by JPL » Fri 20 Jul 2007, 19:02:56
$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('EnergyUnlimited', ' ')My overall impression is that Jevon's paradox will be around, as long as we have free market economy and population growth.
Which brings us full circle back to Aaron's basic argument.
If we cannot offset Jevons', then conservation and efficiency gains will be the death of us.
Like throwing gasoline on a fire.
But yet, we
will conserve.
The micro gains are self-evident.
It's the macro-gains that will forever elude us.
The bottom line here is that,
under our current system of thinking and economics, conservation and efficiency gains are
not part of the macro solution...which is what we are looking for.
Asset inertia rules.
Hi Monte
OK I've been thinking about this for 24h - as requested - and I believe we CAN de-construct Jevon although I don't think you are going to like the results (grin).
One way to square the circle between 1) conservation/resource depletion and 2) an economy that grows on efficiency gains is to re-inflate.
I think another paradox is useful as both an analogy & a foil. Take a look at this famous visual paradox by Escher:
Depending on which way you look at it, the staircase is either endlessly rising (clockwise) or falling (anticlockwise). From the point of view of anyone on it, the progression is totally logical and only if you consider the thing as a whole, does the perspective-distorting trick of the artist become visible.
Earlier on the thread we were talking about the need to preserve economic growth whilst at the same time conserving (or even reducing) consumption. This is the 'sustainable growth' oxymoron, but I think Escher illustrates it better.
In plain English, I think the challenge ahead of us to find a way of increasing each part of the economy without actually increasing the total aggregate. Logically impossible, yes. Do-able, possibly, yes as well, providing we can get our heads around how the above image works.
If we use the image as a picture of the macro-economy we can substitute 'inflation' for 'perspective' and then let each individual part of the economy (wages, stocks, GDP) grow whilst the overall picture does not.
Efficiency gains (as per Jevon) could be translated into increased wealth without increasing overall consumption, because any time one staircase rises above its fellows, a knowledgeble central bank could print more money, and inflate the rest of the economy back up to meet.
Excessive inflation would destroy everything but I think a - carefully managed - inflationary period would allow an economy to both grow (in terms of keeping things appearing normal) and shrink (in terms of 'real' GDP) at the same time. Jevon's paradox wouldn't rear it's ugly head because although some things (like energy costs) would be more expensive, other stuff (like stock value and pension funds) would be getting better, so, overall, no need to panic, huh?
Of course the analogy would work best if the early inflationary period was hidden from the markets (for obvious reasons). A clever central bank would initally have to do stuff like massage down 'real' inflation figures and drop stuff like M3 reporting. I guess a currency decline would help at this stage too.
After that you would need to be a bit more blatent & introduce price controls on core commodities - but also keep printing the money - so the overall picture would be one of steadily increasing wealth at home whilst also squeezing overseas suppliers.
...
JP