Dear Readers: I’m currently writing a long-form post twice a month now for Chris Martenson’s excellent website. Accordingly, I’ll be publishing the first (and free) part of these essays here at Gregor.us. Enjoy. — Gregor
Once a year the very chic and exclusive TED conference takes place in Southern California, bringing together entrepreneurs, inventors, and thought leaders from every corner of the world.
There, gathered around a stage, a kind of hivemind begins to unfold in which the most cutting edge ideas in healthcare, energy, social development, and behavioral psychology are shared from a very plugged-in, big screen podium. It’s extremely well done.
And despite the reflexive criticism from outside the conference — that the gathering is inward looking and elitist — TED usually does manage to disturb the zeitgeist, a little, with its unveilings in technology and innovation. It is good, plainly so, that next step advances in solar technology, data collection, and developing world health initiatives are explained and broadcasted from TED. Especially given that policy makers, or those who have the ear of policy makers, are also often in attendance.
A better charge to level against the TED conference, however, is that it’s routinely if not unfailingly optimistic.
The 2009 conference, held in the aftermath of the global financial crisis, did not address the unpleasantness of that historic event in any meaningful way. Moreover, very few talks in recent years have addressed energy costs, and especially the price revolution in oil.
In some sense, TED is the techno-innovators’ version of the faith expressed by neo-liberal economics, in which the market solves nearly all of its own problems. The enduring posture at TED, therefore, is one that acknowledges serious world problems, ranging from war to famine, water and food availability, but which nearly always concludes that amazing and ingenious people — geniuses – are working to solve the problem. The Great Man theory of history would find each TED conference a comfortable place to be.
So it was perhaps surprising but also encouraging that the January 2012 TED conference finally addressed the subject of Collapse, by inviting Paul Gilding to give his talk The Earth is Full (opens to video).
I’d actually seen a version of Gilding’s talk at the Ilhahee Lecture Series here in Portland last fall. Gilding’s view is that we’ve reached a relationship between global population and available natural resources, that makes it inevitable that the economy—a converter of natural resources into goods—will sharply slow down, if it has not started to slow down already. Gilding can be thought of not as a neo-Malthusian, or a doomer, but rather as an ecological economist. (As most readers know, I share this same view.) Gilding looks at trailing historical growth rates — again, the rate at which natural resources are converted to industrial and population growth — and concludes that the future size of the economy at these growth rates would create a machine that the earth simply cannot sustain. Again, I agree.
But Gilding’s TED talk was countered, if you will, with a more typical and rousing plea from Peter Diamandis of the X Prize Foundation.
Diamandis, grounded heavily by a personal background in science and medicine, is not naive. His talk, Abundance is Our Future, was a laundry list of fast-moving technological innovations that have transformed poverty rates historically, and which promise to transform quality of life in the years ahead.
One of the most laudable, and humanistic beliefs, advanced by Diamandis is that the 3 billion people remaining to come online to the Internet and telecom networks represents a vast and underutilized supply of human thinking. As a previous educator myself, I find this argument to be powerful.
My quibble with Diamandis and his talk is that the magnitude of the world’s present challenges cannot wait for the array of potential solutions that may start to work at the margins of humanity, even despite his core belief that innovation and its impacts will actually start to speed up. After all, Diamandis is an adherent to technological singularity, the notion that exponential growth in technology will eventually reach a crescendo, thus offering humankind super-solutions at a kind of hyperspeed rate of change. (By the way, I don’t agree with this view.)
Diamandis would go on to further test my ability to follow his arguments, however, when he recently announced a team that will explore the possibility of mineral mining on moving asteroids. I’ve no doubt the public has reacted to this prospect as either impossible, or as another silly story about the grandiose dreams of tech millionaires.
I had a different reaction: why is Diamandis thinking about mineral mining in space, when resources here on Earth — in his view — are so abundant?
Blue Sky (Asteroid) Mining
Although here in America we tend to dumb down complex subjects into simple ‘Either-Or’ arguments, it was useful to hear the Gilding vs Diamandis debate at TED. In addition to their respective presentations, they had an onstage exchange which you can see here, hosted by Chris Anderson.
One of the major default lines between cornucopian technologists like Diamandis, and thinkers like Gilding, is the role that technology plays in the creation and extraction of resources. In ecological-economics, technology helps us extract resources. But, for folks like Diamandis, technology creates resources. It is both a distinction without a difference and also a distinction with a huge difference, depending on your perspective.
And the implications, depending on that difference, for the future price path of commodities, for inflation, for industrial growth are enormous.
Ask yourself the following. For the technologies which allowed for the increased rate of extraction of coal in the 19th century, or, which now allow for the increased rate of extraction of natural gas from shale in the 21st century: did those technologies create the resources or merely extract them as they already existed? The answer seems rather obvious, doesn’t it? I mean, I want to be sympathetic to the view that technology creates resources, in the sense that technology makes previous unrecognized or unrecoverable resources available. But a threshold I cannot cross, however, is that idea that there are always a new resources waiting to be discovered, if we can only create a technology to obtain them.
Which brings us back to mining for minerals. On asteroids.
Why is Diamandis not pursuing technologies for material upgrading, for example? In material upgrading, the task is to substitute materials once thought inapplicable, for example, to the task of solar manufacturing or electricity transmission. If copper gets too expensive to use for electrical transmission, then some other metal, or combination of metals, or even liquids or gases are used. That’s the theory, anyway.
