The thing about economics is that it’s a real scientific discipline. Like many sciences, there’s some more theoretical branches and also some more applied branches. And the application of economic modeling to real life society is, well, controversial.
And the thing about Andrew Leach is that he’s a smart guy and a PhD and he’s really into energy policy and economics and oil sands research especially in the context of Alberta. And he’s helping the rest of us understand economics, so that’s good.
Recently he became frustrated with “easy soundbites,” like “you can’t have infinite economic growth around a finite resource.” So Leach decided to explain why that easy soundbite is false. Apparently infinite and exponential economic growth is possible in the context of a finite resource, like Alberta oil.
I find this topic fascinating. And controversial. I’m reserving judgment. Here’s a couple of resources: Physicst meets Economist, Wikipedia article about Limits of Growth, Freakonomics blog post, first law of thermodynamics, Hartwick’s Rule.
Infinite, exponential economic growth with respect to Alberta oil?
Here’s seven recent quotes by Andrew Leach, economist, that I invite you to consider:
- “Can we have infinite, exponential growth with finite resources? Yes.”1
- “It’s not correct to say you can’t have infinite growth with a finite resource — you just need resource productivity to grow quickly to accomplish it.”
- “As time goes on, your annual resource use would get closer and closer to zero, so while your resource is still finite, you can use it for a time period that limits to infinity as long as your rate of productivity improvement was sufficiently rapid.”
- “It’s certainly possible to sustain exponential growth infinitely with finite resources, as long as productivity improves.”
- “This is what Queen’s University economist John Hartwick had in mind when he wrote down the Hartwick rule – the mathematical proof of what I’ve just tried to do in words: as long as you invest sufficiently in improvements in productivity, and manage resources optimally, its possible to sustain infinite growth from a finite resource.”
- “Saying that it’s impossible to achieve exponential growth infinitely with finite resources does nothing to advance our discussions of resource management and ignores plenty of evidence to the contrary in the economics literature.”
- “As long as that improvement is fast enough, you could have exponential economic growth while using fewer resources.”
Fascinating. Even though I’m doing my best to try to understand and withhold judgment, I have to admit that all of these statements appear to me to be quite wrong headed. But economics is not my strong suit. And some of them are tautological, granted.
But are they true in the context of the real world of oil and gas, and thermodynamics? And what’s the public relations impact of speaking them in the theatre of oil politics? Looking over some recent titles of Leach’s at Maclean’s I get the sense that he’s more and more getting pulled into that theatre.
But science is funny, and sometimes ridiculous things are still true.
- The first three quote are from http://andrewleach.ca/uncategorized/finite-resources-and-infinite-growth/ and the last four are from http://www2.macleans.ca/2014/02/01/what-happens-when-we-run-out-of-oil/ ↩