We need more clean energy to maximize human potential, not just for bitcoin
Also: considering economic risk; pushing for better teachers; investing in science research
“Advances in science when put to practical use mean more jobs, higher wages, shorter hours, more abundant crops, more leisure for recreation, for study, for learning how to live without the deadening drudgery which has been the burden of the common man for ages past. Advances in science will also bring higher standards of living, will lead to the prevention or cure of diseases, will promote conservation of our limited national resources, and will assure means of defense against aggression. But to achieve these objectives — to secure a high level of employment, to maintain a position of world leadership — the flow of new scientific knowledge must be both continuous and substantial.” - Vannevar Bush, The Endless Frontier
In This Issue:
⚛ We need more clean energy for bitcoin — and, more importantly, to maximize human potential (603 words)
📈 Slower but steadier: A Biden Boomlet might be better than a Biden Boom (477 words)
🏫 Why America needs smarter teachers (756 words)
🧪 Please, let’s ‘do no harm’ as we boost US science research funding (454 words)
⚛ We need more clean energy for bitcoin — and, more importantly, to maximize human potential
When there are coal mine accidents in China, the Financial Times reports, bitcoin prices fluctuate. That’s because two-thirds of bitcoins mined — created by solving a computational puzzle — have occurred in Chinese data centers. Nearly 60 percent of China’s energy comes from burning coal. Overall, bitcoin miners are expected to consume roughly 0.6 percent of global electricity consumption — or an amount similar to the annual electricity use of Sweden.
It’s that combo of (a) ravenous energy use and (b) how that energy is generated that bothers many people, not just hardcore environmentalists. For instance, Treasury Secretary Janet Yellen recently said this on CNBC (where I am an official Contributor, by the way) about bitcoin: “It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.” Count electric car and reusable rocket entrepreneur Elon Musk in that group of critics, too. He says Tesla will no longer accept bitcoin for purchases. “We are concerned about rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal,” Musk said. (VCer Tim Draper responds: “Has anyone calculated the energy and the CO2 the existing banking system uses? The buildings, the paper, the bankers themselves? Maybe Elon should not accept Fiat for cars?”)
Of course, bitcoin isn’t the only internet-related technology that uses a lot of energy. A Financial Times piece on Musk and bitcoin points to a study by a former Google AI researcher that highlights “environmental risks” from the natural language processing models behind Google search — processes that are “estimated to require as much energy as a trans-American flight.” A predictable counter: Search is valuable, bitcoin isn’t. But I don’t know that the latter is true for bitcoin or cryptocurrencies more broadly. As venture capitalist Chris Dixon reiterated recently, “I believe, personally, that the most exciting new computing wave is blockchains and crypto.”
Maybe he’s right, maybe he’s wrong. But as a society, we should seek to limit, as much as possible, the instances in which innovation is limited by the availability and cost of clean energy. In the provocative book Where Is My Flying Car?: A Memoir of Future Past, J Storrs Hall argues that a big reason for the post-1960s slowdown in global productivity growth is because too much innovation bandwidth went into figuring out how to use less energy rather than other areas. As the title of the book suggests, aviation is of particular interest to Hall:
The one area where progress continued most robustly — Moore’s Law in computing and communications — was the one where energy was not a major concern. … There has been considerable advance in aeronautical engineering since then, but it hasn’t shown up in faster, roomier airliners or flying cars. Most of that considerable effort and ingenuity has gone to energy efficiency. We now have small, sleek private planes that use half the fuel per mile that my old Beechcraft does. What we don’t have, but could have had instead with the same amount of work, would be flying machines that were somewhat less efficient for pure flying because they also were cars. They could also be a lot quieter on takeoff, but known noise reduction techniques, such as slower propellers with more blades, are less energy efficient than current practice. Planes are made lighter by the highest-tech carbon fiber composites, and therefore more fuel-efficient—but also much more expensive.
The world needs more economic growth. And we’re going to need more energy, multiples of what we currently produce globally. That’s why one of the more fascinating developments over the past year is the work being done by nuclear fusion startup Commonwealth Fusion Systems, which will start building its first test reactor later this year with hopes of producing more energy than it consumes by 2025.
📈 Slower but steadier: A Biden Boomlet might be better than a Biden Boom
Just before the Covid-19 pandemic exploded in the United States, Americans were feeling as good about America as they had in a long time. In February 2020, 45 percent told Gallup they were “satisfied with the way things are going in the United States at this time” — the highest reading since the start of 2005. One reason for the increasing good cheer: The long economic expansion. Unemployment was low, and wages were rising at a decent clip, especially on the lower end. Good vibes only.
America could use another long expansion, something policymakers should be squarely focused on. And not just because low unemployment and rising wages are good things. See, it wasn’t job losses from China trade that created America’s grievance-based populist backlash. At most, some two million manufacturing jobs were lost as a result of Chinese competition from 2000 to 2015. That works out to roughly 130,000 workers displaced annually in a labor market where 20 million jobs are lost every year from failed businesses or relocation.” In other words, writes economist Adam Posen in Foreign Affairs (where all these trade numbers come from), “for each manufacturing job lost to Chinese competition, there were roughly 150 jobs lost to similar-feeling shocks in other industries.”
