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The Scary Progress and Hairy Promise of AI

18 Tuesday Apr 2023

Posted by Nuetzel in Artificial Intelligence, Existential Threats, Growth

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Agentic Behavior, AI Bias, AI Capital, AI Risks, Alignment, Artificial Intelligence, Ben Hayum, Bill Gates, Bryan Caplan, ChatGPT, Clearview AI, Dumbing Down, Eliezer Yudkowsky, Encryption, Existential Risk, Extinction, Foom, Fraud, Generative Intelligence, Greta Thunberg, Human capital, Identity Theft, James Pethokoukis, Jim Jones, Kill Switch, Labor Participation Insurance, Learning Language Models, Lesswrong, Longtermism, Luddites, Mercatus Center, Metaculus, Nassim Taleb, Open AI, Over-Employment, Paul Ehrlich, Pause Letter, Precautionary Principle, Privacy, Robert Louis Stevenson, Robin Hanson, Seth Herd, Synthetic Media, TechCrunch, TruthGPT, Tyler Cowen, Universal Basic Income

Artificial intelligence (AI) has become a very hot topic with incredible recent advances in AI performance. It’s very promising technology, and the expectations shown in the chart above illustrate what would be a profound economic impact. Like many new technologies, however, many find it threatening and are reacting with great alarm, There’s a movement within the tech industry itself, partly motivated by competitive self-interest, calling for a “pause”, or a six-month moratorium on certain development activities. Politicians in Washington are beginning to clamor for legislation that would subject AI to regulation. However, neither a voluntary pause nor regulatory action are likely to be successful. In fact, either would likely do more harm than good.

Leaps and Bounds

The pace of advance in AI has been breathtaking. From ChatGPT 3.5 to ChatGPT 4, in a matter of just a few months, the tool went from relatively poor performance on tests like professional and graduate entrance exams (e.g., bar exams, LSAT, GRE) to very high scores. Using these tools can be a rather startling experience, as I learned for myself recently when I allowed one to write the first draft of a post. (Despite my initial surprise, my experience with ChatGPT 3.5 was somewhat underwhelming after careful review, but I’ve seen more impressive results with ChatGPT 4). They seem to know so much and produce it almost instantly, though it’s true they sometimes “hallucinate”, reflect bias, or invent sources, so thorough review is a must.

Nevertheless, AIs can write essays and computer code, solve complex problems, create or interpret images, sounds and music, simulate speech, diagnose illnesses, render investment advice, and many other things. They can create subroutines to help themselves solve problems. And they can replicate!

As a gauge of the effectiveness of models like ChatGPT, consider that today AI is helping promote “over-employment”. That is, there are a number of ambitious individuals who, working from home, are holding down several different jobs with the help of AI models. In fact, some of these folks say AIs are doing 80% of their work. They are the best “assistants” one could possibly hire, according to a man who has four different jobs.

Economist Bryan Caplan is an inveterate skeptic of almost all claims that smack of hyperbole, and he’s won a series of bets he’s solicited against others willing to take sides in support of such claims. However, Caplan thinks he’s probably lost his bet on the speed of progress on AI development. Needless to say, it has far exceeded his expectations.

Naturally, the rapid progress has rattled lots of people, including many experts in the AI field. Already, we’re witnessing the emergence of “agency” on the part of AI Learning Language Models (LLMs), or so called “agentic” behavior. Here’s an interesting thread on agentic AI behavior. Certain models are capable of teaching themselves in pursuit of a specified goal, gathering new information and recursively optimizing their performance toward that goal. Continued gains may lead to an AI model having artificial generative intelligence (AGI), a superhuman level of intelligence that would go beyond acting upon an initial set of instructions. Some believe this will occur suddenly, which is often described as the “foom” event.

Team Uh-Oh

Concern about where this will lead runs so deep that a letter was recently signed by thousands of tech industry employees, AI experts, and other interested parties calling for a six-month worldwide pause in AI development activity so that safety protocols can be developed. One prominent researcher in machine intelligence, Eliezer Yudkowsky, goes much further: he believes that avoiding human extinction requires immediate worldwide limits on resources dedicated to AI development. Is this a severely overwrought application of the precautionary principle? That’s a matter I’ll consider at greater length below, but like Caplan, I’m congenitally skeptical of claims of impending doom, whether from the mouth of Yudkowsky, Greta Thunberg, Paul Ehrlich, or Nassim Taleb.

As I mentioned at the top, I suspect competition among AI developers played a role in motivating some of the signatories of the “AI pause” letter, and some of the non-signatories as well. Robin Hanson points out that Sam Altman, the CEO of OpenAI, did not sign the letter. OpenAI (controlled by a nonprofit foundation) owns ChatGPT and is the current leader in rolling out AI tools to the public. ChatGPT 4 can be used with the Microsoft search engine Bing, and Microsoft’s Bill Gates also did not sign the letter. Meanwhile, Google was caught flat-footed by the ChatGPT rollout, and its CEO signed. Elon Musk (who signed) wants to jump in with his own AI development: TruthGPT. Of course, the pause letter stirred up a number of members of Congress, which I suspect was the real intent. It’s reasonable to view the letter as a means of leveling the competitive landscape. Thus, it looks something like a classic rent-seeking maneuver, buttressed by the inevitable calls for regulation of AIs. However, I certainly don’t doubt that a number of signatories did so out of a sincere belief that the risks of AI must be dealt with before further development takes place.

The vast dimensions of the supposed AI “threat” may have some libertarians questioning their unequivocal opposition to public intervention. If so, they might just as well fear the potential that AI already holds for manipulation and control by central authorities in concert with their tech and media industry proxies. But realistically, broad compliance with any precautionary agreement between countries or institutions, should one ever be reached, is pretty unlikely. On that basis, a “scout’s honor” temporary moratorium or set of permanent restrictions might be comparable to something like the Paris Climate Accord. China and a few other nations are unlikely to honor the agreement, and we really won’t know whether they’re going along with it except for any traceable artifacts their models might leave in their wake. So we’ll have to hope that safeguards can be identified and implemented broadly.

Likewise, efforts to regulate by individual nations are likely to fail, and for similar reasons. One cannot count on other powers to enforce the same kinds of rules, or any rules at all. Putting our faith in that kind of cooperation with countries who are otherwise hostile is a prescription for ceding them an advantage in AI development and deployment. Regulation of the evolution of AI will likely fail. As Robert Louis Stevenson once wrote, “Thus paternal laws are made, thus they are evaded”. And if it “succeeds, it will leave us with a technology that will fall short of its potential to benefit consumers and society at large. That, unfortunately, is usually the nature of state intrusion into a process of innovation, especially when devised by a cadre of politicians with little expertise in the area.

