π Faster, Please! Week in Review+ #27
Our pandemic productivity problem; Republicans against housing reform; the danger of a backlash against emerging clean-energy tech; and much more!
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β Β Poll Alert!Β I used to publish my essays and 5 Quick Question interviews in the same issue, resulting in fewer total issues published each week. But I felt that was a lot to read in one sitting, and the 5QQs would often get lost. So I split the essays and 5QQs into separate issues. I give the new podcast its own issue, too. Which approach do you prefer? Is less more? Or are you good as is? Please answer the first poll, below:
Second poll: My essays typically run around 1,500 words, including block quotes and such. Would you prefer they were shorter, more column length (say, 800 words or so), or does the current length work for you? Again, please let me know below!
Melior Mundus
In This Issue
Essay Highlights:
β "Hello, I must be going." Another look at the pandemic-era productivity boom β then bust.
β Republican reversal: The worst economic idea from what used to be the 'party of ideas'
β Don't take the emerging Nuclear Renaissance for grantedBest of 5QQ
β What's next for the emerging nuclear renaissance?
β How to build a future of clean energy abundance
Essay Highlights
π "Hello, I must be going." Another look at the pandemic-era productivity boom β then bust.
The economic silver lining of the first two pandemic years, 2020 and 2021, was strong US productivity growth. But the first half of 2022 has seen a big reversal from those higher-productivity years, with annualized declines of 7.4 percent in the first quarter and 4.1 percent in the second quarter. Setting aside how productivity growth drives the long-term increase in living standards, a less productive economy boosts the degree of difficulty for the Federal Reserve in managing a soft landing from the current inflation surge. The Goldman Sachs bottom line: "[P]roductivity growth slowed in 2022, but by much less than todayβs GDP vintages indicate and to a level still above the pre-pandemic trend. Our estimates of the positive and negative factors net out to a +1.6% annualized pace since 2019." That's just a tick above the long-term trend and isnβt nearly good enough for the American economy to grow as fast in the future as in the past, especially with a demographically-driven slowing in labor force growth. I sure hope what Washington has been doing lately helps boost productivity growth β because, you know, it obviously needs lots of help.
β Republican reversal: The worst economic idea from what used to be the 'party of ideas'
In many cases, pursuing the American Dream of economic opportunity means moving to where the better jobs are. But as economist Daniel Shoag points out, "This dynamic has faltered in recent decades, as land-use restrictions have limited housing availability in Americaβs booming local economies.β Which brings us to the modern Republican Party and its disappointing reversal on housing reform. In a 2020 Wall Street Journal op-ed, President Trump and HUD Secretary Ben Carson described density-centric housing reform as an attack on Americaβs suburbs. Meanwhile, Democrats continue to embrace and push the housing reform issue. Back in May, President Biden announced a βHousing Supply Action Plan,β that would β[r]eward jurisdictions that have reformed zoning and land-use policies with higher scores in certain federal grant processes, for the first time at scale.β And last year, California Governor Gavin Newsom signed bipartisan legislation that chipped away at restrictive zoning rules, including allowing two homes or a duplex on lots that had for decades been reserved exclusively for single-family homes. Republicans used to embrace state-level policymaking. βLaboratories of democracyβ and all that. Maybe that bit of old-fashioned GOP thinking may yet make a comeback.
β Don't take the emerging Nuclear Renaissance for granted
For all my optimistic Up Wing analysis and speculation about an emerging New Atomic Age (and I hope also a first Geothermal Age), nothing is assured. Technology must continue to advance both scientifically and economically. And it must successfully fight its way through an overgrown, and prickly regulatory thicket. Then thereβs public opinion. True, weβve seen a resurgence in public support for nuclear energy thanks to rising energy prices, concerns about how geopolitical instability affects fossil fuel supplies, and climate change. But what if something goes wrong? What if thereβs another Fukushima-level event that seizes public attention in the worst possible way? Russiaβs invasion of Ukraine raises a new concern: the weaponization of nuclear power plants. To die-hard nuclear opponents, such a risk at one reactor anywhere makes the case against nuclear energy everywhere.
