I noticed that Noah Smith has a post criticizing physicist Tom Murphy, who I cited in my article. I love Noah's blog and read everything he writes, but I don't think this is his fairest criticism, although parts are fair. Certainly, I can see that economists might feel that their best arguments weren't put forward in the dialogue Murphy recalled between himself and an economist, the subject of Murphy's most widely read post. (Note: I didn't cite that particular post Noah refers to, but this one of Murphy's which looks at trends in energy growth alone.) But reading Noah, I'm led to believe that my understanding of the prevailing view among modern economists on economic growth is hugely mistaken. Indeed, he makes it sound as if economists generally accept that growth must end, and fairly soon (if true, I' very happy about that).
Murphy made the point that, if we extrapolate our current and past energy growth into the future, then we will actually boil the oceans in 400 years (with 2.3% energy growth; sooner with fast growth). To this Noah responds,
Yes, of course. But the point is that 400 years is not very long. And we don't need the oceans boiling before we would see important temperature change (and other associated environmental changes) that would make life rather uncomfortable. I think Murphy is right that most people do not appreciate how soon in the future (soon on a timescale of human history) continued growth of energy use brings problems. This isn't a problem set some 5 billion years in the future. This is one reason I think so many people have found Murphy's posts worth reading: this seems really surprising to them.This is correct. And in fact, Murphy didn't even need to mention waste heat or anything like that to make his argument; he could have just said "Hey, eventually the Sun will explode, and then the whole Universe will degrade into heat, and where will your economy be then?" So what if that happens 500 million years in the future, or 10^100 years? What's the difference? One way or another, the human race is kaput!
Noah goes on:
Again, I think this is just the point Murphy is trying to make -- that if these effects are looming only 400 years (or significantly less) in the future, then perhaps contemporary humans ought to be taking them into account now in making their economic decisions. Certainly it would be appropriate for our leaders to be casting an eye on this long term, and to seek advice from our best economists who might help them think clearly about how our society could manage to change in response. Does economics end with the business cycle? Nothing longer term than that? 400 years is perhaps only 20-30 business cycles away.Are economists ignoring this basic fact? Do economists' models crucially hinge on the idea that economic growth will continue forever and ever and ever? No. The "long term trend growth" that is used in growth and business cycle models is only meant to represent a trend that lasts longer than the business cycle - so, longer than a decade or two. No economist - I hope - thinks that currently living humans are making economic decisions based on what they think is going to happen in 400 years, or 2500 years, or 500 million years.
These are the main points I think Murphy was trying to make. I do agree with Noah that other parts of Murphy's original post are much less convincing. When he moves into proper economic territory, discussing prices, scarcity of future energy, etc., my own feeling was to take that all with a grain of salt, as quite a lot of speculation.
In any event, I'm glad Noah has brought the attention of more economists to the quite short timescale on which continued energy growth leads to problems. If this is already well understood in economics, and built into theories of growth, then great, I've learned something. In my experience a lot of people think we'll be fine and continue growth if we can only find some cheap, infinite and non-polluting energy source to power our future. That's not the case.