Again, according to experts like Yudkowsky, AGI would pose serious risks. He thinks the AI Pause letter falls far short of what’s needed. For this reason, there’s been much discussion of somehow achieving an alignment between the interests of humanity and the objectives of AIs. Here is a good discussion by Seth Herd on the LessWrong blog about the difficulties of alignment issues.

Some experts feel that alignment is an impossibility, and that there are ways to “live and thrive” with unalignment (and see here). Alignment might also be achieved through incentives for AIs. Those are all hopeful opinions. Others insist that these models still have a long way to go before they become a serious threat. More on that below. Of course, the models do have their shortcomings, and current models get easily off-track into indeterminacy when attempting to optimize toward an objective.

But there’s an obvious question that hasn’t been answered in full: what exactly are all these risks? As Tyler Cowen has said, it appears that no one has comprehensively catalogued the risks or specified precise mechanisms through which those risks would present. In fact, AGI is such a conundrum that it might be impossible to know precisely what threats we’ll face. But even now, with deployment of AIs still in its infancy, it’s easy to see a few transition problems on the horizon.

White Collar Wipeout

Job losses seem like a rather mundane outcome relative to extinction. Those losses might come quickly, particularly among white collar workers like programmers, attorneys, accountants, and a variety of administrative staffers. According to a survey of 1,000 businesses conducted in February:

“Forty-eight percent of companies have replaced workers with ChatGPT since it became available in November of last year. … When asked if ChatGPT will lead to any workers being laid off by the end of 2023, 33% of business leaders say ‘definitely,’ while 26% say ‘probably.’ … Within 5 years, 63% of business leaders say ChatGPT will ‘definitely’ (32%) or ‘probably’ (31%) lead to workers being laid off.”

A rapid rate of adoption could well lead to widespread unemployment and even social upheaval. For perspective, that implies a much more rapid rate of technological diffusion than we’ve ever witnessed, so this outcome is viewed with skepticism in some quarters. But in fact, the early adoption phase of AI models is proceeding rather quickly. You can use ChatGPT 4 easily enough on the Bing platform right now!

Contrary to the doomsayers, AI will not just enhance human productivity. Like all new technologies, it will lead to opportunities for human actors that are as yet unforeseen. AI is likely to identify better ways for humans to do many things, or do wonderful things that are now unimagined. At a minimum, however, the transition will be disruptive for a large number of workers, and it will take some time for new opportunities and roles for humans to come to fruition.

Robin Hanson has a unique proposal for meeting the kind of challenge faced by white collar workers vulnerable to displacement by AI, or for blue collar workers who are vulnerable to displacement by robots (the deployment of which has been hastened by minimum wage and living wage activism). This treatment of Hanson’s idea will be inadequate, but he suggests a kind of insurance or contract sold to both workers and investors by owners of assets likely to be insensitive to AI risks. The underlying assets are paid out to workers if automation causes some defined aggregate level of job loss. Otherwise, the assets are paid out to investors taking the other side of the bet. Workers could buy these contracts themselves, or employers could do so on their workers’ behalf. The prices of the contracts would be determined by a market assessment of the probability of the defined job loss “event”. Governmental units could buy the assets for their citizens, for that matter. The “worker contracts” would be cheap if the probability of the job-loss event is low. Sounds far-fetched, but perhaps the idea is itself an entrepreneurial opportunity for creative players in the financial industry.

The threat of job losses to AI has also given new energy to advocates of widespread adoption of universal basic income payments by government. Hanson’s solution is far preferable to government dependence, but perhaps the state could serve as an enabler or conduit through which workers could acquire AI and non-AI capital.

Human Capital

Current incarnations of AI are not just a threat to employment. One might add the prospect that heavy reliance on AI could undermine the future education and critical thinking skills of the general population. Essentially allowing machines to do all the thinking, research, and planning won’t inure to the cognitive strength of the human race, especially over several generations. Already people suffer from an inability to perform what were once considered basic life skills, to say nothing of tasks that were fundamental to survival in the not too distant past. In other words, AI could exaggerate a process of “dumbing down” the populace, a rather undesirable prospect.

Fraud and Privacy

AI is responsible for still more disruptions already taking place, in particular violations of privacy, security, and trust. For example, a company called Clearview AI has scraped 30 billion photos from social media and used them to create what its CEO proudly calls a “perpetual police lineup”, which it has provided for the convenience of law enforcement and security agencies.

AI is also a threat to encryption in securing data and systems. Conceivably, AI could be of value in perpetrating identity theft and other kinds of fraud, but it can also be of value in preventing them. AI is also a potential source of misleading information. It is often biased, reflecting specific portions of the on-line terrain upon which it is trained, including skewed model weights applied to information reflecting particular points of view. Furthermore, misinformation can be spread by AIs via “synthetic media” and the propagation of “fake news”. These are fairly clear and present threats of social, economic, and political manipulation. They are all foreseeable dangers posed by AI in the hands of bad actors, and I would include certain nudge-happy and politically-motivated players in that last category.

The Sky-Already-Fell Crowd

Certain ethicists with extensive experience in AI have condemned the signatories of the “Pause Letter” for a focus on “longtermism”, or risks as yet hypothetical, rather than the dangers and wrongs attributable to AIs that are already extant: TechCrunch quotes a rebuke penned by some of these dissenting ethicists to supporters of the “Pause Letter”:

“‘Those hypothetical risks are the focus of a dangerous ideology called longtermism that ignores the actual harms resulting from the deployment of AI systems today,’ they wrote, citing worker exploitation, data theft, synthetic media that props up existing power structures and the further concentration of those power structures in fewer hands.”

So these ethicists bemoan AI’s presumed contribution to the strength and concentration of “existing power structures”. In that, I detect just a whiff of distaste for private initiative and private rewards, or perhaps against the sovereign power of states to allow a laissez faire approach to AI development (or to actively sponsor it). I have trouble taking this “rebuke” too seriously, but it will be fruitless in any case. Some form of cooperation between AI developers on safety protocols might be well advised, but competing interests also serve as a check on bad actors, and it could bring us better solutions as other dilemmas posed by AI reveal themselves.

Imagining AI Catastrophes

What are the more consequential (and completely hypothetical) risks feared by the “pausers” and “stoppers”. Some might have to do with the possibility of widespread social upheaval and ultimately mayhem caused by some of the “mundane” risks described above. But the most noteworthy warnings are existential: the end of the human race! How might this occur when AGI is something confined to computers? Just how does the supposed destructive power of AGIs get “outside the box”? It must do so either by tricking us into doing something stupid, hacking into dangerous systems (including AI weapons systems or other robotics), and/or through the direction and assistance of bad human actors. Perhaps all three!

The first question is this: why would an AGI do anything so destructive? No matter how much we might like to anthropomorphize an “intelligent” machine, it would still be a machine. It really wouldn’t like or dislike humanity. What it would do, however, is act on its objectives. It would seek to optimize a series of objective functions toward achieving a goal or a set of goals it is given. Hence the role for bad actors. Let’s face it, there are suicidal people who might like nothing more than to take the whole world with them.

