    Then you must carefully define real income. So many definitions out there merely given a mathematical relationship between money income and real income. This term has no common usage even among a wide range of economists.
    Other parameters must be addressed by specific self analysis. A short list might be as follows:
    1. Do you want to introduce the term social income?
    2. How about the term community goods/services? Is it necessary to be specific here?
    3. What about free riders? Are they relevant?
    4. Then there is the whole minefield of a social contract. Are you interested in this?

    As for cheap information services providing money benefits as well as social benefits, that’s a Pandora’s box I would rather not open. Not without the full protection of optional selectivity. If it jumps out and does not meet my definition of an economic item then it is of no interest to me AS an economist.

    Economists must stay inside their academic territory. They are not meant to be universal experts. They can only help non economists see pitfalls that must be anticipated for private want satisfaction. It’s like searching for truffles. If you do not know where to look and have no help from a sniffer pig/dog then leave it alone.

    My old economic professor (Professor John Neville) harped on this when we submitted our papers. His credo was:

  23. Not wanting to put this Marchetti’s constant/Jevons paradox bone down … Imagine that we had a successful decades long program to beat Marchetti’s constant? What is the endgame for the kind of settlement result that we would have?

    And now apply this to an age of pandemic infection? Can we infer that the result would make targeted lockdown far less costly and far more effective?

  24. «My old economic professor (Professor John Neville) harped on this when we submitted our papers. His credo was: FIRST DEFINE YOUR TERMS..»

    Serious Economists do this all the time and define regular-sounding words in quite ridiculous ways: for example using “hedonics” the Consumer Price Index has become actually an index of alleged consume enjoyment of products, rather than of consumer prices.

    Anyhow defining terms and defining them in useful ways is an old ambition:
    “Confucius was asked what he would do if he was a governor. He said he would “rectify the names” to make words correspond to reality.”

  25. Ikonoclast (re your comments at DECEMBER 24, 2020 AT 1:09 PM);
    You state: “Solar PV proved cheaper and more scaleable, small and large. Another one to J.Q. I predicted solar PV costs would not come down fast enough and their EROEI would be high enough to be genuinely deployable. I was wrong. Another two to to J.Q. I predicted capitalism as opposed to statism, would fail to deploy solar pv fast enough and fail to phase out fossil fuels fast enough.”

    So far as I can see, renewables have not yet phased out fossil fuels – the transition is still in progress, and has a long way to go. Whether it’s happening fast enough, I’d suggest, is not in debate – it isn’t – COVID-19 has induced a small reduction in GHG emissions earlier this year compared with 2019, but the decline (and more) needs to be maintained year-on-year until all fossil fuel combustion ceases everywhere to drastically reduce human-induced GHG emissions. There’s also the ‘little’ problem of human-induced GHG emissions from land use to solve.

    As I see it, humanity has a time constraint to transition off fossil fuels – less than 20 years. See the Carbon Crunch graph in:

    If we/humanity fail we will overshoot 2 °C warming, likely on current GHG trajectory before 2050, and the dire consequences that entails for human civilisation and the natural world. See Professor Will Steffen’s YouTube video titled “Will Steffen – Climate Change 2020 – Why we are facing an emergency – April 2020”.

    I don’t think solutions for stationary energy, lower temperature heat (up to 160 °C), and lower power mobile devices are the problem – I think mature low/zero- GHG emissions solutions that are affordable and rapidly deployable at large-scale are available. IMO, Professor Blakers presents a compelling case for these solutions – see YouTube video titled “Professor Andrew Blakers: 100% renewables and storage – part 1”. I’d suggest what’s currently missing is the lack of political will to proceed as needed.

    The problem I see is the lack of adequate solutions available RIGHT NOW for replacing/displacing fossil-fuelled mobile devices requiring high power and sustained energy density supply – i.e. heavy road and rail haulage vehicles, long range marine vessels and aircraft, etc.

