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162 comments on Olduvai Theory: Toward Re-Equalizing the World Standard of Living - Richard Duncan

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mcain6925 on July 3, 2009 - 1:15pm Permalink | Subthread | Parent | Comments top

Let's see if I get this right: by the author's definition of standard of living, if I trade in my gas-guzzler for a Prius and super-insulate my house such that my total annual energy consumption is cut in half, then by definition I would be cutting my standard of living in half. Right?

On average over the entire population, and with a time lag, yes. Because the author is not talking about a one-time event. Real energy prices will double every so many years, so the Prius and insulation are only the first step. As an ever-increasing portion of your income goes into "basic" goods and services -- shelter, transportation, food, water -- less goes into other things and the standard of living decreases. There is at least a plausible case for a downward spiral: can we invest in efficiency and new energy sources fast enough to offset the rising cost of available energy? I am personally inclined to believe, and am working on a more formal model, that capital will be the limiting factor, and that results may vary widely from region to region.

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joule on July 3, 2009 - 2:04pm Permalink | Subthread | Parent | Comments top

mcain6925 -

Well, I would agree that if energy prices go up faster than your personal energy consumption goes down, then you are financially worse off than when you started, all other things being equal. I never said we were not on a downward spiral, as I think we definitely are, the only thing in contention being how steep that spiral is.

However, that does not appear to be what the authors of the article are talking about, as the only thing they seem to think matters is this global per capita energy consumption as some sort of a surrogate for standard of living, and that's where I (and apparently a lot of other TODers) think the authors' premise is flawed. I say call this per capita energy consumption something else, but don't call it 'standard of living'.

I also tend to agree that availability of capital (real capital, not the stuff willed into being by the Fed) could very well constitute the limiting factor as to whether or not we will be able to keep things from coming apart at the seams.

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mcain6925 on July 4, 2009 - 6:44pm Permalink | Subthread | Parent | Comments top

Fundamentally, they're referring to something like this:
http://home.comcast.net/~mcain6925/etc/energy.gdp.gif

that relates per-capita GDP and per-capita energy consumption. GDP is not the only thing that goes into standard of living, of course, but there's a relationship. Certainly no one will assert that the average standard of living in the US (the largish circle at the upper right end of the regression line) and the average standard of living in India and China (the two very large circles down and to the left) are comparable. That there are no national economies occupying the upper left portion of this particular space suggests no one knows how to operate a high-GDP economy without high energy consumption (including Japan, which has been fairly fanatical about this for 70 years). Similarly, that there are none occupying the lower right portion suggests no nation has managed to have high energy consumption without correspondingly high GDP.

For the record, I believe that I used 2004 data when I put this together. Data from The Economist's annual world statistics booklet.

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rockhound on July 3, 2009 - 4:01pm Permalink | Subthread | Parent | Comments top

I agree, just like the results are different now for different countries.I can visualize the overall trend over time based on the graphs.One country might have an increase while two countries will have a decrease to produce an overall trend downwards.The NEED for basic services will always be there, so I dont see a change downward very much in the developed countries. It will be the NEED for basic services in the developing world as it is now.
Some basic goods and services can be adjusted based on an increasing allotment of income. Housing and transportation can be adjusted with the increasing allotment. Just look at last year, the truck market went into the crapper because of fuel prices. People wanted smaller more fuel efficient vehicles. People could move to smaller houses in an attempt to lower heating bills, property taxes, and the amount of crap that we can accumulate in a larger house(which might not be the most comfortable but can have an impact). Food and Water-that is the tough part. We obviously NEED those two just for basic survival. As those prices become a larger portion of income there are two choices: 1)Eat less, 2)Consume the same amount which will be offset by the lower housing and vehicle costs. But each scenario in and of itself does not solve the end problem--Sustainability.

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162 comments on Olduvai Theory: Toward Re-Equalizing the World Standard of Living - Richard Duncan

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