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Oh for fuck’s sake

After three weeks of trivia, we’ve finally alighted on the one issue that towers above all others. Productivity. It may sound a rather insipid word, but it’s the fundamental determinant of living standards, public services and whether we have the budget to upgrade our (currently enfeebled) military. And it is painfully, tragically flat.

True, then not true. Productivity isn’t everything but in the long run it’s almost everything – to quote Paul Krugman.

Productivity isn’t flat today in the slightest. It’s just turning up in the consumer surplus, not GDP. As with my favourite example, WhatsApp. That is in the economic statistics as a decline in productivity (no, really). It’s also giving 2 billion people free telecoms. As another (non-NL so far at least) economist, Hal Varian puts it, GDP doesn’t deal well with free.

Why? The reason is that every technological innovation — and there were quite a few — ran into an insurmountable problem: a lack of energy. Agricultural economies, you see, were fuelled by biomass: plants. We ate plants for food, our domesticated animals ate them too and we burnt them (in the form of wood) for industrial processes. But to obtain more plant energy our ancestors had to bring inferior land into cultivation, reducing returns on labour and capital. Growth fizzled out almost as soon as it had started.

Tossery. Productivity increased just fine. So did output. What actually happened is that a better food supply led to more humans, therefore living standards went back down to subsistence again. It’s called a Malthusian economy.

This is important because it reveals something invisible to most economists: abundant energy sits at the centre of all economic activity and, therefore, growth.

The claim that many tens of thousands of often quite bright people, chewing over a subject for centuries, are going to miss something as obvious as that? Tossery.

The point is that productivity growth is about energy, energy and energy. And, while economists fiddle with their abstract models, this is what is screwing us today: we are an energy-constrained civilisation.

Ignorance. Summat called “energy intensity of GDP” which is how much energy do we have to use to create a unit of measured output? Been declining since Nineveh.

This is why I suggest all politicians open their eyes to what’s staring them in the face: productivity will rise only when we move to higher-EROI sources of energy.

Oh, so that’s where he’s going, EROI. Folk stumbling through economics do find the weirdest things to call unicauses.

18 thoughts on “Oh for fuck’s sake”

  1. “As with my favourite example, WhatsApp. That is in the economic statistics as a decline in productivity (no, really). It’s also giving 2 billion people free telecoms.”

    Can anyone explain to me how WhatsApp make their money?

  2. You might mock, but I am all for it if the gurus of the great and good are coming round to the realisation that cheap, reliable energy is rather important to us. And that it’s not going to happen with solar panels and windmills.

    Sadly, Syed doesn’t say this explicitly, only noting: “Advances in renewable technology are part of this challenge, not least if we can solve the problem of intermittency.”

    Well maybe. All the ‘solutions’ to intermittency are expensive, impractical and energy-hungry, which will reduce the EROI for wind and solar. Currently, however, the UK approach to this is to pretend those costs don’t exist.

  3. https://www.samizdata.net/2024/06/farage-is-a-snake-but-if-we-were-honest-on-migration-hed-have-no-fangs/

    The writer is an ex-sportsman who subsequently participated in a sporting podcast as the ping pong guy for which he was well qualified. It is regrettable that the times now allows him freedom to push his boilerplate bien pensant opinions on non-sporting issues (see above).

    I may of course be doing him an injustice in this instance but can’t be arsed to bypass the paywall. Fool me once etc.

    Articles I have read previously do at least show him to be a better educated and infinitely less unpleasant version of Lineker – which is not difficult.

  4. Another point to bear in mind is that other countries, France, say, have a higher level of productivity simply because the regulations ensure that those with lower productivity just remain unemployed.

  5. To solve the problem of solar intermittency we would have to tidally lock the earth to the sun. (As the moon is to earth.)
    Of course, only a narrow strip of earth would be habitable but we’d get lots of heat and light.

  6. “Advances in renewable technology are part of this challenge, not least if we can solve the problem of intermittency.”

    Intermittency is an insoluble problem because its cause is variability of wind and solar neither of which can be controlled and made constant.

    What can be done is attempts to remove the effect, and the only ond which is possible is gas-fired power stations. Other attempts such as storage, interconnectors linking dispersed wind and solar installations will not succeed because they rely on wind and solar so they too are victims of the intermittency they are supposed to remove.

  7. I do tend to agree with you John B. That’s why I agree with Dutton’s proposal to build nukes to provide Oz with net zero electricity.