    Perhaps someone could please provide examples of these technologies that actually demonstrate adequate solutions? I don’t see enough to be significant. Telsa’s heavy haulage prime mover looks promising but it’s still not available to the market right now and therefore the claims about operational performance cannot be verified. But where are the significant solutions for shipping and aviation?

    The electrification of nearly everything requires base materials. Are there adequate higher quality ore supplies to support the transition needed? Some analyses suggests we are approaching ‘peak everything’.

    Key ingredients for electrification are the so-called rare earths (REs) – REs are relatively abundant in the earth’s crust, with the term attributable to their rare occurrence in economic concentrations.

    Light rare earth elements (LREE) and common uses include:
    * Lanthanum (La): _ _ Catalysts (oil refining), NiMH battery anodes, Metallurgy
    * Cerium (Ce): _ _ _ _ Catalysts, Polishing, Metallurgy, Glass additives
    * Praesodymium (Pr): _Magnets, fibre optics
    * Neodymium (Nd): _ _Magnets, lasers
    * Promethium (Pm): _ _Phosphors
    * Samarium (Sm): _ _ _Magnets, lasers
    * Europium (Eu): _ _ _ Phosphors

    Heavy rare earth elements (HREE) and common uses include:
    * Gadolinium (Gd): _ _ Metallurgy, phosphors, superconductors
    * Terbium (Tb): _ _ _ _ Phosphors
    * Dysprosium (Dy): _ _ Magnets, lasers, nuclear reactor control rods
    * Holmium (Ho): _ _ _ Niche scientific uses
    * Erbium (Er): _ _ _ _ _Lasers, alloys, pigments
    * Thulium (Tm): _ _ _ _Lasers, X-rays, superconductors
    * Ytterbium (Yb): _ _ _ Lasers, X-rays
    * Lutetium (Lu): _ _ _ _X ray phosphors and x-ray detectors
    * Scandium (Sc): _ _ _ Aviation alloys
    * Yttrium (Y): _ _ _ _ _ Phosphors, superconductors, Li-I batteries

    China currently produces approximately 76% of the world’s mined RE
    production, followed by Australia (i.e. Lynas 10%) and the USA (Mountain

    All I’m asking for is credible evidence/data/analyses to support the optimism.

  26. “The problem I see is the lack of adequate solutions available RIGHT NOW”

    The real problem is the failure to implement the solutions we have, rapidly enough. Depending on how you measure it, we’ve spent $100-200 billion dealing with Covid, about 5-10 per cent of our annual income. If we spent that every year for the next decade, we could decarbonize the electricity supply and electrify most of the transport system, including most trucks, buses and (where this hasn’t already happened) trains. As well as eliminating most Co2 emissions, we would greatly reduce urban air pollution, and enjoy a long-term return in the form of cheap electricity and transports.

    If we had done that, the biggest remaining problem would be the hard cases like air travel and concrete where solutions are still a way off.

    As regards rare earths, you’re correct to say they aren’t rare. China has most of the market because they are the cheapest supplier, but anytime they’ve tried to use this fact to blackmail people, the buyers have just turned to other suppliers like Australia. And the long list you have makes the point that no particular element is crucial – if we can’t get Erbium we’ll use Ytterbium etc.

  27. @Blissex ” GDP, GDI or CPI, which should be basic, measurable quantities?” Sadly, no. These numbers are the products of economic models, which are ultimately based on the consumer utilities you mention. The point of the OP is that these models break down when some items get spectacularly abundant and cheap, while others remain scarce and costly.

  28. Ray, synthetic diesel wasn’t competing with oil back when it was $100 a barrel. It’s hard to see how it will be competitive any time soon with pumped hydro, battery storage, or burning natural gas and sucking equivalent CO2 out of the atmosphere with plants and then sequestering it.

  29. Ray Conger,
    You state: “So supposing we put a lot of slow investment into concentrated solar power in the desert? The only rare earth in that case is silver. For the time being those mirrors require silver so thats a single rare earth we have to worry about.”