The Occam's Razor explanation points us to the Global Financial Crisis and the slow economic recovery that followed it. Indeed, it seems that economic shocks that are financial in nature have particularly nasty political effects. From “Going to extremes: Politics after financial crises, 1870 – 2014”:
After a crisis, voters seem to be particularly attracted to the political rhetoric of the extreme right, which often attributes blame to minorities or foreigners. On average, far-right parties increase their vote share by 30% after a financial crisis. Importantly, we do not observe similar political dynamics in normal recessions or after severe macroeconomic shocks that are not financial in nature.”
Financial crises seem more like a failure of elite competence than, say, a recession caused by an oil shock. But severe downturns, whatever their causes, risk undermining the economic openness and acceptance of “creative destruction” on which market capitalism thrives. This is why I fear Washington’s tilt toward a more-of-everything policy — more stimulus, more checks, more jobless benefits — could prove to be an exercise in self harm if it leads to a slower jobs recovery or, perhaps more importantly, higher inflation that prompts the Fed to slam on the brakes sooner than expected. It’s a scenario that policymakers should take more seriously. As the economics consultancy Capital Economics puts it: “What is happening to activity and prices isn’t a repeat of the stagflation of the 1970s, when both the unemployment and inflation rates were in double digits, but it does have a bit of the same whiff about it, which is eerily similar to conditions in 2005 and 2006.”
Fast growth? Yes. But we might be looking at a case of “less is more” if the result is a longer economic expansion.
🏫 Why America needs smarter teachers
Few statistical observations have stuck with me like this one from “Closing the Talent Gap,” a 2010 McKinsey report on education: Top-performing nations — such as Singapore, Finland, and South Korea — recruit all their teachers from the top third of college students vs. just 23 percent in the US. Having dropped those numbers into more than one conversation about the state of American education, I know they cause an “A-Ha!” moment in the thinking of many people. People naturally assume students benefit from having high-achieving teachers.
And there’s good reason to think that intuitive assumption is a correct one. In the 2018 study “The Value of Smarter Teachers: International Evidence on Teacher Cognitive Skills and Student Performance,“ Eric Hanushek, Marc Piopiunik, and Simon Wiederhold find “substantial differences in teacher cognitive skills across countries that are strongly related to student performance.” I chatted with Hanushek about this issue when the paper came out:
Why should cognitive skills impact how good a teacher is and help determine the outcome they have on their students?
We think of education largely as being able to adapt to different circumstances. The value of education is that when something changes, people that are more educated can analyze what is going on and figure out what to do. That’s what goes on in classrooms all the time. Teachers are trying to figure out how they react to the responses they are getting from kids or the tests that kids take.
How does the United States compare to other countries as far as getting smart people to become teachers?
Some countries get more. Some countries get less. It’s not clear that you want your smartest people as teachers. You still need a few rocket scientists here and there. But what we’ve seen over time is that as opportunities for women in the labor market have expanded, the skills and test scores of teachers have gone down. … The average teacher in Finland comes from something like the 65th percentile of skills of college graduates. The average teacher in the US comes from the 47th percentile. So the US is systematically drawing from lower down among the college graduates and that has an impact.
If we could replace the bottom five to ten percent of teachers with merely average teachers, it would have a big impact, right?
If I have a really bad teacher in the bottom five to eight percent, that means on average I’m losing one year of my K-12 schooling, and that’s costly. So if we could just move those people out to better occupations for them and bring in an average teacher, our nation could jump to Canada — which by other work that I’ve done suggests that future economic growth would be noticeably higher, like eight tenths of a percent per year higher of annual growth. Now most people think eight tenths is a small number. Eight tenths in terms of growth rates is a huge number because we’ve averaged one and a half percent per year of growth over the last 25 years.
Can better teachers overcome problems that disadvantaged kids might bring with them into the classroom?
There is no doubt that families are extraordinarily important in education. Nobody doubts that at all. What we do know now is that good teachers can overcome deficits that come to students with bad family backgrounds. One quick example to give you an idea of this: Sometime in the past, I did a study in Gary, Indiana, an old falling apart rust-belt city looking at all low-income black students in the Gary public schools.
The best teachers were giving a year and half of learning each academic year. The worst teachers were giving half a year of learning each academic year. So depending upon what classroom you went to, you could get as much as a full year of learning difference in the outcomes. The evidence we have on the variations in teacher effectiveness suggests that if you had four or five years with a good teacher you could overcome the average family background difference between a poverty kid and a non-poverty kid.
So it is a matter of both will and management that we have good teachers in the classrooms for poor kids. And that’s not because we want to take them away from kids that are doing better. This is a statement that in the long run the only way that our schools are going to change is by one way or another getting better teachers in the classroom.
