Excellent post. What people forget is that the most powerful force for raising living standards has been and always will be investment by businesses in things that increase productivity - new and better equipment and factories, R&D to create better products and processes, and employee training.
Investment requires savings, and our net savings are far lower than in the past and not unlimited. To the extent we divert investment from what raises productivity toward what has no effect on productivity but merely reduces CO2 output, living standards will stop growing.
What people do at work counts! Despite losing WW2 and absorbing massive destruction of their infrastructure and skilled workforce, both Germany and Japan, within a few decades took over a big piece of the US markets for autos, specialty chemicals, cameras, consumer electronics of all types, precision equipment, and other things. That was because, as losers of the war, they were forbidden to produce any kind of output that had military applications. While our best engineers took jobs at Lockheed, General Dynamics, Raytheon, and other aerospace and military related companies, their best engineers got jobs at Toyota, BMW, VW, Sony, Panasonic, etc., and came up with better designed and made products than what US companies could create. US consumers took note, and bought from them instead.
With the trillions of government money that green companies have to spend, they can outbid other outfits for engineers and scientists. We might produce less CO2, but other than that, the progress in living standards we’ve been used to for centuries will stop.
It feels deeply unfortunate that I agree with you on so much, and have such similar root goals, yet the disagreement on solar and battery learning rates (and other details, though that's really the key one) means we have such sharply divergent ideas of the best way to pursue those goals.
I am glad that we share many similar root goals. I urge you to rethink your prior assumptions. My guess is that it is rooted in a prejudice against fossil fuels without understanding how essential they have been (and will likely continue to be) to human material progress.
I'm well aware of their historical importance, and am not in fact arguing that they ought to be shut down before a substitute capable of fully powering industrial civilization is ready. Solar power *as it currently exists,* in the strictest sense, is of course not up to the task. The point on which we disagree is that I think it will in the very near future - even without any particular government intervention, just by the industrial-economics equivalent of a snowball rolling downhill.
Incidentally, and mostly unrelated to energy issues, what's your opinion on Georgism?
Michael, I love your longterm thinking and scholarship.
Excellent post. What people forget is that the most powerful force for raising living standards has been and always will be investment by businesses in things that increase productivity - new and better equipment and factories, R&D to create better products and processes, and employee training.
Investment requires savings, and our net savings are far lower than in the past and not unlimited. To the extent we divert investment from what raises productivity toward what has no effect on productivity but merely reduces CO2 output, living standards will stop growing.
What people do at work counts! Despite losing WW2 and absorbing massive destruction of their infrastructure and skilled workforce, both Germany and Japan, within a few decades took over a big piece of the US markets for autos, specialty chemicals, cameras, consumer electronics of all types, precision equipment, and other things. That was because, as losers of the war, they were forbidden to produce any kind of output that had military applications. While our best engineers took jobs at Lockheed, General Dynamics, Raytheon, and other aerospace and military related companies, their best engineers got jobs at Toyota, BMW, VW, Sony, Panasonic, etc., and came up with better designed and made products than what US companies could create. US consumers took note, and bought from them instead.
With the trillions of government money that green companies have to spend, they can outbid other outfits for engineers and scientists. We might produce less CO2, but other than that, the progress in living standards we’ve been used to for centuries will stop.
Please see this post for more: https://economicsreimagined.substack.com/p/what-people-do-at-work-counts-1
Thanks for the comment. I will check out your link.
In the future, however, please try to keep your comments a little bit more tightly focused on the topic of the post.
It feels deeply unfortunate that I agree with you on so much, and have such similar root goals, yet the disagreement on solar and battery learning rates (and other details, though that's really the key one) means we have such sharply divergent ideas of the best way to pursue those goals.
Thanks for the comment.
I am glad that we share many similar root goals. I urge you to rethink your prior assumptions. My guess is that it is rooted in a prejudice against fossil fuels without understanding how essential they have been (and will likely continue to be) to human material progress.
I'm well aware of their historical importance, and am not in fact arguing that they ought to be shut down before a substitute capable of fully powering industrial civilization is ready. Solar power *as it currently exists,* in the strictest sense, is of course not up to the task. The point on which we disagree is that I think it will in the very near future - even without any particular government intervention, just by the industrial-economics equivalent of a snowball rolling downhill.
Incidentally, and mostly unrelated to energy issues, what's your opinion on Georgism?
I wrote about Georgism (or more specifically a land value tax) in this article:
https://frompovertytoprogress.substack.com/p/can-a-land-value-tax-make-housing
Thank you. Having read it, as far as I can tell we are in full agreement on that.