    I’m a fan of solar concentrated solar thermal (CST) with molten salt thermal energy storage despite the higher LCOE. As you suggest there are less scarcer materials required for CST construction and operation. The bulk of the materials used are non-toxic and more readily recyclable, and the operational lifespan of the equipment is significantly longer (~40-50 years), compared with wind turbines (~25 years) and solar-PV (~30 years) and batteries (~10 years). The competitive ‘sweet spot’ for CST is in the 6-24 hour range of energy dispatchability.

    Copper is a key element in electrification.

    The YouTube video titled “EXTRACTED – How the Quest for Mineral Wealth is Plundering the Planet”, published by the Club of Rome on 10 June 2014, promoting the book by Ugo Bardi includes (from time interval 3:48):

    “We will never run out of minerals, but we will run out of cheap fossil fuels and high-grade ores.
    The limits to mineral extraction are not limits of quantity, but of energy.
    Extracting minerals takes energy, and the more dispersed the minerals are, the more energy is needed.
    Technology can mitigate the depletion problem, but cannot solve it.
    The depletion of fossil fuels is already becoming a serious problem. The peak of conventional oil production may have passed between 2005 and 2008, while all other oil and gas resources could peak within the next ten years. Coal production could increase for several years, but at a tremendous cost to the environment.
    Production from uranium mines is likely to decline during this decade.
    Metals such as copper, zinc, nickel, gold, silver and others, are expected to reach
    their productive peak within less than two decades.”

    Electricity power generation is only part of the electrification process. The other part of the process is the utilisation of the electricity generated to do useful work. Rare earths (REs) are utilised in high-efficiency electric motors for cars, trucks, locomotives, etc. that would displace/replace ICE powered equipment/vehicles.

    You also state: “People put a lot of faith in batteries. Thats irrational given that the best battery is synthetic diesel.”

    What do you mean by “synthetic diesel”, Ray?

    Overall efficiencies for renewable electricity generated through to that energy dissipated at the road wheels to do useful work for equivalent mass vehicles (per Transport & Environment):
    • Battery-Electric Vehicles: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 73%;
    • Hydrogen Fuel-Cell Electric Vehicles: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _22%;
    • Power2Liquid Hydrocarbon Fuels-Internal Combustion Engine V’s: 13%.

    Battery electric cars are at least three times more efficient than hydrogen fuel cell cars due to energy losses. P2L synthetic fuels are less energy efficient than hydrogen. P2L synthetic fuels are only at pilot plant stage – I’d suggest NOT yet a mature technology and large-scale deployable.

  30. Merry Christmas, Ray Conger. Are you of the opinion that plants don’t incorporate carbon from atmospheric CO2 into their mass as they grow?

  31. Ray Conger (re your comment at DECEMBER 26, 2020 AT 6:21 PM):
    When I asked “What do you mean by “synthetic diesel”, Ray?”, I meant: How do you suggest it is synthesized? What were you thinking?
    – Coal-to-liquids? or
    – Fossil gas-to-liquids? or
    – Direct air capture (DAC)? or
    – Waste CO2 stream utilisation? or
    – biomass derived diesel (i.e. biodiesel)? or
    – something else?

    In your comment (at DECEMBER 26, 2020 AT 4:33 PM) you state:
    “So the last time the American navy tried synthetic diesel (charged via nuclear) it came out at about 150 dollars per barrel.”

    Reference/link please, Ray? What quantity was produced?

    A price of $150/barrel induces economic decline – the price of oil per barrel peaked at $147/barrel in the 2008 GFC period.

  32. Very much agree that the spending needed to almost completely decarbonise over a decade would be not especially extreme; especially since, as noted, the technology already exists and is cheaper in the long term. A lot of the money required is currently being used to pull fossil fuels out of the ground.

