Managing Austerity

by John Reid

Malthus Postponed

Thomas Malthus, in his 1798 book An Essay on the Principle of Population, observed that in a period of resource abundance, a population could double in 25 years. However, the margin of abundance could not be sustained as population grew, leading to checks on population growth: If the subsistence for man that the earth affords was to be increased every twenty-five years by a quantity equal to what the whole world at present produces, this would [require] the power of production in the earth to be absolutely unlimited, and its ratio of increase much greater than we can conceive that any possible exertions of mankind could make it.

According to the learned authors of his Wikipedia entry: … the hypothesis is rendered irrelevant. due to a disregard for technological advancement. This is because food production has increased as a result of technological advancements such as genetically modified organisms (GMOs). … The static aspect of the Malthusian hypothesis, which is based on the rule of decreasing returns, limits its applicability.

This is nonsense. Malthus’ proposition was not “based on the rule of diminishing returns” at all, but on the simple, arithmetic fact that a finite or arithmetically increasing supply must inevitably fail to meet an exponentially increasing demand. Even children understand this when they encounter the wheat and chessboard problem, but, evidently, it is beyond the intellect of economists. Economists also seem unaware that increases in food supply due to genetically modified organisms would not have been possible without the widespread use of nitrogenous fertilisers. These, in turn, are manufactured using a considerable amount of fossil fuels, of which there are finite reserves. As Vaclav Smil points out: At least half of the global crop harvests have been produced thanks to the application of synthetic nitrogenous compounds and without them it would be impossible to produce the prevailing diets for even half of today’s eight billion people.

It follows that, if it happened now, net zero emissions would result in death by starvation of several billion people.

Wartime Austerity

I was born in 1938 and I grew up in the war years in the Midlands of England. Although only a child I was well aware of austerity. Phrases like “off the ration”, “under the counter”, “black market” were part of everyday speech.  I remember the metal stumps where the park railings had been taken away for the “war effort”. As the war came to an end, luxury items, such as ice-cream, began to reappear. Everyone laughed when I asked “How do you shell it?” about my first banana.

It was a managed austerity. Government nutritionists had calculated the optimum diet for every man, woman and child in the country and ration books were issued accordingly. All new clothing had a “utility” label (see above) to demonstrate  there had been no extravagant use of resources. In contrast to the picture often painted in documentaries, people were not miserable. They had a common purpose. “We are in this together.”  “Don’t you know there’s a war on?”  As a child I was, no doubt, sheltered from the consequences of people losing loved ones in the armed forces or losing their homes to bombing, but the mood was definitely “up”.

Since setting foot in Australia, in 1947, I have experienced ever-increasing prosperity. It has been, arguably, the most prosperous time in the history of the human race.

This unprecedented prosperity has been largely due to the use of machines to replace human and animal labour in the production and distribution of food and other necessities. Most of these machines are powered by fossil fuels. When fossil fuels start to dry up and become prohibitively expensive, this age of prosperity will end and a new age of austerity will begin.  If not handled properly this “energy famine” could have consequences comparable to the arrival of the Black Death in Europe in 1347.

Energy famine austerity will differ from the wartime austerity discussed above, because:

• At present few people believe it is going to happen.
• There is no foreseeable end apparent.
• The adrenalin motivating a nation in wartime is absent.
• Society is already polarised on the moral issue of whether conserving the environment is more important than conserving people.
• For more than three decades, all research which might have been relevant has been monopolised by environmental activists and climate modellers.

The Upside

It is not all doom and gloom for the following reasons.

Austerity caused by plagues and war comes on suddenly, within a year, as in 1347. Energy Famine will, hopefully, creep up slowly over decades as petroleum becomes ever more expensive to extract and refine. So far we have only picked the low-hanging fruit. As the price rises, demand will fall as various activities become too expensive to pursue. First among these will perhaps be air travel for international tourists and air freight for perishable commodities. Once ordinary people are affected by these changes they may come to see the need for urgent action. Will this change in attitude be fast enough to allow currently unpopular alternatives, such as nuclear power, to  be brought on-line in time to avoid industrial collapse?