Otherwise, if humanity happens to be an obstruction to solving an AGI’s objective, then we’d have a very big problem. Humanity could be an aid to solving an AGI’s optimization problem in ways that are dangerous. As Yudkowsky says, we might represent mere “atoms it could use somewhere else.” And if an autonomous AGI were capable of setting it’s own objectives, without alignment, the danger would be greatly magnified. An example might be the goal of reducing carbon emissions to pre-industrial levels. How aggressively would an AGI act in pursuit of that goal? Would killing most humans contribute to the achievement of that goal?

Here’s one that might seem far-fetched, but the imagination runs wild: some individuals might be so taken with the power of vastly intelligent AGI as to make it an object of worship. Such an “AGI God” might be able to convert a sufficient number of human disciples to perpetrate deadly mischief on its behalf. Metaphorically speaking, the disciples might be persuaded to deliver poison kool-aid worldwide before gulping it down themselves in a Jim Jones style mass suicide. Or perhaps the devoted will survive to live in a new world mono-theocracy. Of course, these human disciples would be able to assist the “AGI God” in any number of destructive ways. And when brain-wave translation comes to fruition, they better watch out. Only the truly devoted will survive.

An AGI would be able to create the illusion of emergency, such as a nuclear launch by an adversary nation. In fact, two or many adversary nations might each be fooled into taking actions that would assure mutual destruction and a nuclear winter. If safeguards such as human intermediaries were required to authorize strikes, it might still be possible for an AGI to fool those humans. And there is no guarantee that all parties to such a manufactured conflict could be counted upon to have adequate safeguards, even if some did.

Yudkowsky offers at least one fairly concrete example of existential AGI risk:

“A sufficiently intelligent AI won’t stay confined to computers for long. In today’s world you can email DNA strings to laboratories that will produce proteins on demand, allowing an AI initially confined to the internet to build artificial life forms or bootstrap straight to postbiological molecular manufacturing.”

There are many types of physical infrastructure or systems that an AGI could conceivably compromise, especially with the aid of machinery like robots or drones to which it could pass instructions. Safeguards at nuclear power plants could be disabled before steps to trigger melt down. Water systems, rivers, and bodies of water could be poisoned. The same is true of food sources, or even the air we breathe. In any case, complete social disarray might lead to a situation in which food supply chains become completely dysfunctional. So, a super-intelligence could probably devise plenty of “imaginative” ways to rid the earth of human beings.

Back To Earth

Is all this concern overblown? Many think so. Bryan Caplan now has a $500 bet with Eliezer Yudkowsky that AI will not exterminate the human race by 2030. He’s already paid Yudkowsky, who will pay him $1,000 if we survive. Robin Hanson says “Most AI Fear Is Future Fear”, and I’m inclined to agree with that assessment. In a way, I’m inclined to view the AI doomsters as highly sophisticated, change-fearing Luddites, but Luddites nevertheless.

Ben Hayum is very concerned about the dangers of AI, but writing at LessWrong, he recognizes some real technical barriers that must be overcome for recursive optimization to be successful. He also notes that the big AI developers are all highly focused on safety. Nevertheless, he says it might not take long before independent users are able to bootstrap their own plug-ins or modules on top of AI models to successfully optimize without running off the rails. Depending on the specified goals, he thinks that will be a scary development.

James Pethokoukis raises a point that hasn’t had enough recognition: successful innovations are usually dependent on other enablers, such as appropriate infrastructure and process adaptations. What this means is that AI, while making spectacular progress thus far, won’t have a tremendous impact on productivity for at least several years, nor will it pose a truly existential threat. The lag in the response of productivity growth would also limit the destructive potential of AGI in the near term, since installation of the “social plant” that a destructive AGI would require will take time. This also buys time for attempting to solve the AI alignment problem.

In another Robin Hanson piece, he expresses the view that the large institutions developing AI have a reputational Al stake and are liable for damages their AI’s might cause. He notes that they are monitoring and testing AIs in great detail, so he thinks the dangers are overblown.:

“So, the most likely AI scenario looks like lawful capitalism…. Many organizations supply many AIs and they are pushed by law and competition to get their AIs to behave in civil, lawful ways that give customers more of what they want compared to alternatives.”

In the longer term, the chief focus of the AI doomsters, Hanson is truly an AI optimist. He thinks AGIs will be “designed and evolved to think and act roughly like humans, in order to fit smoothly into our many roughly-human-shaped social roles.” Furthermore, he notes that AI owners will have strong incentives to monitor and “delimit” AI behavior that runs contrary to its intended purpose. Thus, a form of alignment is achieved by virtue of economic and legal incentives. In fact, Hanson believes the “foom” scenario is implausible because:

“… it stacks up too many unlikely assumptions in terms of our prior experiences with related systems. Very lumpy tech advances, techs that broadly improve abilities, and powerful techs that are long kept secret within one project are each quite rare. Making techs that meet all three criteria even more rare. In addition, it isn’t at all obvious that capable AIs naturally turn into agents, or that their values typically change radically as they grow. Finally, it seems quite unlikely that owners who heavily test and monitor their very profitable but powerful AIs would not even notice such radical changes.”

As smart as AGIs would be, Hanson asserts that the problem of AGI coordination with other AIs, robots, and systems would present insurmountable obstacles to a bloody “AI revolution”. This is broadly similar to Pethokoukis’ theme. Other AIs or AGIs are likely to have competing goals and “interests”. Conflicting objectives and competition of this kind will do much to keep AGIs honest and foil malign AGI behavior.

The kill switch is a favorite response of those who think AGI fears are exaggerated. Just shut down an AI if its behavior is at all aberrant, or if a user attempts to pair an AI model with instructions or code that might lead to a radical alteration in an AI’s level of agency. Kill switches would indeed be effective at heading off disaster if monitoring and control is incorruptible. This is the sort of idea that begs for a general solution, and one hopes that any advance of that nature will be shared broadly.

One final point about AI agency is whether autonomous AGIs might ever be treated as independent factors of production. Could they be imbued with self-ownership? Tyler Cowen asks whether an AGI created by a “parent” AGI could legitimately be considered an independent entity in law, economics, and society. And how should income “earned” by such an AGI be treated for tax purposes. I suspect it will be some time before AIs, including AIs in a lineage, are treated separately from their “controlling” human or corporate entities. Nevertheless, as Cowen says, the design of incentives and tax treatment of AI’s might hold some promise for achieving a form of alignment.

