Where Are We Going? The 40 Shades of Gray

Human wealth and productivity is commonly attributed to our own cleverness (technology), existing wealth (capital) and hard work (labor). These inputs are important but in turn are all dependent – on energy.   Modern economies eat power like animals eat food – every object and service in human economies first requires an energy input to convert it into something useful. Ergo, $1 of petroleum has orders of magnitude more value than $1 worth of pencils, paperclips or pastries. But energy, other than perhaps its dollar cost, is invisible to our society.

The human economy runs on natural resources like copper, iron and phosphorous. Globally $1 of GDP results in ~1KG of extracted minerals, energy and materials. We are particularly dependent on high density energy resources like oil and natural gas and from a long term perspective we are living during what might be called ‘the Carbon Pulse’ –a one-time bolus of fossil productivity injected into the human ecosystem. Ninety-eight percent of physical labor in the modern world is done by machines, which in turn are 85% powered by energy-dense carbon compounds.  Few think about it, but 1 barrel of crude oil, at 5.8 million BTUs (British Thermal Units), for which we currently pay $70, contains the work equivalent of 4.5 years of human labor, for which we pay (in the USA) $140,000.  The average American uses 54 of these ‘barrels’ per year directly, with an additional 10-20 via imported goods, equating to ~300 ‘fossil slaves’ supporting our lifestyles.  In effect, though we eat ~2,500 calories via food, we each ‘consume’ over 200,000 calories per day overall. Our culture effectively treats all these geological inputs as ‘flows’ (like rivers, rain, sunlight, tree growth) but they are depletable stocks. No natural resource stocks are renewable on human time scales. Drilling holes is not sustainable. Our cultural stories conflate stocks with flows. 

Stocks (oil, copper, phosphorous) typically follow predictable (gaussian) curves that rise, peak and decline. The amount of these ‘stocks’ we access has generally been increasing for over a century but has now started to decline in many cases (oil quality, iron ore grade, copper overburden, etc.).  But our supply of money and credit continues to increase with no reference to the area of the curve remaining for these one-time natural stock endowments. (Globally it took over $4 of new debt to add $1 of additional GDP in 2017). We can print money, but we cannot print energy, only extract it faster with borrowed money.

We commonly count on the absolute amount of a resource, stock or reservoir available without considering the amount of it that can be technically or economically extracted. As we access the deeper, harder to find and more environmentally damaging resources, we spend an increasing amount of the key resources to get at the key resources. (E.g. static field decline for US shale oil is 30-40% per year, so production will now largely be a function of how many new wells are drilled). We have now left the era where our culture spent ~5% of our energy on finding and delivering energy, to one where we will be spending ~10% or even ~15% to 20%. This all manifests in higher costs and lower benefits for people and economies. As more energy is redirected to the energy sector, which sectors will get less/none? The net is ultimately what we are able to spend. 

Energy can only be substituted by other energy. Conventional economic thinking on most depletable resources considers substitution possibilities as essentially infinite. But not all joules perform equally. There is a large difference between potential and kinetic energy. Energy properties such as: intermittence, variability, energy density, power density, spatial distribution, energy return on energy invested, scalability, transportability, etc. make energy substitution a complex prospect. The ability of a technology to provide ‘joules’ is different than its ability to contribute to ‘work’ for society. All joules do not contribute equally to human economies.

The modern human ecosystem can be simply described. We use technology to convert energy and materials into products measured in dollars. We turn the dollars/products into neurotransmitters (feelings) + waste/impact.  Repeat at larger scale. We often mistake a trend for a reality and a short-term pattern for an axiom of nature. In a modern (and relevant) case, we have constructed rules and ‘economic laws’ around a long-by-human-lifespan, but short-by-human-history unique period of time during which, because of one-time inputs on geologic time scales, we’ve experienced continual economic growth for over a century. The constant growth we’ve experienced was correlated with human inventions and economic theories, but the cause was finding a bolus of fossil sunlight. We behave like squirrels living in a forest where a truck full of hazelnuts crashed, living off the freight and thinking it will last forever. Economic theories have  –until recently – been right about describing our trajectory but for the wrong reasons  –they largely ignore the physical and biological underpinnings of the human endeavor and will have to be reworked. 

Humans are clever, unique, adaptable and very capable. Yes, we are special, but we are part of the animal kingdom –part of the mammal and ape lineage. Our behavioral repertoire is amazing, yet still constrained and informed by our heritage. 

Why do we want that job? Why do we waste time on Facebook? Why do we love stock market returns? Why do we dislike that person? Why do we want to play with puppies? Why do we go to war? There are proximate – or ‘surface’ explanations for all these behaviors, but there are also ‘ultimate’ explanations based on our ancestral past. These 'ultimate' explanations can predict and make sense of much of modern human behavior. Ultimately, we go through our daily lives seeking ‘brain services’ – activities, experiences and behaviors in the modern world that provide the same ‘feelings’ that our successful ancestors got in a different environment.

The human brain can imagine and speak many more word combinations representing reality than exist in reality.  As such, the virtual world in our minds seems more real to us even in the face of science, logic and common sense. And since we construct our own individual virtual worlds, we prefer them over the virtual worlds in others’ minds. Which is why ‘beliefs’ are far more powerful than facts. Beliefs usually precede the reasons used to explain them.  Which is why fake news works and why we find it extremely difficult to convince people about climate change, energy descent, the limits of technology, etc. 

