An energy revolution: better late than never
Also: Can China’s digital dictatorship also be a dynamic dictatorship?
“The destiny of world civilization depends upon providing a decent standard of living for all mankind.” - Norman Borlaug
In This Issue
The Micro Reads: Space solar power, woolly mammoths, solarpunk, and more . . .
The Short Read: Can China’s digital dictatorship also be an economically dynamic dictatorship?
The Long Read: An energy revolution: better late than never
The Micro Reads
Space Solar Power: An Extraterrestrial Energy Resource For The U.S. - Innovation Frontier Project | One historical catalyst for the US doing big things is a geopolitical challenge. While the risk of military conflict is concerning, the silver lining would be increased US R&D urgency on many fronts, including energy. From the IFP report: “The development of key technologies such as reusable rockets and thin film solar panels has finally made SSP economically and technically viable. But there is still a lot of fundamental research on SSP that needs to be done and it is in the United States’ national interest to begin this research program as soon as possible.”
The American Housing Market Is Stifling Mobility - Edward Glaeser and David Cutler, WSJ | Two great economists join forces to address a key problem undermining both mobility and economic growth. So build, baby, build. But it’s also a politically tricky problem given the NIMBY power of existing homeowners. Here’s their solution:
How can America once again become a nation for outsiders? With housing, the key actors are state legislatures, because they can rewrite the rules of local zoning on a dime. Last month, the California legislature passed a law that could make the permitting of two-unit projects far more automatic. It’s a good beginning, but states should go further and only allow localities to impose regulations and rules that have gone through rigorous cost-benefit analysis. They can institute one-stop permitting that allows new businesses to deal with a single authority instead of many overlapping government offices. The federal government can help, too: There is no reason why infrastructure dollars can’t be directed to communities that permit the most new construction.
The Woolly Mammoth’s Return Could Thaw Relations With Russia - Foreign Policy | The geopolitical angle is not nearly as important as mitigating the degradation of the Arctic permafrost in Siberia. From the piece: “Woolly mammoths add particular value in this regard. According to Church’s team, they were considered to be engineers of the grasslands in their day, preventing the growth of trees that would break up the grasslands and thereby compromise their natural ability to sequester carbon from the atmosphere.”
Solarpunk Is Not About Pretty Aesthetics. It's About the End of Capitalism - Hannah Steinkopf-Frank, Vice | Well, at least it’s a non-apocalyptic vision of the future. I will give it that — but just that. “[Solarpunk] imagines a world where energy, usually from the sun or wind, can be used without harming our environment. Where green roofs and windmills allow humans to live in harmony with nature. . . . At its core, and despite its appropriation, Solarpunk imagines an end to the global capitalist system that has resulted in the environmental destruction seen today.” (A fact check on that laste claim, via my Political Economy podcast.)
The Short Read
👁 Can China’s digital dictatorship also be an economically dynamic dictatorship?
Many American parents might be envious of China’s new restrictions on video games. But the rules are hardly benign. They should be seen as more steps by the Chinese Communist Party to create a digital dictatorship — one in which “people are monitored and directed to an unprecedented degree through the agency of government-controlled cyber networks, surveillance systems and algorithms,” as the Financial Times puts it. That same FT piece also has this ominous quote from China expert Scott Kennedy: “I think the solution that [Xi Jinping] has settled on is Orwell.”
It’s certainly worth asking if China is creating a culture that encourages and rewards creativity, imagination, and risk-taking. Or to put it another way: Can an oppressive surveillance state also be a dynamic, entrepreneurial one? As with the US, China’s economic future depends on making its economy more productive. But that will mean reversing a long-term downshift since the Global Financial Crisis. According to the World Bank, Chinese total factor productivity growth — the amount of GDP growth that cannot be explained by capital or labor and is often used as short-hand for an economy’s innovativeness — slowed from 2.8 percent in the 10 years before the GFC to 0.7 percent in 2009–2018.
But China has a plan that attempts to deal with the slowdown by doubling down on one of its causes: more planning, including greater state investment into what it thinks are key industrial sectors such as aerospace, artificial intelligence, and robotics. And as part of its attempt to continually modernize its manufacturing sector, the Chinese Communist Party also wants to make sure too much brainpower isn't diverted into services. “Schooled in Marxist doctrine, China’s leaders have long regarded industry as more economically valuable and more strategically useful than services,” explains a recent article in The Economist. Indeed, one way to look at the new limits on video games is as a part of that effort.