Letting It Roll

There’s plenty of time for solutions to the AGI threat to be worked out. As I write this, the consensus forecast for the advent of real AGI on the Metaculus online prediction platform is July 27, 2031. Granted, that’s more than a year sooner than it was 11 days ago, but it still allows plenty of time for advances in controlling and bounding agentic AI behavior. In the meantime, AI is presenting opportunities to enhance well being through areas like medicine, nutrition, farming practices, industrial practices, and productivity enhancement across a range of processes. Let’s not forego these opportunities. AI technology is far too promising to hamstring with a pause, moratoria, or ill-devised regulations. It’s also simply impossible to stop development work on a global scale.

Nevertheless, AI issues are complex for all private and public institutions. Without doubt, it will change our world. This AI Policy Guide from Mercatus is a helpful effort to lay out issues at a high-level.

Economic Growth and the Real Accretion of Resources**

18 Saturday Feb 2023

Posted by Nuetzel in Growth, Scarcity

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A copy of a post from last week appears below. This was necessary because two of the sites to which I cross-post required a revised link. I don’t know why, but they did.

A few weeks ago I argued that raising living standards and eliminating poverty are human imperatives, and therefore growth is an imperative. Growth is a natural process for a free and creative people, and the alternative to growth is not zero growth. The coercion necessary to “achieve” a static economic environment would invariably lead to decline. It would be impossible to maintain average living standards while attempting a coerced leveling of those standards.

People have a notion, however, that it’s impossible to sustain growth due to the planet’s finite base of resources. If that is the case, we have available a mechanism to warn us as the time of hard limits approaches, which I’ll discuss below. So far, that signal hasn’t been activated. Moreover, the claim that growth is unsustainable can be challenged on several levels, which I’ll also address.

Effective Resources

First, a word about what I mean by the “accretion of resources”. The phrase refers to growth in the total effectiveness or productive potential of known resources given the rate of discovery and improvements in extraction and production technologies. Of course, if these discoveries and efficiencies are exceeded by current use, then there is no accretion, but depletion.

So let’s say we have a particular known stock of a resource we can readily draw on, so many pounds of resource X. In addition, we might know of the existence of another equally large quantity that can’t be readily drawn upon. Those are additional known (or proved) but undeveloped reserves. They might be difficult to exploit except at high cost, but we know they exist. We’d want to get on with the business of developing those reserves for extraction if they were needed any time soon, and we might want to begin prospecting for new reserves as well. As we’ve learned over the years. discoveries of previously unknown reserves of resources can be quite large. Prospectors are willing to bet that more resources exist, and they’ll undertake the risks of exploration if the potential rewards are adequate.

All of those concepts are straightforward. However, suppose we discover ways in which resource X can be used more efficiently, making things stronger or run longer or harder with less X. If we double the efficiency with which X is used, we have doubled the effective known reserves of X and, at least theoretically, unknown reserves as well. We’d have witnessed a doubling in the years that resource X can last. This is a form of resource accretion. Improvements in extraction or purification methods are also examples. Technological leaps like this, not to mention untold small increments in the efficiency of practices, have made economic growth possible in the past and will continue to do so in the future. Our effective resources seem to keep expanding. Accretion has occurred even with respect to resources like land as the world urbanized and the efficiency of farming advanced many-fold.

Growth In Real Time

Perceptions of growth are sometimes shaped by graphic depictions that some parties find alarming, so it might be helpful to take a quick look at some growth curves. First is an oldie-but-goodie chart showing GDP per capita taken from “Statistics on World Population, GDP, and Per Capital GDP, 1- 2008 AD” by Angus Maddison of the IMF:

This shows the explosion in the value of production that occurred during and after the industrial revolution, in contrast to very slow progress before that. The point I want to make here is how dramatic growth can look on a broad but visually compressed time scale. OMG! Look what we’ve done! How can we go on like this??? Often, the crux of the limits to growth argument is that such growth seems impossible assuming that we face fixed resource limits.

In fact, we experience growth in a very “local” way with respect to the passage of time. The two charts below illustrate a difference in perspectives using a hypothetically constant annual growth rate of 2.5%. The first chart shows 200 periods of growth, while the second expands only the last 20 periods of that time frame.

There is a great difference in the way the two vertical axes are scaled, which is important, but the second chart conveys that a respectable growth rate doesn’t really feel extreme when you’re in the middle of it, or, that is, in real time. It can look very extreme at the end of a long interval, depending on how severely the time axis is compressed. That’s not to discount the reality of much larger levels of activity (the vertical axes) and demands for resources as time goes on. However, those levels, and growth from those levels, is not at all alarming if our ability to achieve them has kept pace. So how can we know when we’re approaching a point at which resource limits will make it impossible to achieve those levels of activity? Market prices are the key signals, and they are the key to resource accretion.

Market Signals Light the Way

The market price is the best gauge of the scarcity of a resource. When resources become especially scarce, higher prices tell us so. That leads to conservation, which obviously extends the availability of those resources. Prices also function as an incentive for sellers to exploit new or harder-to-reach stores of a resource. That kind of resource accretion is one of the lessens the oil market has taught us again and again: oil exploration and known reserves tend to expand as the price rises, such that the prospect of oil depletion moves out to ever more distant horizons. There are certain minerals, elements, or isotopes (tritium?) that seem to be quite rare on Earth, but our ability to find them or extract them often improves with time. Space mining, which would vastly reduce the scarcity of resources like platinum, iron, nickel, cobalt, and many others, may become a reality in the near future. Interestingly, much of that activity could be in private hands. Space mining would lead to resource accretion on a whole new scale, and if we aspire to be a “grabby” civilization, it is a logical next step. So let’s go grab an asteroid!

When a price spikes due to greater scarcity, opportunities for substitution, exploration, and new efficiencies arise because the higher price justifies the cost of exploiting them. In addition to more difficult or costly extraction, a higher price encourages the use of close and even novel substitutes that may involve new technologies. In turn, that substitution reduces the relative scarcity of the original resource in question. And finally, back to conservation, users respond to price increases by finding their own innovative efficiencies in how a resource is utilized. The price response to scarcity is a channel through which much technological progress is encouraged.

While our earth-bound resources or even our star-system’s resources are finite, their effective quantity is highly flexible. Their potential at any time depends on our stage of discovery and the state of technology. Human ingenuity is a marvel at stretching the effective quantity of resources, and the greatest gains always occur when market forces are unleashed.

Thus, we see that prices, markets, and capitalism itself enable rational and sustainable responses to scarcity. Yet too often we hear claims that capitalism must be destroyed in order to save humanity. In fact, capitalism itself is the one system of social organization capable of achieving resource accretion, sustained growth, and lifting mankind from poverty. In fact, growth might well be an insurmountable problem without the dynamic energies of capitalism. Government planners are incapable of gathering and processing the vast information that markets process each and every day. Planners must substitute their own weak judgements, which prove flawed again and again.