    Rare earths are used in certain types of wind turbines (especially offshore) and EVs but not to any significant extent in typical PV cells or typical battery technologies. So even ignoring the existence of alternative suppliers, a shortage would be more of a delay/inconvenience than a deal-breaker.

    It has become clearer and clearer that the real problem is not running out of places to mine (peak whatever), but mining ever increasing quantities of stuff, and thus trashing the planet with mines and waste. Fossil fuels require massively more mining and generate more waste than any alternative because the quantities required are so large.

  33. Thanks, Ben. I’ve deleted all Conger comments. I’ll do the same for replies soon, so if people have any points they want to make that were mixed in with replies to Conger, please repost the,.

  34. Just a quick set of thoughts on “International Comparisons of Living Standards and Tastes : A Revealed-Preference Analysis” by Steve Dowrick and John Quiggin. I will try to keep most of my comments relevant to the title of this blog “Scarcity and Plenty”.

    1. Due to my educational limitations, I only poorly comprehended Dowrick and Quiggin’s paper. I fully comprehended Fix’s paper. I think I have to say that up front. Clearly, I know a little science but less orthodox economics.

    2.The reference to a “growth industry in comparative economic performance” amused me. Did I detect a little irony?

    3. “Our concern stems from the fact that relative prices vary across countries. For instance, the 1980 price of meat relative to medical care was 4.8 times higher in Japan than in the United States, and 5.4 times higher than in Argentina. Given wide price variation, any single price index measure such as the ICP’s “average international prices … is a dubious basis for welfare comparisons.”

    I can certainly see here the concerns about relative prices, the non-equatability of even PPP prices when items considered in isolation of relative prices and the issue of “welfare comparisons”. Welfare comparisons have to be, or ought to be, one the central concerns of economics. As we now know, welfare concerns need to be extended to all life in the global ecological web of life, excepting some pathogens of course. (I think we would not be too concerned if we could send SARS-CoV-2 extinct). The concern for wildlife is both altruistic and of a enlightened self interest nature.

    4. I do have concerns about the revealed preferences approach. That doesn’t mean I have a new or better idea ready to hand. The “revealed” part I do not have a problem with. It seems only logical that we have to wait for a preference to be behaviorally revealed and executed as a preference or choice which affects an element of the real economy, before we start to analyze it.

    The unstated adjective of “preferences” I do have a problem with. I assume it refers to consumer preferences as revealed by purchases or trades in the market. Looking at the economy as a whole system (thus holistically), one can see holes in that theory. In our economy, it is one-sided to talk only of consumer preferences here. Are there not producer preferences also? It seems clear to me that producers also have preferences in what they produce and how they produce it and that they can “foist” (for want of a better word at this juncture) choices and limited sets of choices on consumers.

    Looking at matters this way, we can move beyond the idea that consumer choice is all-powerful in determining products and prices in the market. Rather, we can see that ownership of the means of production, management of production, the power of accumulated capital (not least in effecting regulatory capture) and the guiding of consumer choices by marketing strategies etc. strongly condition and distort the market, such that any claim that consumer revealed preference is the sole guiding principle of the market economy needs to seen as too simplistic claim and too simplistic a model.

    I will post these points in several separate posts. Otherwise each post will get too long.For example, I haven’t even got to “scarcity” as a topic yet.

  35. To continue my post on “International Comparisons of Living Standards and Tastes : A Revealed-Preference Analysis” by Steve Dowrick and John Quiggin.

    Point 5. – The issues of aggregation and dis-aggregation.

    If I continue my concepts cross-comparison of the above paper and Fix’s paper, I can note the common concern with the general issue of aggregation (and disaggregation). I can also note the common concern with the issue of the numeraire and whether it is a reliable measure (in a common dimension) which permits valid aggregation and thus valid cross-comparisons of human welfare outcomes (which arguably are what we should be most concerned with along with concern for wild plant and animal population outcomes and the issues of ecological and civilizational sustainability.)