But will more planning — even perhaps better planning enabled by Big Data — do the trick if China saps its economy of private-sector vigor and substitutes Beijing’s judgment for that of the market? I’m skeptical that such a top-down society can consistently produce intuitive risk-takers such as Elon Musk or Steve Jobs. (When asked once what market research went into the iPad, Jobs replied: “None. It’s not the consumer’s job to know what they want.”) But Beijing is apparently willing to take that risk rather than reduce its power to plan both the economy and the lives of its citizens.
The Long Read
⚛An energy revolution: better late than never
A few recent headlines to ponder:
“Get Ready for the Nuclear Fusion Revolution” - Bloomberg
“Asimov’s vision of space-based solar power is more than science fiction” - FT
Now here’s an Our World in Data chart showing per capita energy use for the United States, China, and globally. Do you read this chart as telling a story of something going very right with America or very wrong or somewhere in-between?
I can certainly understand choosing the “something going very right” option. US energy usage peaked in 1973 at 95,508 kilowatt hours. That same year, real US per capita GDP was $26,851 (versus $58,454 in the second quarter of this year). So in the past nearly half-century, per capita GDP has risen by 118 percent, while per capita energy use has declined by 16 percent. We’ve been able to efficiently generate more economic output from less energy. Through innovation, we seem to have broken the historically tight relationship between energy consumption and economic growth. And that reality, along with evidence of peak consumption in many industrial inputs, leads MIT research scientist Andrew McAfee to declare in his book More from Less that the “American economy is now experiencing broad and often deep absolute dematerialization.” The chart below is from More from Less:
But what if much of that impressive innovation in energy efficiency — from cars to dishwashers — had instead been devoted toward innovation in cheap, clean, and abundant energy? As it happens, the long-term downshift in US productivity growth is usually dated to 1973, the same year as the peak in per capita energy usage. Indeed, the start of that downshift also coincides with the 1970s oil shocks. And there’s, no surprise, a linkage.
In the 2004 paper “Retrospective on the 1970s Productivity Slowdown,” Nobel laureate William Nordhaus identifies that slowdown as “primarily centered in those sectors that were most energy-intensive, were hardest hit by the energy shocks of the 1970s, and therefore had large output declines. In a sense, the energy shocks were the earthquake, and the industries with the largest slowdown [pipelines, oil extraction, electric and other utilities, motor vehicles, and air transportation] were near the epicenter of the tectonic shifts in the economy.”
We can’t keep blaming those oil shocks, however. The 1980s decline in oil prices, for instance, didn’t lead to a rebound in productivity growth. And Nordhaus cites the eventual productivity surge in the late 1990s and early 2000s as evidence that “the economy made the transition from the oil age to the electronic age.”
Yet what if we had also made a transition to a nuclear/geothermal/space solar age? What if those headlines from the start of this piece had popped up in 1981 rather than 2021? Where might we be today?
And how could that have happened? Maybe we could have followed the Space Race with the Energy Race with a similar level of national research funding and attention, not to mention a more permissive regulatory environment. (Here’s looking at you, NEPA.) As I have mentioned previously, the big tech-optimist dreams of the postwar “golden age” assumed big progress on the energy front in all the areas I just mentioned.
Well, better late than never, I guess. But that’s likely not how the modern Thunbergian-degrowth environmentalists see things. Back in the 1970s, their predecessors embraced the notion of “peak oil” and expensive energy as a way of slowing the dangerous growth they felt to be consuming Spaceship Earth. There may have been nothing they feared more than cheap, abundant energy to fuel more capitalist production and consumption. (Of course, little did most realize back then that a joint federal-private sector effort was already laying the foundation for the shale revolution.)
One hopes current environmental concerns will, looking back, be seen to have missed another energy revolution — or maybe revolutions. We had better hope so. We need not just clean energy, but lots more energy for a world where more than half of our fellow humans live on less than 10 dollars a day. How much energy must be generated in a world where everybody lives at least as well as Americans do today? Depending on population growth and urbanization trends, five times as much energy as is generated today is hardly an unreasonable estimate. That’s a lot of solar panels and wind turbines. We had better fire up the reactors, drill the heat wells, and launch those sunshine-catching satellites.