Scarcity of the Commons

The environmental Left is quick to marshal a different kind of limits-to-growth argument. This one has to do with the scarcity of non-priced common resources and their overuse in production. For example, if a certain activity degrades the environment and those costs are not internalized by producers, they will tend to produce “too much”, leading to some degree of deterioration in human living conditions or the natural quality of the environment. In that case, we might not notice the limits to growth bearing down on us before corrective action is taken. Or so goes the theory that accumulating externalities lead to catastrophe. This is another front along which the limits to growth are asserted, particularly by climate alarmists and the environmental Left. Most prominently today, they contend that increases in atmospheric carbon concentration will lead to an unlivable warming of Earth’s climate.

Sense and Nonsense

The most glaring shortcoming of climate change advocacy is that the trends it decries are exaggerated. I’ve discussed the absurdly brief climate record cited by alarmists in several past posts (many of which appear here). We can start with the contention that carbon emissions are “poison”. In fact, carbon is life nourishing, as we’ve witnessed with the “greening” of the planet at current carbon concentrations of 4 parts per 10,000 of atmospheric gas. Furthermore, a longer historical temperature record using paleoclimate data shows that we are well within the range of past variation, even with the huge distortions to the record caused by urban heat islands and questionable downward adjustments to records of five to 15 decades ago.

The alarmist perspective is also inflamed by simplistic models of carbon forcing that ignore the impact of solar radiation, volcanic activity, and the behavior of aerosols in the atmosphere. Those models have consistently over-predicted temperature trends for decades. Equally troubling is that these models promote the fiction that mankind can control global temperatures by a little fiddling with a “carbon dial”, as if such fiddling could be accomplished without a massive centralization of political and economic power. The panicked narratives related to sea level increases and alleged increases in violent weather are equally flawed.

Growth Can Cure It

Another compelling response to climate arguments against growth is that technological advances have already enabled us to produce power without carbon emissions. Unfortunately, as a matter of public policy (regulation and bad choices by government industrial planners), we have increasingly failed to avail ourselves of these opportunities, instead choosing extremely wasteful methods of generating power. These are the windmill and solar “renewables”, which are resource-intensive, intermittent, low utilization, non-dispatchable, lacking storage for excess generation, intensive in land use (reversing prior accretions), and environmentally disastrous in fabrication, operation, and at disposal. Nuclear power is a far superior technology, especially with the advent of small, modular reactors and potential breakthroughs in fusion energy. These might help to rescue us from the spectacle of bone-headed industrial planning and greedy, renewable-energy rent seekers, but regulators have done seemingly all they can to prevent nuclear facilities from being built.

Just as human ingenuity is capable of expanding the exploitable stock of tradable, priced resources, it is also capable of inventing non-carbon power technologies that are more efficient and less environmentally destructive than ground-based solar and wind. Collection of non-intermittent solar energy in space arrays with wireless transmission to Earth is another promising alternative, as is geothermal energy. And carbon capture technologies show promise for neutralizing emissions or perhaps even reversing carbon concentrations one day, if that is deemed necessary. Much of this development work is in private hands, but barring drastic reductions in scale, the bulk of these efforts are (or will be) dependent on government funding.

It’s worth acknowledging here that resource accretion has a safety component in an expected value sense. Sometimes those risks can be internalized if risk reduction is of value to buyers. But the costs of “reasonable” risk mitigation cannot always be internalized without government action. For example, deflecting asteroid threats to the planet might be done best by private actors, but paying for that activity is a worthy application of public finance. The ability to deflect incoming asteroids is a noteworthy example of resource accretion via risk reduction.

Somehow, governments must be convinced to begin dedicating a larger share of the vast sums they spend on misguided climate interventions (including renewable technologies) to more sensible innovations. We might then benefit from accelerated breakthroughs that would settle not only our energy future, but a great deal of political strife as well. Like the market response to changes in scarcity, creative entrepreneurs will always step forward to compete for government funding. But if you pay them for crap, you’ll get a lot of crap!

Growth Once More

One day we might learn we are reaching the top of an s-curve. We aren’t there yet, if our ongoing accretion of resources is any guide, and there are new frontiers of space and technology to explore. The primary obstacles we face are not natural, but political and regulatory.

One area neglected above is the accretion of human capital. Certainly education is another way to expand our boundaries. However, population growth (and therefore labor force growth) tends to slow as living standards rise, and many argue that demographics have already become a drag on growth. A shrinking and aging population places a tremendous burden on young workers, making other sources of growth and productivity all the more critical. But new physical capital, resource development (including education), and new technologies can all continue to drive productivity and growth.

Growth depends on resource accretion, and there are many ways in which our effective stock of resources can be expanded. That includes enhancements in quantities, efficiencies, and safety. Private investment should be the primary avenue through which these are accomplished, which in turn requires flows of saving. Those flows are much more difficult to conjure without growth, so we have a chicken and egg cross-dependency. But chickens will lay eggs, just as saving and all kinds of investment will take place given the right incentives. Those would promote expansion in our effective stock of resources, improved adaptation to change, and enhanced well being. In the end, the rationale is simple: ending poverty requires growth.

Addendum: I just noticed that Don Boudreaux posted (and beautifully elaborated upon) this great Julian Simon quote:

“The quantity of a natural resource that might be available to us – and even more important the quantity of the services that can eventually be rendered to us by that natural resource – can never be known even in principle, just as the number of points in a one-inch line can never be counted even in principle.”

Economic Growth and the Real Accretion of Resources

10 Friday Feb 2023

Posted by Nuetzel in Growth, Scarcity

≈ Leave a comment

Tags

Angus Maddison, Carbon Concentrations, Carbon Dial, Common Resources, Don Boudreaux, External Costs, Fusion Energy, Geothermal Energy, global warming, Grabby Civilization, Greening, Growth, Human capital, Human Ingenuity, Julian Simon, Known Reserves, Markets, Modular Reactors, Paleoclimate Data, Price Signals, Public Finance, Renewables, Resource Accretion, Risk Mitigation, S-Curve, Scarcity, Sea Levels, Space Mining, Urban Heat Islands

A few weeks ago I argued that raising living standards and eliminating poverty are human imperatives, and therefore growth is an imperative. Growth is a natural process for a free and creative people, and the alternative to growth is not zero growth. The coercion necessary to “achieve” a static economic environment would invariably lead to decline. It would be impossible to maintain average living standards while attempting a coerced leveling of those standards.

People have a notion, however, that it’s impossible to sustain growth due to the planet’s finite base of resources. If that is the case, we have available a mechanism to warn us as the time of hard limits approaches, which I’ll discuss below. So far, that signal hasn’t been activated. Moreover, the claim that growth is unsustainable can be challenged on several levels, which I’ll also address.

Effective Resources

First, a word about what I mean by the “accretion of resources”. The phrase refers to growth in the total effectiveness or productive potential of known resources given the rate of discovery and improvements in extraction and production technologies. Of course, if these discoveries and efficiencies are exceeded by current use, then there is no accretion, but depletion.