    Of course Labor and the Greens are outraged, and I suspect they’ll win the fight. But at least Dutton intends to postpone any push for net zero until 2050. And I presume he intends to keep the coal and gas burners running ‘temporarily’ until the nukes have been built.

  8. Completely misses all the ways that we learned to not waste energy. Mostly because we were trying to save on cost in other ways (like people’s time) but it saved energy anyway.

    Like putting satnavs into delivery vans. Driver doesn’t get lost, so more deliveries done, but also, not getting lost means less fuel. Then, you have an internet enabled sat nav, and if there’s road trouble, it diverts him, because that saves more time, which also means less fuel. And he has a phone now, so if he’s en route to a customer, maybe you get him to stop at another customer and pick up something. Which is more time efficient than sending out another van, but it also means that you use less energy. Then you get really fancy and use the Microsoft service that works out the most efficient route for multiple stops, so he spends even less time and even less fuel.

    Or how there are now GPS-controlled combine harvesters so that they’ll harvest a field more accurately, with less overlap. So, you need less driver time. Also, less energy going into the combine harvester.

    Or how architects and car designers will test a design in a computer before putting it into a wind tunnel. Saves building physical prototypes, also saves the energy on those.

  9. WatsApp doesn’t make money – that’s the entire point. It’s a loss for the producers, but a tiny tiny tiny loss. From memory, it was produced as a personal-time hobby project. Similar with LINE in Japan.

    I’ve got loads of software that I’ve written that people use, so increasing their “gdp” by the presence of a task done instead of not done. But there’s no market to charge for it, so it has negative measured gdp – my personal time used to create it.

    But I would create it anyway, it’s a by-product of my being alive, just like carbon dioxide is a by-product of me breathing.

  10. “Can anyone explain to me how WhatsApp make their money?”

    “WhatsApp doesn’t make money – that’s the entire point. It’s a loss for the producers, but a tiny tiny tiny loss. ”

    Yes but why are the owners happy to continue to make a continual loss? Whats in it for them?

    My assumption is that for all the protestations of how secure Whatsapp is, its actually being maintained as a way for the three letter acronyms to keep an eye on everyone. The tech guys get told ‘Keep this thing running or else’ and the usual suspects get to screen the communications of the populace in real time. Pretending its secure is just to make sure people use it without worrying too much about what they say.

  11. the usual suspects get to screen the communications of the populace in real time. Pretending its secure is just to make sure people use it without worrying too much about what they say.
    But people do worry about what they say. If only because the conversation will be on their phone unencrypted & can be accessed by anyone gets their hand on the phone unless they delete. And the consensus is that deleting may itself draw attention so do so with care..
    What actually happens in these sort of conversations is both parties know the subject. So the information being exchanged is the details. So the details can be nested in what appears to be a conversation about something else. It may be little more than a half a dozen curiously spelt words & a couple of emojies amongst hello, how are you, what you doing etc etc etc
    Don’t get the idea that everybody is a stupid with their conversations as politicians & Civil Servants. We’re talking about intelligent people here.

  12. Pretending its secure is just to make sure people use it without worrying too much about what they say.

    Perhaps.
    Even if it is completely secure, the metadata can be useful to TLAs with lots of computing power. See finding Paul Revere

  13. @dcardno
    I’ve often wondered about LinkedIn.
    They do pretend to try to make money by promoting premium subs.
    But finding the Paul Revere style links would require comparatively quite trivial amounts of computing power.

    Come the revolution, brothers…

  14. There is WhatsApp for business. Lets businesses message multiple customers at the same time, with clickable links etc. And it costs money – the more are in the group, the more it costs. Still v. cheap per message, but it generates revenue.

  15. Thank you, Tim. I read the original article and wondered what you would make of it. Matthew Syed is always thought provoking but sometimes gets out of his depth. I remember you doing a similar job on a previous one of his about (I think) minerals in Ukraine. BTW, what is a unicause, please?

  16. WhatsApp is owned by Meta which owns FaceBook and Instagram and there’s a financial hook there somewhere.

    Probably because WhatsApp is very often used to share videos and Images from FaceBook or Instagram thereby increasing viewership and ad revenue.

    The actual transmission cost of WhatsApp is borne by the users. Meta spent a few hundred grand writing the fairly simple software involved and it will run forever with very little tending.

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