We are biological creatures with finite lifespans. For good evolutionary reasons we disproportionately care about the present more than the future. But most of our modern challenges are ‘in the future’. 

Modern technology provides stimuli orders of magnitude higher than our ancestors seeking similar feelings experienced. For them, a berry found on their path was a rare sweet surprise, while we buy sweets by the pound at the grocery store, or shipped via Amazon. We can easily become hijacked/addicted to things that ‘feel’ important but are just ephemeral action-potentials in the brain, not in the real world.    

Fitness in nature is correlated with caloric intake per unit of effort.  We each follow this simple ‘foraging algorithm’, mediated by the neurotransmitter dopamine, to get more for less. But after basic needs are met, this algorithm shifts to caring significantly more about our comparative performance, income, status, ranking vs. others than we do about absolute measures of the same. Ergo we don’t care about good or bad so much as better or worse (than our neighbors, or relative to the day before).   

Our impulses to want something – a pair of shoes, a new car, a toy – feel more intense to us than the satisfaction we get from the possessing of that thing on ongoing basis. Which is why our basements and storage units are full of the ghosts of dopamine past. While our physical world is based on stocks, our brain and behavior is based on flows, which need to be continually experienced each and every day. 

Once our basic needs (food, water, basic services, social respect) are met, we get very little additional life satisfaction from increased consumption. The best things in life are free, but ‘yearning’ is a strong human driver. 

We are a biological species, and as such on the spectrum of competition vs. cooperation, we are generally looking out for #1 – ourselves and our family– relative to others. 

But our formative years (millennia actually) were in small nomadic tribes on the African savannah. The success of our tribe –in hunting, resource acquisition, and defense against other tribes, dictated– and often trumped – our own individual success.  This intense favoring of ingroups and ostracizing of outgroups – be they different religions, different political groups, different sports teams or even just different opinions about the future – remains with us today.

Human nature does not change in the short term –our great-great+ grandchildren living in 200 years will be subject to all the same drives and constraints I just mentioned. But culture can manifest emergent behaviors –both positive and negative– that can happen on much shorter timelines, even less than a decade in some cases. Our genes tell us what we need, but culture dictates how we get it. We can get at least a good portion of ‘what we want and need’ using less stuff with less damage.

In the modern formulation of the market system, we internalize profits and externalize costs. The costs –of pollution and negative social impacts– are born by the commons and the public, which includes other generations and other species. No industry in the world would be profitable if full cost pricing were to include all externalized costs (e.g. damaging impacts of coal $0.38 kWh full cost instead of $0.04). But most other species don’t care at all about externalities, and as we become socially aware of our downstream effects, we have done more to respond to the costs. Relevant examples include DDT, chlorofluorocarbons, polluted rivers, and unleaded gasoline. But CO2 remains an impact that can’t easily be ‘internalized’.

The vast ecological riches of our natural world: mineral deposits, millions of species, vibrant ecosystems, lush rainforests, etc. are only counted as having value to human economies once they are converted. In our quest for treasure, we have plundered our riches, and the default plan is to continue to. 

Humans now appropriate between 30-40% of the annual productivity from sunlight interacting with soil/land on our planet. Additionally, we (and our cows, pigs, goats, dogs, sheep, etc.) outweigh the sum total of all other terrestrial vertebrates by a ratio of over 50:1.  The continuum between human civilization and Earth community – at least so far– has been solely headed in one direction.

Many of the ‘externalities’ of human commerce we can only read about. Today looks very similar to yesterday. Yet, France (and other countries) has lost 1/3 of its bird population in the last 15 years across the board due to fewer insects (presumably due to pesticides), sea creatures 10 km-deep are found to have more toxic chemical concentration than in polluted Chinese rivers, we have lost 50% of animal populations since the 1970s, etc. Human sperm count among people in developed countries has dropped ~50% in past generation. The ocean has lost 2% of its oxygen in the last 50 years, etc. We focus (naturally) on the seen – but the unseen currently tells a worrying story.

In modern human culture we cooperate at various scales (individuals, corporations, nations) to maximize representations of surplus (monetary profits). Once we understand that 1) all goods and services leading to economic output first require a primary resource conversion, 2) GDP is highly correlated with energy, and 3) to provide ‘brain services’ to as many people as possible, governments and institutions do whatever they can to keep access to energy growing (credit creation, rule changes, guarantees, etc.)  the common economic statistic Gross Domestic Product takes on a different connotation. To a reasonable approximation, GDP could be renamed as GDB - Gross Domestic Burning, as underpinning every economic transaction a small fire happened somewhere on Earth.  From a birds-eye view, modern human society is thus functioning akin to an energy dissipating structure. With a collective focus on short term profits, we tacitly assume the best futures will naturally arrive. But viewed from a perspective of GDB, the market itself cannot use intelligent foresight. It can only march forward, 3 months at a time.  The game – at least so far – is also the plan.

Each issue we encounter has different correct answers depending on how wide a perspective is used. We can look at the impact of a policy on the taxi driver, on the taxi company, on the New York City transport system, on New York City itself, on the USA, on the world today, on future generations, on ecosystems, etc.  Most current predicaments are viewed from a wider boundary perspective, but most cultural decisions are made using narrow boundaries.

In the 20^th century we constructed societal infrastructure and expectations on rules from finance and economics, but the rules from natural sciences and ecology –primary productivity, trophic cascades, carrying capacity, overshoot, bottlenecks, phase shifts, succession, pulses, etc. are going to be much more pertinent in the 21^st.