So let’s say we have a particular known stock of a resource we can readily draw on, so many pounds of resource X. In addition, we might know of the existence of another equally large quantity that can’t be readily drawn upon. Those are additional known (or proved) but undeveloped reserves. They might be difficult to exploit except at high cost, but we know they exist. We’d want to get on with the business of developing those reserves for extraction if they were needed any time soon, and we might want to begin prospecting for new reserves as well. As we’ve learned over the years. discoveries of previously unknown reserves of resources can be quite large. Prospectors are willing to bet that more resources exist, and they’ll undertake the risks of exploration if the potential rewards are adequate.

All of those concepts are straightforward. However, suppose we discover ways in which resource X can be used more efficiently, making things stronger or run longer or harder with less X. If we double the efficiency with which X is used, we have doubled the effective known reserves of X and, at least theoretically, unknown reserves as well. We’d have witnessed a doubling in the years that resource X can last. This is a form of resource accretion. Improvements in extraction or purification methods are also examples. Technological leaps like this, not to mention untold small increments in the efficiency of practices, have made economic growth possible in the past and will continue to do so in the future. Our effective resources seem to keep expanding. Accretion has occurred even with respect to resources like land as the world urbanized and the efficiency of farming advanced many-fold.

Growth In Real Time

Perceptions of growth are sometimes shaped by graphic depictions that some parties find alarming, so it might be helpful to take a quick look at some growth curves. First is an oldie-but-goodie chart showing GDP per capita taken from “Statistics on World Population, GDP, and Per Capital GDP, 1- 2008 AD” by Angus Maddison of the IMF:

This shows the explosion in the value of production that occurred during and after the industrial revolution, in contrast to very slow progress before that. The point I want to make here is how dramatic growth can look on a broad but visually compressed time scale. OMG! Look what we’ve done! How can we go on like this??? Often, the crux of the limits to growth argument is that such growth seems impossible assuming that we face fixed resource limits.

In fact, we experience growth in a very “local” way with respect to the passage of time. The two charts below illustrate a difference in perspectives using a hypothetically constant annual growth rate of 2.5%. The first chart shows 200 periods of growth, while the second expands only the last 20 periods of that time frame.

There is a great difference in the way the two vertical axes are scaled, which is important, but the second chart conveys that a respectable growth rate doesn’t really feel extreme when you’re in the middle of it, or, that is, in real time. It can look very extreme at the end of a long interval, depending on how severely the time axis is compressed. That’s not to discount the reality of much larger levels of activity (the vertical axes) and demands for resources as time goes on. However, those levels, and growth from those levels, is not at all alarming if our ability to achieve them has kept pace. So how can we know when we’re approaching a point at which resource limits will make it impossible to achieve those levels of activity? Market prices are the key signals, and they are the key to resource accretion.

Market Signals Light the Way

The market price is the best gauge of the scarcity of a resource. When resources become especially scarce, higher prices tell us so. That leads to conservation, which obviously extends the availability of those resources. Prices also function as an incentive for sellers to exploit new or harder-to-reach stores of a resource. That kind of resource accretion is one of the lessens the oil market has taught us again and again: oil exploration and known reserves tend to expand as the price rises, such that the prospect of oil depletion moves out to ever more distant horizons. There are certain minerals, elements, or isotopes (tritium?) that seem to be quite rare on Earth, but our ability to find them or extract them often improves with time. Space mining, which would vastly reduce the scarcity of resources like platinum, iron, nickel, cobalt, and many others, may become a reality in the near future. Interestingly, much of that activity could be in private hands. Space mining would lead to resource accretion on a whole new scale, and if we aspire to be a “grabby” civilization, it is a logical next step. So let’s go grab an asteroid!

When a price spikes due to greater scarcity, opportunities for substitution, exploration, and new efficiencies arise because the higher price justifies the cost of exploiting them. In addition to more difficult or costly extraction, a higher price encourages the use of close and even novel substitutes that may involve new technologies. In turn, that substitution reduces the relative scarcity of the original resource in question. And finally, back to conservation, users respond to price increases by finding their own innovative efficiencies in how a resource is utilized. The price response to scarcity is a channel through which much technological progress is encouraged.

While our earth-bound resources or even our star-system’s resources are finite, their effective quantity is highly flexible. Their potential at any time depends on our stage of discovery and the state of technology. Human ingenuity is a marvel at stretching the effective quantity of resources, and the greatest gains always occur when market forces are unleashed.

Thus, we see that prices, markets, and capitalism itself enable rational and sustainable responses to scarcity. Yet too often we hear claims that capitalism must be destroyed in order to save humanity. In fact, capitalism itself is the one system of social organization capable of achieving resource accretion, sustained growth, and lifting mankind from poverty. In fact, growth might well be an insurmountable problem without the dynamic energies of capitalism. Government planners are incapable of gathering and processing the vast information that markets process each and every day. Planners must substitute their own weak judgements, which prove flawed again and again.

Scarcity of the Commons

The environmental Left is quick to marshal a different kind of limits-to-growth argument. This one has to do with the scarcity of non-priced common resources and their overuse in production. For example, if a certain activity degrades the environment and those costs are not internalized by producers, they will tend to produce “too much”, leading to some degree of deterioration in human living conditions or the natural quality of the environment. In that case, we might not notice the limits to growth bearing down on us before corrective action is taken. Or so goes the theory that accumulating externalities lead to catastrophe. This is another front along which the limits to growth are asserted, particularly by climate alarmists and the environmental Left. Most prominently today, they contend that increases in atmospheric carbon concentration will lead to an unlivable warming of Earth’s climate.

Sense and Nonsense

The most glaring shortcoming of climate change advocacy is that the trends it decries are exaggerated. I’ve discussed the absurdly brief climate record cited by alarmists in several past posts (many of which appear here). We can start with the contention that carbon emissions are “poison”. In fact, carbon is life nourishing, as we’ve witnessed with the “greening” of the planet at current carbon concentrations of 4 parts per 10,000 of atmospheric gas. Furthermore, a longer historical temperature record using paleoclimate data shows that we are well within the range of past variation, even with the huge distortions to the record caused by urban heat islands and questionable downward adjustments to records of five to 15 decades ago.

The alarmist perspective is also inflamed by simplistic models of carbon forcing that ignore the impact of solar radiation, volcanic activity, and the behavior of aerosols in the atmosphere. Those models have consistently over-predicted temperature trends for decades. Equally troubling is that these models promote the fiction that mankind can control global temperatures by a little fiddling with a “carbon dial”, as if such fiddling could be accomplished without a massive centralization of political and economic power. The panicked narratives related to sea level increases and alleged increases in violent weather are equally flawed.