Why mount energy-intensive missions into space, and run heavy payloads back to earth? Surely the ROI (return on investment) to such efforts would be low, even if the minerals involved commanded a very high price….back on earth.
I think I have one answer to this question, but first, let’s review the business plan, the mission, of Planetary Resources, Inc. From the Los Angeles Times:
A group of 21st-century private space entrepreneurs is expected to unveil an ambitious new venture to mine the surface of near-Earth asteroids in search of precious metals and rare metallic elements. The plan may seem like it was torn from a science fiction novel, and critics say the idea may be far-fetched and difficult for a small company to accomplish. But the company, Planetary Resources Inc., has already drawn an A-list of investors and advisors. The backers include Google Inc. Chief Executive Larry Page and Chairman Eric Schmidt, “Avatar” director James Cameron and Microsoft Corp.’s former chief software architect Charles Simonyi….”Humanity has been driven for thousands of years to explore the Earth for resources,” said Peter H. Diamandis, the company’s co-founder and co-chairman. “The next step is to expand the economic sphere of humanity beyond Earth’s confines.”
You have to wonder: is it possible that the team behind Planetary Resources accepts that many crucial natural resources, necessary for mobile, greentech, and telecom development are–in truth neither replicable, nor substitutable, nor sufficiently recoverable here on our fair and blue planet?
The Abundance Movement
However, it is worth noting this cultural theme comes after a decade in which the production rate of many natural resources, from oil to gold, to more recently copper, did not speed up but instead either slowed or stagnated in the face of quickly rising prices. Crude oil production has been trapped below a ceiling since 2005. Global production of gold actually fell every year of the past decade until the last two years, but is once again stagnating. Copper production managed to rise the past decade. However, ore grades of copper have been declining for a century, and this is why copper has now repriced at much higher levels, closer to $4.00 per pound. Recent data shows also that the rate of growth of global copper production in the last decade slowed significantly, and stagnated also in the past 24 months.
There’s an important distinction to make, therefore, between an Abundance movement that simply posits we’ll have more of everything, at cheaper prices, in the same style as the past, as opposed to an Abundance movement that is tethered to reality, and realizes that large changes in consumption, values, and lifestyle will be needed to create the next phase of “wealth.”
Authors such as Juliet Schor, who wrote Plentitude, are much more reflective of and respectful of limits, and therefore does not dream of the next phase of mineral mining in outer space. Rather, many “new wealth” thinkers have gravitated instead to a less is more pathway, in which a lot of our previous consumption and time-bankruptcy is finally recognized as waste.
Three Crucial Problems with the “More is More” Abundance Movement
Peter Thiel recently debated George Gilder at ISI (you can open the video at YouTube, here). Thiel made a familiar point, which is that the impact of technological progress has become more narrow. I have treated this issue in previous reports, and pointed to some of the data on which this thesis relies, including the stagnation of Total Factor Productivity, for example.
But Thiel goes on to make a second point which is that belief in rapid, even accelerating technological progress is surely going to cause tremendous mis-allocation of capital. And that’s the first crucial problem I see with the cornucopian abundance movement.
Like a financial system that refuses to accept that tightly coupled structures are risky, and that risk itself grows with in tandem with complexity, the cornucopian abundance approach simply won’t take no for an answer. That means instead of focusing on smaller solutions with more immediate effects, grandiose solutions with long timelines are pursued instead.
The second crucial problem is a failure to consider the limit outlined by Paul Gilding, which is that present growth rates of energy consumption, for example, imply an economy that just about everyone can agree is simply too large for the planet to handle. You simply cannot keep growing the size of the human-created heat engine up to the level of a star. This was articulated beautifully by physicist Tom Murphy in his recent and very wide read post Exponential Economist Meets Finite Physicist. When problem solvers entirely avoid the subject of limits it is both appealing, and exciting, but eventually it becomes vaguely pathological.
Finally, there are a number of pressing issues already on the planet, which range from the risk created when food production is outsourced by water-starved populations to other continents, to large regions of the world such as Asia attempting to provide increased electrified transport for billions of people. Leapfrog adoption of mobile telecom, and the rise of social networks will no doubt serve to get these emerging voices out to a world eager to learn, and to help with solutions. But celebrating the success of solutions before they’ve actually arrived, indeed well before they’ve arrived, is no solution at all.
Repricing the Planet: Real World Copper as Opposed to Metals in Space
In Part II: The Looming Dislocation Risks Posed By Resource Scarcity, we dive further into the challenges that accompany the acceleration of technology, which relate to de-industrialization and the displacement of human labor with automation.
Previously in the past century this dynamic gave rise to increased productivity, and wealth. But that may no longer be the case. We are not living in a world where any of our critical natural resources are forecasting a radical upswing in supply. Oil and copper, for example, remain decidedly unconcerned about substitution or miracles from space.
Importantly, we will take a closer look at the red metal (no, not the red planet!), also known as Dr. Copper. What happened to global copper production this past decade as the price rose? And how crucial will copper become, as the world tries to transition away from transport based on liquid BTU?
Click here to access Part II of this report (free executive summary; enrollment required for full access)