We can stop worrying about emissions. Of the various emissions scenarios postulated by the IPCC, future emissions are likely to follow the more modest speculations, as hydrocarbons dry up, with little effort on the part of humanity. Furthermore, a recent statistical analysis of CO2 emissions and concentration data shows that the (pessimistic) Impulse Response Function, widely used by modellers, is wrong and that half of all emissions are absorbed by the ocean within about 50 years. The emissions problem may not be not quite as dire as once thought.

We have been addressing the wrong problem, i.e. emissions rather than supply. However the rush to install intermittent energy supplies, solar and wind “renewables”, has had an unexpected benefit. Some of these installations are now being used to generate hydrogen rather than extracting it from fossil fuels. This “green hydrogen” can, in turn, be used to make ammonia and ultimately the synthetic nitrogenous fertilisers mentioned above. No doubt renewable power generators will soon be disconnected from the grid and used more fruitfully for this purpose. Local production of fertiliser in this way should  appeal to Third World countries although subsequent ammonia synthesis requires significant capital investment. The upside is that we have already started down the path of decoupling synthetic fertiliser production from fossil fuels.

The Great Reset

Mancur Olsen in his book The Rise and Decline of Nations points out that developed nations tend to grow more slowly and ultimately stagnate due to special interests gaining more and more political power so preventing competition, faster growth, innovation and development. Such special interests include industrial cartels and trade unions. War and revolution are often followed by a boom in a nation’s prosperity. Germany after WW II is the prime example because special interest groups had been swept away by Hitler and the War.

We are now living in such an age of stagnation but this has been obscured by massive growth in the electronic sector, i.e. by Moore’s Law. This was the result of the invention of the transistor and the optical etching of semi-conductor substrates, which occurred in the 1960s. The market for consumer products in the form of desk-top computers and mobile phones has been ever expanding and is now global. Similar, but less spectacular growth occurred in other areas, in pharmaceuticals and in agriculture as mentioned above. In the energy and transport sectors little has changed since the 1950s. In fact, the energy sector has gone backwards with its obsession with ineffective “renewables” and the closing of nuclear power stations in some countries.

There has been so little progress in the energy sector simply because petroleum is so cheap. A litre of gasoline is about the same price as a litre of water and cheaper than a litre of milk. This has kept all competition at bay for a century. As petroleum inevitably increases in price competing products will gain market share.

Bio-fuels are one group of products which come to mind. So far all that has happened is the growing of corn for conversion to ethanol by fermentation and distillation. One such project led to a corn shortage in the USA and ultimately to food riots in Mexico. It typifies the blinkered thinking of existing interest groups.

A far more viable bio-fuel experiment is to look at the use of wood as the feed-stock for bio-fuel. Even at present energy prices, wood, in the form of wood-chips, is an economic alternative to coal for electricity generation in some localities, such as the well-forested parts of SE Australia, where it is already, by far, the cheapest form of domestic heating.

But wood is better than that. It can be easily converted to another fuel/feed-stock in the form of charcoal. Charcoal can be converted, in turn, to a high octane gasoline substitute by the Fischer-Tropsch process.  Powdered charcoal  or an emulsion of powdered charcoal in water can fuel a diesel engine directly without further chemical processing. Proof-of-concept has already been demonstrated but further research is needed to create viable commercial products. That this research has still to be undertaken is an indictment of Big Oil and the present energy hegemony.

Once the stranglehold of the various industrial and political lobbies is released, other off-the-wall ideas can be considered. One such is the use of offshore nuclear reactors to mix nutrients from the deep ocean into the surface layers to create a rich, artificial eco-system to support a commercial fishery. Another is to explore the genetic modification of yeasts or bacteria to fix nitrogen, so avoiding the high energy costs of the Haber-Bosch process.

Wars and/or revolutions are inevitable once the man-in-the-street is severely affected by the coming energy famine.  The first symptoms are beginning to appear. Vladimir Putin is already using the EU’s energy problems to leverage his imperial ambitions in Eastern Europe and a harvest collapse in Sri Lanka has led to civil unrest and the re-introduction of imported fertilisers. This “reset” may not lead to  “blood in the streets” but it will lead to the rapid dissolution of some socio-economic structures none-the-less.

We must endeavour to manage these changes with reason and integrity and, as far as possible, for the benefit of all. Heaven forbid that any of the plethora of ideologues, now so vocal in the media and on the Internet, should finish up calling the shots.

See Energy Crisis Links for further information on this topic.