Growth Can Cure It

Another compelling response to climate arguments against growth is that technological advances have already enabled us to produce power without carbon emissions. Unfortunately, as a matter of public policy (regulation and bad choices by government industrial planners), we have increasingly failed to avail ourselves of these opportunities, instead choosing extremely wasteful methods of generating power. These are the windmill and solar “renewables”, which are resource-intensive, intermittent, low utilization, non-dispatchable, lacking storage for excess generation, intensive in land use (reversing prior accretions), and environmentally disastrous in fabrication, operation, and at disposal. Nuclear power is a far superior technology, especially with the advent of small, modular reactors and potential breakthroughs in fusion energy. These might help to rescue us from the spectacle of bone-headed industrial planning and greedy, renewable-energy rent seekers, but regulators have done seemingly all they can to prevent nuclear facilities from being built.

Just as human ingenuity is capable of expanding the exploitable stock of tradable, priced resources, it is also capable of inventing non-carbon power technologies that are more efficient and less environmentally destructive than ground-based solar and wind. Collection of non-intermittent solar energy in space arrays with wireless transmission to Earth is another promising alternative, as is geothermal energy. And carbon capture technologies show promise for neutralizing emissions or perhaps even reversing carbon concentrations one day, if that is deemed necessary. Much of this development work is in private hands, but barring drastic reductions in scale, the bulk of these efforts are (or will be) dependent on government funding.

It’s worth acknowledging here that resource accretion has a safety component in an expected value sense. Sometimes those risks can be internalized if risk reduction is of value to buyers. But the costs of “reasonable” risk mitigation cannot always be internalized without government action. For example, deflecting asteroid threats to the planet might be done best by private actors, but paying for that activity is a worthy application of public finance. The ability to deflect incoming asteroids is a noteworthy example of resource accretion via risk reduction.

Somehow, governments must be convinced to begin dedicating a larger share of the vast sums they spend on misguided climate interventions (including renewable technologies) to more sensible innovations. We might then benefit from accelerated breakthroughs that would settle not only our energy future, but a great deal of political strife as well. Like the market response to changes in scarcity, creative entrepreneurs will always step forward to compete for government funding. But if you pay them for crap, you’ll get a lot of crap!

Growth Once More

One day we might learn we are reaching the top of an s-curve. We aren’t there yet, if our ongoing accretion of resources is any guide, and there are new frontiers of space and technology to explore. The primary obstacles we face are not natural, but political and regulatory.

One area neglected above is the accretion of human capital. Certainly education is another way to expand our boundaries. However, population growth (and therefore labor force growth) tends to slow as living standards rise, and many argue that demographics have already become a drag on growth. A shrinking and aging population places a tremendous burden on young workers, making other sources of growth and productivity all the more critical. But new physical capital, resource development (including education), and new technologies can all continue to drive productivity and growth.

Growth depends on resource accretion, and there are many ways in which our effective stock of resources can be expanded. That includes enhancements in quantities, efficiencies, and safety. Private investment should be the primary avenue through which these are accomplished, which in turn requires flows of saving. Those flows are much more difficult to conjure without growth, so we have a chicken and egg cross-dependency. But chickens will lay eggs, just as saving and all kinds of investment will take place given the right incentives. Those would promote expansion in our effective stock of resources, improved adaptation to change, and enhanced well being. In the end, the rationale is simple: ending poverty requires growth.

Addendum: I just noticed that Don Boudreaux posted (and beautifully elaborated upon) this great Julian Simon quote:

“The quantity of a natural resource that might be available to us – and even more important the quantity of the services that can eventually be rendered to us by that natural resource – can never be known even in principle, just as the number of points in a one-inch line can never be counted even in principle.”

Grow Or Collapse: Stasis Is Not a Long-Term Option

18 Wednesday Jan 2023

Posted by Nuetzel in Climate, Environment, Growth

≈ 1 Comment

Tags

Asymptotic Burnout, Benjamin Friedman, Climate Change, Dead Weight Loss, Degrowth, Fermi Paradox, Lewis M. Andrews, Limits to Growth, NIMBYism, Paul Ehrlich, Population Bomb, Poverty, regulation, Robert Colvile, Stakeholder Capitalism, State Capacity, Stubborn Attachments, Subsidies, Tax Distortions, Thomas Malthus, Tyler Cowan, Veronique de Rugy, Zero Growth

Growth is a human imperative and a good thing in every sense. We’ve long heard from naysayers, however, that growth will exhaust our finite resources, ending in starvation and the collapse of human civilization. They say, furthermore, that the end is nigh! It’s an old refrain. Thomas Malthus lent it credibility over 200 years ago (perhaps unintentionally), and we can pick on poor Paul Ehrlich’s “Population Bomb” thesis as a more modern starting point for this kind of hysteria. Lewis M. Andrews puts Ehrlich’s predictions in context:

“A year after the book’s publication, Ehrlich went on to say that this ‘utter breakdown’ in Earth’s capacity to support its bulging population was just fifteen years away. … For those of us still alive today, it is clear that nothing even approaching what Ehrlich predicted ever happened. Indeed, in the fifty-four years since his dire prophesy, those suffering from starvation have gone from one in four people on the planet to just one in ten, even as the world’s population has doubled.”

False Limits

The “limits” argument comes from the environmental Left, but it creates for them an uncomfortable tradeoff between limiting growth and the redistribution of a fixed (they hope) or shrinking (more likely) pie. That’s treacherous ground on which to build popular support. It’s also foolish to stake a long-term political agenda on baldly exaggerated claims (and see here) about the climate and resource constraints. Ultimately, people will recognize those ominous forecasts as manipulative propaganda.

Last year, an academic paper argued that growing civilizations must eventually reach a point of “asymptotic burnout” due to resource constraints, and must undergo a “homeostatic awakening”: no growth. The authors rely on a “superlinear scaling” argument based on cross-sectional data on cities, and they offer their “burnout” hypothesis as an explanation for the Fermi Paradox: the puzzling quiet we observe in the universe while we otherwise expect it to be teeming with life… civilizations reach their “awakenings” before finding ways to communicate with, or even detect, their distant neighbors. I addressed this point and it’s weaknesses last year, but here I mention it only to demonstrate that the “limits to growth” argument lives on in new incarnations.

Growth-limiting arguments are tenuous on at least three fundamental grounds: 1) failure to consider the ability of markets to respond to scarcity; 2) underestimating the potential of human ingenuity not only to adapt to challenges, but to invent new solutions, exploit new resources, and use existing resources more efficiently; and 3) homeostasis is impossible because zero growth cannot be achieved without destructive coercion, suspension of cooperative market mechanisms, and losses from non-market (i.e., political and non-political) competition for the fixed levels of societal wealth and production.