🧪 Please, let’s ‘do no harm’ as we boost US science research funding
It sure seems like everyone wants to spend more taxpayer dough on science and technology research. (Federal R&D spending, as a share of GDP, is only a third of what it was during the Space Race 1960s.) I know I do, mostly because I hope increased investment eventually boosts US productivity growth, raises living standards (broadly defined), and helps us manage some big problems such as extreme climate change. America has a key role to play in pushing forward the global technology frontier.
Others might prioritize the geopolitical challenge/threat of China as the most compelling reason for Washington to act. I recall a 2015 Long Now talk by journalist (and my old boss) James Fallows who said big infrastructure projects typically need one of three things to happen. As summarized by the Long Now’s Stewart Brand, there either needs to be “an emergency (such as World War II or the Depression), stealth (such as all the works that quietly go forward within the military budget or the medical-industrial complex), or a story (such as Manifest Destiny and the Space Race).”
A big science push satisfies some of Fallow’s conditions. So maybe it should be no surprise that Washington is acting — and doing so in a relatively bipartisan manner. Last week, two key congressional committees approved bills, Science magazine reports, that “would more than double NSF’s budget over 5 years as part of a broader push to outinnovate China and the rest of the world through a massive federal investment in research.”
Not that there isn’t considerable debate about the details of that spending, particularly the effort to expand the mission of the National Science Foundation through a new technology directorate that would focus on the development of 10 key technologies. Among them: artificial intelligence and machine learning; robotics, automation, and advanced manufacturing; natural or anthropogenic disaster prevention; and biotechnology, genomics, and synthetic biology.
Some NSF supporters worry this new directorate would muddle the agency’s mission to do basic research. “Let the NSF stay the NSF,” they say. Agreed. If we want more applied R&D or “mission-oriented” R&D or some sort of SuperDARPA, a new solution-oriented agency should be created. Or DARPA-like entities could be embedded elsewhere. This piece from the quarterly journal Issues in Science and Technology makes a lot of sense to me: “In its short history ARPA-E has already shown that this model can be adapted to new missions and can create valuable new technologies. One can imagine other versions associated with the Departments of Commerce, Agriculture, and Transportation, among others.”
The 15-hour week: Keynes’s prediction revisited - Nicholas Crafts, University of Warwick | In 1930, economist John Maynard Keynes published “Economic possibilities for our grandchildren,” a short essay containing the prediction that in a hundred years, people would work for only 15 hours per week. Work did fall, but by only a third rather than by two-thirds as Keynes predicted. So a bit off. But as Crafts point out, lifetime leisure is way up because we are living longer:
If, however, the increase in expected leisure and non-market work time is considered on a lifetime basis, a very different picture is revealed. For a 20-year old man expected years of retirement have increased from 4.66 years in 1931 to 16.37 years in 2011 mainly as a result of improved life expectancy. The implication is that expected lifetime hours of leisure/non-market work rose by 60.1 per cent between 1931 and 2011.
Keynes did not make a prediction on a lifetime basis but if he had it would surely have assumed that life expectancy, especially for the elderly, would have risen by much less actually was the case. Using conventional 1930s’ demographers’ assumptions plus a 15-hour week and universal retirement at 65, his prediction for the increase in expected lifetime leisure/non-market work hours would have been about 50 per cent rather than the 60 per cent that transpired. Viewed from this perspective, contrary to conventional wisdom, the outcome has exceeded Keynes’s expectations.
North American companies buying more robots to keep up with demand - Reuters | The 20 percent jump might suggest that forecasts of better post-pandemic productivity growth might have some merit. Also this: “Robots were once concentrated in the auto industry but are now moving into more corners of the economy, from ecommerce warehouses to food processing plants. For the first time last year, most of the robots ordered by companies in North America weren’t destined for auto factories or their parts suppliers.”
Is Beef the New Coal? Climate-Friendly Eating Is on the Rise - Bloomberg | Really? Two stats jumped out at me. First: “Globally, 14.5% of human-driven greenhouse gas emissions come from livestock production, with cattle responsible for two-thirds.” And second: “U.S. consumption of beef actually ticked up slightly during the 2020 pandemic, to 55.8 pounds per person. It has been slowly rising since 2015 after plunging during the 2007-2009 Great Recession.”
Crises are times of non-complacency - Eli Dourado, The Center for Growth and Opportunity at Utah State University |
If the human species ends before we can spread sustainably across several star systems, I think it will be because of complacency. Complacency gives crises extra opportunity to arise, and in non-terminal cases, the non-complacency generated by the crisis is what ultimately resolves it. But what if a big, fast-moving crisis overwhelms our ability to respond, even mustering all our non-complacent energy, in the time afforded? A giant asteroid could strike just before we have the technology to divert it. Then it’s curtains.
I vote for less complacency. Recognizing that to some degree we are combating our natural tendency to settle into routine behaviors, we should systematically locate and dismantle the barriers to progress. We should accept risk, short-term job loss and inequality, changes to neighborhood character, and a ceasefire in the culture war if it means faster technological progress and economic growth. We may never know what future crises are averted with faster progress today, but in this case ignorance is bliss.