    I don’t want to sound too portentous, pretentious and tendentious (which I know I tend to do) but there is a real concern (to me these days) that academic orthodox economists and the heterodox economic community seem to tend to straw-man (as a verb) each others’ arguments. I’ve been guilty of that tendency myself as an amateur theorist in the heterodox economic camp.

    Ernestine Gross has correctly picked me up on this tendency a number of times. Even when we start to learn better our ideological reflexes lead that repeated desire to kick the other camp in the straw-man shins. Ernestine Gross has pointed out that neoliberal economics and orthodox economics bowdlerized for public consumption (and as neoliberal propaganda) are not the same thing as the entirety of the orthodox economics field (if I may characterize it as “orthodox”). Clearly J.Q, and his co-author have been grappling with these aggregation and numeraire issues since at least 1994.

    Point 6. – “Measure Real Stuff” to determine Welfare

    My position in relation to human welfare and ecological welfare is to argue that we should “measure real stuff”. Following substance philosophy and empirical science, real stuff means real physical stuff (real materials, energy and biological system entities including living organisms) measurable in the dimensions of the SI table.

    Money or the numeraire is not a consistent measuring stick as Fix demonstrates and it does not measure any real dimension (using dimension in the sense of the SI definition). It seems to me that orthodox economics, of at least some flavors of it like neoliberalism, neoclassicalism (perhaps), monetarism and market fundamentalism, attempt to get money to “do too much duty”. While money is useful as a medium of exchange, it is not useful as a measure of, or as a proxy for, of value and comparisons of value. The first problem involves the issue that it is not a reliable measuring stick (it stretches and contracts relative to what it measures via differential inflation / deflation. The second problem related to the first is that it is not a valid unit in which to aggregate unlike items, like widgets, human lives and ecosystems. The third problem is that different kinds of values are incommensurable. We cannot value widgets, human lives, human rights, animal rights, ecosystems and other biospheric systems in the same measure.

    Yet, we attempt to manage human welfare, our real economy and real ecological systems all in the same money calculus on the assumption that money can count and equate everything. I referred above to the need to resist ideological reflexes. The greatest ideologically enculturated and instantiated reflex today is this very reflex to measure almost everything in money. And in practical terms that is what we do every day because the system forces us to do it with only a set of special exemptions. For example, you can’t openly buy and sell human slaves so there is a not a market value put on human slaves. However, you can indirectly trade in how many humans animals and natural ecosystems will die from pollution by trading in permissions to pollute.

    Hence, my plea to measure real stuff. This posits placing a much higher importance on impact science and impact economics (medicine, ecology etc.) by comparison to production science and production economics. In measuring human welfare, we need real measures: heights, weights, BMIs, protein intake, fat intake, sugar intake, life expectancies, dental caries counts and so on and on. In measuring ecological welfare we need in like manner real counts. I need not enumerate examples. Money counts are useless, indeed worse than useless.

    In conclusion, the best service heterodox and orthodox economics (and associated ideologies) along with general education can give is to steer people conceptually away from the ubiquitous money-measuring of value and towards a more “real stuff” conception of materially measurable values and also a more moral philosophy conception of values which are not reducible to the materially measurable. In other words public discourse needs to become more about real stuff, how many children are properly nourished, how many children have access to free education and so on. It also needs to become more about our ethics and values other than monetary values.

    If I come up with more points I will post them. I haven’t directly talked about scarcity yet. I will ponder on that some more.

  36. Attempt to sum up on the indicator problem.
    1. The pandemic has underlined the need for policymakers and policy intellectuals to move away from the deeply and increasingly flawed GDP indicator as the main measure of welfare changes.
    2. it will take a long time to develop and get consensus on a better indicator, or basket of indicators.
    3. Meanwhile, let’s cash the conceptual progress made during the pandemic. Attention has shifted, quite rightly, to public health indicators (infection and death rates, excess deaths, suicides), employment/unemployment, and carbon emissions. We should avoid backsliding into the GDP fetish, and at least keep the new temporary basket.