The zero-growth world is one that lacks opportunities and rewards for honest creation of value, whether through invention or simple, hard work. That value is determined through the interaction of buyers and sellers in markets, the most effective form of voluntary cooperation and social organization ever devised by mankind. Those preferring to take spoils through the political sphere, or who otherwise compete on the basis of force, either have little value to offer or simply lack the mindset to create value to exchange with others at arms length.

Zero-Growth Mentality

As Robert Colvile writes in a post called “The Morality of Growth”:

“A society without growth is not just politically far more fragile. It is hugely damaging to people’s lives – and in particular to the young, who will never get to benefit from the kind of compounding, increasing prosperity their parents enjoyed.”

Expanding on this theme is commenter Slocum at the Marginal Revolution site, where Colvile’s essay was linked:

“Humans behave poorly when they perceive that the pie is fixed or shrinking, and one of the main drivers for behaving poorly is feelings of envy coming to the forefront. The way we encourage people not to feel envy (and to act badly) is not to try to change human nature, or ‘nudge’ them, but rather to maintain a state of steady improvement so that they (naturally) don’t feel envious, jealous, tribal, xenophobic etc. Don’t create zero-sum economies and you won’t bring out the zero-sum thinking and all the ills that go with it.”

And again, this dynamic leads not to zero growth (if that’s desired), but to decay. Given the political instability to which negative growth can lead, collapse is a realistic possibility.

I liked Colville’s essay, but it probably should have been titled “The Immorality of Non-Growth”. It covers several contemporary obstacles to growth, including the rise of “stakeholder capitalism”, the growth of government at the expense of the private sector, strangling regulation, tax disincentives, NIMBYism, and the ease with which politicians engage in populist demagoguery in establishing policy. All those points have merit. But if his ultimate purpose was to shed light on the virtues of growth, it seems almost as if he lost his focus in examining only the flip side of the coin. I came away feeling like he didn’t expend much effort on the moral virtues of growth as he intended, though I found this nugget well said:

“It is striking that the fastest-growing societies also tend to be by far the most optimistic about their futures – because they can visibly see their lives getting better.”

Compound Growth

A far better discourse on growth’s virtues is offered by Veronique de Rugy in “The Greatness of Growth”. It should be obvious that growth is a potent tonic, but its range as a curative receives strangely little emphasis in popular discussion. First, de Rugy provides a simple illustration of the power of long-term growth, compound growth, in raising average living standards:

This is just a mechanical exercise, but it conveys the power of growth. At 2% real growth, real GDP per capital would double in 35 years and quadruple in 70 years. At 4% growth, real GDP would double in 18 years… less than a generation! It would quadruple in 35 years. If you’re just now starting a career, imagine nearing retirement at a standard of living four times as lavish as today’s senior employees (who make a lot more than you do now). We’ll talk a little more about how such growth rates might be achieved, but first, a little more on what growth can achieve.

The Rewards of Growth

Want to relieve poverty? There is no better and more permanent solution than economic growth. Here are some illustrations of this phenomenon:

Want to rein-in the federal budget deficit? Growth reduces the burden of the existing debt and shrinks fiscal deficits, though it might interfere with what little discipline spendthrift politicians currently face. We’ll have to find other fixes for that problem, but at least growth can insulate us from their profligacy.

And who can argue with the following?

“All the stuff an advocate anywhere on the political spectrum claims to value—good health, clean environment, safety, families and quality of life—depends on higher growth. …

There are other well-documented material consequences of modern economic growth, such as lower homicide rates, better health outcomes (babies born in the U.S. today are expected to live into their upper 70s, not their upper 30s as in 1860), increased leisure, more and better clothing and shelter, less food insecurity and so on.”

De Rugy argues convincingly that growth might well entail a greater boost in living standards for lower ranges of the socioeconomic spectrum than for the well-to-do. That would benefit not just those impoverished due to a lack of skills, but also those early in their careers as well as seniors attempting to earn extra income. For those with a legitimate need of a permanent safety net, growth allows society to be much more generous.

What de Rugy doesn’t mention is how growth can facilitate greater saving. In a truly virtuous cycle, saving is transformed into productivity-enhancing additions to the stock of capital. And not just physical capital, but human capital through investment in education as well. In addition, growth makes possible additional research and development, facilitating the kind of technical innovation that can sustain growth.

Getting Out of the Way of Growth

Later in de Rugy’s piece, she evaluates various ways to stimulate growth, including deregulation, wage and price flexibility, eliminating subsidies, less emphasis on redistribution, and simplifying the tax code. All these features of public policy are stultifying and involve dead-weight losses to society. That’s not to deny the benefits of adequate state capacity for providing true public goods and a legal and judicial system to protect individual rights. The issue of state capacity is a major impediment to growth in the less developed world, whereas countries in the developed world tend to have an excess of state “capacity”, which often runs amok!

In the U.S., our regulatory state imposes huge compliance costs on the private sector and effectively prohibits or destroys incentives for a great deal of productive (and harmless) activity. Interference with market pricing stunts growth by diverting resources from their most valued uses. Instead, it directs them toward uses that are favored by political elites and cronies. Subsidies do the same by distorting tradeoffs at a direct cost to taxpayers. Our system of income taxes is rife with behavioral distortions and compliance costs, bleeding otherwise productive gains into the coffers of accountants, tax attorneys, and bureaucrats. Finally, redistribution often entails the creation of disincentives, fostering a waste of human potential and a pathology of dependence.

Growth and Morality

Given the unequivocally positive consequences of growth to humanity, could the moral case for growth be any clearer? De Rugy quotes Benjamin Friedman’s “The Moral Consequences of Economic Growth”:

“Growth is valuable not only for our material improvement but for how it affects our social attitudes and our political institutions—in other words, our society’s moral character, in the term favored by the Enlightenment thinkers from whom so many of our views on openness, tolerance and democracy have sprung.”

De Rugy also paraphrases Tyler Cowen’s position on growth from his book “Stubborn Attachments”:

“… economic growth, properly understood, should be an essential element of any ethical system that purports to care about universal human well-being. In other words, the benefits are so varied and important that nearly everyone should have a pro-growth program at or near the top of their agenda.”

Conclusion

Agitation for “degrowth” is often made in good faith by truly frightened people. Better education would help them, but our educational establishment has been corrupted by the same ignorant narrative. When it comes to rulers, the fearful are no less tyrannical than power-hungry authoritarians. In fact, fear can be instrumental in enabling that kind of transformation in the personalities of activists. A basic failing is their inability to recognize the many ways in which growth improves well-being, including the societal wealth to enable adaptation to changing conditions and the investment necessary to enhance our range of technological solutions for mitigating existential risks. Not least, however, is the failure of the zero-growth movement to understand the cruelty their position condones in exchange for their highly speculative assurances that we’ll all be better off if we just do as they say. A terrible downside will be unavoidable if and when growth is outlawed.

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