Sunday, December 27, 2020

The priest, the engineer and the economist

I was exchanging economist jokes over the holiday and heard this one that seemed apropos both to our resource predicament and the seeming abundance of the holiday season:

A priest, an engineer and an economist were stranded together on a desert island. Given their location, fish seemed to be a logical source of food. So, they discussed how to get some. The priest said that the three of them should pray. The engineer said he thought a better approach would be to fashion a net from materials on the island. The priest and the engineer then turned to the economist for his input. With his hand on his chin, the economist thought for a moment and then looked up and said, "Assume a fish."

That joke neatly summarizes the problem with the vast majority of economic thinking today. Much of that thinking rests on something called the Cobb-Douglas function which has three terms:

Total production = Labor input X Capital input

What is so obviously missing, of course, are physical resources. Hence, "assume a fish" illustrates the slight of hand which most economists perform when referring to the physical world.

Sunday, December 20, 2020

Taking a short break - no post this week

I'm taking a short break this week and expect to post again on Sunday, December 27.

Sunday, December 13, 2020

Mobility is NOT a business: Why the pandemic-induced collapse of mass transit should concern us all

People have always needed to get from here to there whether by foot, by horse, by ship, by train, by car, by bus or by plane. Civilization DEPENDS on the mobility of humans and the produce they cultivate and extract from the earth. Without mobility everything would grind to a halt. Human mobility—like drinkable water, waste disposal, roads, grain storage and buildings (for government, religion, and commerce)—is a prerequisite to human civilization.

Human mobility may be aided by businesses which manufacture vehicles, motorized and not; supply concrete and asphalt for roadways, sidewalks and tarmacs; supply fuel; and build facilities that are part of the mobility infrastructure. But this is all in service to something essential to civilization, something that is the glue of civilization. Airplanes are optional to civilization. They create a certain kind of civilization. But civilization has been around, of course, for a very long time before airplanes arrived.

Governments typically organize transportation systems and then build the necessary infrastructure and purchase the vehicles or license the purchase of vehicles by others. This is how it is done because mobility is NOT optional for civilization.

Mass transit—the kind of transit in deep trouble right now because of the pandemic—is a product of cities' dense accumulations of people. Though we identify mass transit with the modern industrial city, it has been around for as long as cities themselves. Any locale where there has been a rickshaw, livery horse or carriage for hire has mass transit—by which I mean a system of vehicles that is SHARED by unrelated persons.

You can easily find stories today about the deepening financial distress of mass transit systems in New York City and Washington, D.C. In my experience, the Washington Metro, the tri-state light rail system, isn't entirely empty as depicted in the linked story. But it is very far from the packed-to-gills, standing-room-only affair it used to be during rush hour. Ridership is reported to be down 80 percent. In the San Francisco Bay Area, the BART light rail system in down 90 percent.

Sunday, December 06, 2020

Critical metals supply: Industry and government just couldn't be that shortsighted, could they?

In 2009 I had an email exchange with a reader in the computer industry in which he contended that the supply of two key metals in the electronics and solar energy industries, gallium and indium, just couldn't be as precarious as I was claiming.

I bring this up because the European Commission put out a white paper earlier this year about the need for a plan to secure adequate supplies of critical metals including gallium and indium. This concern arises, in part, because these metals and several others are central in the manufacture of ubiquitous devices such as cellphones and renewable energy equipment such as solar cells.

In 2009 my reader made the following case which I summarized in a piece I wrote at the time:

He insists that indium simply can't be that scarce because—get this—there is indium in billions of electronic devices including cellphones and computer screens, in fact, in nearly everything that has a flat-screen display associated with it.

This is curious logic. It says that because we are using a resource ubiquitously and at an exponentially increasing rate, it must be plentiful...

I realized later that what this computer professional actually meant was that the corporate and government planners charged with thinking about resource supply issues couldn't possibly have made a colossal blunder which would lead to a catastrophic shortage of key metals in the electronics industry. He presumed, I think, that such an outcome was simply out of the question given the competence and intelligence of the people in his industry.