  37. James Wimberley,

    I agree. Measure real stuff. If it can be measured in one or more of the seven dimensions of the SI table (or the derived units) and it directly relates to human welfare or ecological sustainability, then consider measuring it. Clearly, our priorities will determine what we measure.

  38. Introducing a carbon price equal to the cost of removing CO2 from the atmosphere and sequestering it reasonably long term would improve GDP figures. As in make it a better representation of human welfare. Of course $100,000 GDP per capita could still represent everyone being extremely well off or 99% of people living at subsistence level while 1% flit around in gold plated luxury blimps. (The gold plating prevents hydrogen embrittlement.)

  39. On the subject of scarcity, here are some discussion points:

    * ‘Peak Phosphorus’
    As an example, a Nature Communications paper headlined “Global phosphorus shortage will be aggravated by soil erosion”, published on Sep 11, includes in the abstract:

    “Soil phosphorus (P) loss from agricultural systems will limit food and feed production in the future. Here, we combine spatially distributed global soil erosion estimates (only considering sheet and rill erosion by water) with spatially distributed global P content for cropland soils to assess global soil P loss. The world’s soils are currently being depleted in P in spite of high chemical fertilizer input. Africa (not being able to afford the high costs of chemical fertilizer) as well as South America (due to non-efficient organic P management) and Eastern Europe (for a combination of the two previous reasons) have the highest P depletion rates. In a future world, with an assumed absolute shortage of mineral P fertilizer, agricultural soils worldwide will be depleted by between 4–19 kg ha−1 yr−1, with average losses of P due to erosion by water contributing over 50% of total P losses.”

    * ‘Peak Helium’
    As an example, a Biophysical Economics and Sustainability paper headlined “Assessing the Past and Future Sustainability of Global Helium Resources, Extraction, Supply and Use, Using the Integrated Assessment Model WORLD7”, published on May 19, includes in the abstract:

    “The sustainability of the helium production, supply and use was assessed using the WORLD7 integrated model. The use of helium is at present concluded to be unsustainable with respect to long-term supply security, because of lack of significant recycling. There is no risk for significant helium scarcity in the short term (before 2030), but in the long term, the scarcity risk is unavoidable under business as usual. The helium supply runs into limitations by 2090, under business as usual and supply declines after that. The study shows that the present helium recycling rate is far too low, causing helium to be squandered in one-way use and that is driving helium prices up. A scenario analysis with the WORLD7 model suggests that a sustained program for helium recycling and demand management, combined with political efforts to ban unnecessary use, will be able to significantly improve the long-term helium supply situation. The outputs show that such efforts may be sufficient for avoiding any scarcity under the demand assumptions taken.”

    What’s more important: helium-filled balloons for parties; or liquid helium for the magnets in MRI scanners and all the other scientific, medical and engineering uses for helium?

    * Platinum group metals (PGM) scarcity and depletion

    As an example, an MDPI paper headlined “Precious Metals in Automotive Technology: An Unsolvable Depletion Problem?”, published 30 Apr 2014, includes in the abstract:

    “Since the second half of the 20th century, various devices have been developed in order to reduce the emissions of harmful substances at the exhaust pipe of combustion engines. In the automotive field, the most diffuse and best known device of this kind is the “three way” catalytic converter for engines using the Otto cycle designed to abate the emissions of carbon monoxide, nitrogen oxides and unburnt hydrocarbons. These catalytic converters can function only by means of precious metals (mainly platinum, rhodium and palladium) which exist in a limited supply in economically exploitable ores. The recent increase in prices of all mineral commodities is already making these converters significantly expensive and it is not impossible that the progressive depletion of precious metals will make them too expensive for the market of private cars. The present paper examines how this potential scarcity could affect the technology of road transportation worldwide. We argue that the supply of precious metals for automotive converters is not at risk in the short term, but that in the future it will not be possible to continue using this technology as a result of increasing prices generated by progressive depletion. Mitigation methods such as reducing the amounts of precious metals in catalysts, or recycling them can help but cannot be considered as a definitive solution. We argue that precious metal scarcity is a critical factor that may determine the future development of road transportation in the world. As the problem is basically unsolvable in the long run, we must explore new technologies for road transportation and we conclude that it is likely that the clean engine of the future will be electric and powered by batteries.”