But consider Fukushima. It is one of only two nuclear accidents, along with Chernobyl, to merit theΒ most severe ratingΒ on the International Nuclear Event Scale. Yet no fatalities have ever been found to be directly attributable to radiation exposure from the Fukushima meltdown, while the post-event reactor shutdowns have caused four-figure fatalities due to the national switch to dirtier and more expensive power generated by imported coal and oil. Itβs hard to square these numbers against the βexistentialβ risk that environmentalists attribute to climate change. Of course, the anti-nuclear media and entertainment industry will no doubt play up any accident, whether technical or war-related, to again turn the public against nuclear.
Best of 5QQ
This week featured not one but two 5QQs with Alex Trembath, Deputy Director at the Breakthrough Institute, a think tank dedicated to promoting technological solutions to environmental and human development challenges. Here are two great answers that paying subscribers saw earlier in the week:
β What's next for the emerging nuclear renaissance? (Part one)
From an ecomodernist perspective, what do you like and dislike about the Inflation Reduction Act?
In order to grapple with the climate crisis, you really have to create a whole new energy economy, a whole new energy abundance on top of the old one. You're not going to regulate or limit your way out of it. You need much cheaper and more scalable low-carbon energy technologies of the kinds that we've seen significant progress in over the last 10, 15, 20 years as solar has gotten a lot cheaper [and] batteries have gotten a lot cheaper. The Inflation Reduction Act totally follows that playbook. It's making big investments in low-carbon technologies, and what's especially promising is it's doing it in a very technologically inclusive way. Itβs got big investments for tax credits for solar and wind, but also for geothermal, for advanced nuclear, for hydrogen. And this is true across the innovation pipeline, as it's called. There's funding for deployment, but also funding for demonstration of new technologies. β¦
What I'm more concerned about is that the Inflation Reduction Act was passed on a bit of a handshake deal between Senator Manchin and leadership over permitting reform, which is alleged to be coming down the pike sometime this fall, which I don't really believe will happen. What Manchin and an increasing number of folks are saying is that we've got increasingly cheap low-carbon technologies, we're trying to electrify transport, heating, sort of industrial processesβthat's going to require a lot more energy infrastructure. [But] the environmental regulatory regime that we set up in the 20th century is just a straight obstacle to building a bunch of that infrastructure. Manchin seems to know this, and that's why he wanted to pair permitting reform with the almost $400 billion down payment that we're putting towards building that infrastructure. But I think that is not remotely a done deal.
I think thereβs going to be lots of opposition from progressives and environmentalists against permitting reform. And I think that is a huge problem that will absolutely impede the expectations people have for the Inflation Reduction Act. The big modelsβthe Repeat Project, the Rhodium Group, Energy Innovation LLCβall expect something like 40 percent emissions reductions below 2005 levels by 2030. My guess is we won't hit that, or probably much close to it, without significant permitting reform in the next few years to make it easier to build long-distance transmission lines, to make it easier to build solar and wind projects and geothermal plants and things like that.
π How to build a future of clean energy abundance (Part two)
How seriously should I take the prospects of really deep geothermal and nuclear fusion?
Those are two significant candidates for very aggressive, ambitious R&D and incentives for demonstration. I think the technical evidence for enhanced geothermal, in particular, is really promising. You're starting to have some commercial-scale demonstrations from startups like Fervo. I think, likewise, there's been scientific advancement in a bunch of different fusion applications that I think merit further investment from institutional investors, from government. We won't know probably this decade how promising fusion will be. But the analysts and the folks I talk to are increasingly optimistic about the scientific milestones being made in fusion. One of the more promising darlings of the energy startup sector today is this startup called Fervo that is doing enhanced geothermal, and they just raised over $100 million in a new round of funding. I think the assessment from both scientists and from actual investment markets is promising. But of course, energy transitions take a long time. Energy innovation is a long-tail endeavor. So we'll see.