    The platinum supply is just one of the problems plaguing the idea of the “hydrogen economy.” Others include: storage, safety, durability, efficiency, energy return, and probably more.

  40. “GDP, GDI or CPI, which should be basic, measurable quantities?”

    «These numbers are the products of economic models, which are ultimately based on the consumer utilities you mention. The point of the OP is that these models break down when some items get spectacularly abundant and cheap, while others remain scarce and costly»

    I am sorry that I wrote a couple of long replies to your questions so you did not have the patience to consider them, but my point was they *should* (as I wrote) be basic, measurable quantities, and I described specifically why it is a bad idea to make them “the products of economic models, which are ultimately based on the consumer utilities you mention”, and that these models have much bigger issues than merely that they “break down when some items get spectacularly abundant and cheap, while others remain scarce and costly”.

    Put another way I was suggesting a two-layer approach: to collect separately “basic, measurable quantities” as it was done before those quantities became less positive, and then on to develop whichever fantasy/metaphysical models may help to ensure that in our imagination the situation is still very positive.

  41. For party balloons I suggest a 5% hydrogen and 95% nitrogen mix with a small drone providing most of the lift. Or we could just put CGI party balloons on the kids’ phones. That sounds easier.

  42. In terms of Maslow’s hierarchy, doesn’t information services come in near the top? This isn’t exactly on point, – and possibly not at all – since few of us can satisfy even the first level alone. “Society” is always going to have some informational service, even when it is just gossip. But I guess I just don’t understand the point here. If at least some people in all countries are going hungry, we should ask why.

    And so for me, I can’t get to the question of how or whether we could use information services to make government run better … bc where I live, the issue is, how do we make more people believe it is government’s job to facilitate the feeding of people? Many people here do not *want* government to get better at this. Which to me seems the main reason it does not happen.

  43. Geoff, the “Precious Metals in Automotive” quote included –
    “We argue that precious metal scarcity is a critical factor that may determine the future development of road transportation”.

    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. Electrification of transport is proposed as a way around precious metal depletion and, sure, the question addressed was materials scarcity but even so the emissions problem is so deeply threaded though these issues that it cannot be passed over.

    Hydrogen production does require improved catalysts and there are some non-precious metal possibilities that show promise. I doubt large scale H2 production will depend on Platinum or similar. Alternatives to expensive Cobalt in Li-Ion batteries are also showing promise. Like with battery development, I think relevant materials science is probably better placed than ever before to find solutions. Or tell us clearly what the limits are.

  44. @Blissex. You are missing my point. There have never been objective measures of real GDP or inflation, and there never can be.

    We can collect measures of the total monetary value of sales of goods and services. That’s the kind of objective number you are happy with. To derive nominal GDP or NDP from that, we need to subtract the value of inputs at each stage of production. That requires a bunch of imputations, but is still not too hard.

    The big problems arise if you want to calculated a measure of inflation and use it to derive real GDP and similar measures. That literally requires comparing apples and oranges, weighting them to get an “average price of fruit”, and extending that to the whole range of goods and services. Any defensible procedure for doing this is based on an economic model, and that’s where the utilities come in.

  45. Comes down to getting more than fancier computer games out of ever better semiconductors, doesn’t it? The self-driving cars will arrive eventually. Radiologists and human chess champions are de facto obsolete since quite some time. Replacing other doctors already doesn’t work so well. A functioning cooking and cleaning bot still looks outright utopian. Something to make housing construction cheaper would be nice. 3d printers can do some parts of house construction, but that doesn’t seem to move the prices much.

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