mead berger shevtsova garfinkle michta grygiel blankenhorn bayles
Crude Economics
The New Oil Reality
Features Icon
show comments
  • Andrew Allison

    Re: Journalists, to take one (for the staff here at TAI) depressing example, are producing much more “information” than ever before. The quote marks are very appropriate. Much of what so-called journalists produce is either regurgitaed press releases and/or opinion — both of which are information only in the very losest sense.

  • D4x

    How did the deflating prices for consumer electronics, computers get modeled to measure consumer purchasing power? Such questions have been tackled since 1988. Not easy to find that information since Alta Vista’s search engine was overwhelmed by Google and it’s algorithms.

    Google’s algorithms appear to have implicit bias, still (somehow) preferring WaPo to Bloomberg News. Is Bezos brunching with Brin?

    • Andrew Allison

      Yeah, I’ve noticed the preponderance of WaPo links. Maybe they write better click-bait, or maybe it really is bias.

      • D4x

        Maybe news websites are paying Google for “product placement”, just like non-durable goods producers have to pay supermarkets for shelf placement. Generally, business media is far less susceptible to spin in reporting news.
        I do not think Google’s algorithms are solely counting clicks, though I stopped testing by using different keyword groupings, to see the difference.

        • Andrew Allison

          Bloomberg is unquestionably spinning.

          • D4x

            Perhaps I am used to Bloomberg’s (no pay wall) spin, because they do not read like DNC talking points, and minimal disrespect for the office of the Presidency.

          • Andrew Allison

            Well, I could agree that they’re only slightly more biased against anything-Trump than the staff of TAI, but nevertheless, the glass is always half-empty.

  • Anthony

    “At the same time, the collapse in the cost of information helps disguise the enormous increase in living standards for most people….” (Walter Russel Mead)

    WRM implicitly promotes the classic American economic mantra: the idea that economic growth continues forever on a finite planet as an implicit/unifying faith of our civilization. Growth is sacrosanct. Growth will bring jobs and perhaps more income. Pricing and innovation will always save us from the depletion of sources. In contrast, Limits offers another view about how we measure performance/productivity/outcome in the 21st century. See here:

    Examples of a differing view from referenced article:

    1) extrapolating from the data to model 12 future scenarios of global development and its consequences projected out to the year 2100, they focused on the complex feedback loops – the system dynamics – that play out when we tax the limits of the planet. The team separated those limits into two categories: sources and sinks. Sources are those things we need from nature for industrial civilization to survive: minerals, metals, rare earth elements, fossil fuels, fresh water, arable soil. Sinks, on the other hand, refer to the capacity of the planet to absorb pollution of the soil, air, water, and most ominously the capacity of its atmosphere to absorb carbon.

    2) an update called Beyond the Limits addressed the most widespread critique of the original study: that it had underestimated innovation and technology, the twin engines of industrial civilization and the pillars of the economic growth faith.

    3) when growth stops, tensions mount. Adapting our institutions, population, aspirations, culture, norms, and capital to this new phase of zero and negative growth will entail many details of change that most people will experience as a deterioration of order – and thus as a mandate for more authoritarian government.

    4) a caveat more than a contrasting position, Limits was dangerous to a social order that posits selfishness, greed, and envy as the drivers of progress; an order that tells us to hoard for ourselves what we can get and ignore the pangs of conscience reminding us that the bigger pie hasn’t led to a better life for all.

    • Tom

      On the other hand, the rate of population growth is dropping, as it has been since the 1970s. Furthermore, the key factor in societal disruption is when population growth outpaces economic growth–i.e., the pie doesn’t have to expand as much if there aren’t as many people eating it.
      Finally, while the bigger pie hasn’t led to a better life for everyone, it’s led to better overall outcomes than any of the alternatives.

      • Anthony

        I’m not sure I understand your brief presentation but perhaps reading linked article may help clarify response to WRM’s position.

    • Sergey

      Remember, Stone Age ended not because of depletion of resources of stones.

    • VitaminP

      But doesn’t your point of view have it’s own mantra – that the answer to looming scarcity is to scale back standards of living and redistribute wealth? Given the track records of the two competing mantras, who would not choose the growth model?

      • Anthony

        Not my point of view but a perspective different from WRM’s proposition.

        • VitaminP

          Fair enough, distinction acknowledged. But I’m still wondering, given the track records of the two perspectives, why the growth perspective would not be the one to choose.

          • Anthony

            Well, there’s definitely more than two perspectives but we’re addressing the two you cite. In that regard, I don’t think either Limits or WRM’s implicit proposition are necessarily at counterpoint. And one may choose both synergistically if seriously thought through.

    • James

      Self interest is not the same as selfishness; ambition is not the same as greed; a competitive spirit is not the same as envy. You made some important points that need to be carefully considered, but your Marxist rhetoric doesn’t help your case. A bigger pie is important, and is worth people working hard to achieve, but as Jesus said, man does not live by pie alone, but instead our spiritual needs end up being more important, once we are no longer all starving to death naked in the snow.

      • Anthony

        Your distinctions as contrasted are not at argument; moreover, I make no assertions (Marxist or otherwise) but I do offer to reading audience two different (not necessarily competing) views of issue – WRM’s plaintive brief and referenced link for Limits. Rejoiceth as a strong man to run a race (Psalms 19:5).

  • Fat_Man

    “the information revolution is likely to lead to revolutions in the way we measure economic performance in the 21st century.”

    Here is one:

    The MIT Billion Prices Project

  • Jacksonian_Libertarian

    Most of the world’s oil supply is produced by inefficient National Oil Monopolies. Monopolies don’t cut costs except under extreme pressure, “produce or be fired”. Nothing less will move the bureaucrats in a Monopoly.

    That so much of the oil industry is inefficient monopolies, makes American Shale Oil Developers look like creative geniuses. When all that’s happening is normal free market continuous improvements.

  • It is always a race between the law of diminishing returns and new technological innovations. Otherwise Marx’s prediction of a falling rate of interest would have become a reality long ago (though you have to admit interests rates are pretty low lately, but owing mostly to a savings glut in China rather than lack of innovation). Malthus’s gloomy prediction is another example of the same thing, or something very similar: we keep discovering new and more efficient ways to increase agricultural yields.

    • LarryD

      Two serious flaws with Malthus-ism. One, Malthus was totally unaware of feedback mechanisms in population dynamics that throttle population growth as the carrying capacity is approached. It’s actually exceptional for population to exceed carrying capacity. This alone guts Malthus’s theory. The second is, as you note, innovation changes the carrying capacity.

      And then there is the fact that Malthus was thinking of a closed system, which innovation in space technology can open up.

    • Gene Frenkle

      $20 barrel is the closest thing to “magic” in the world.

  • Joe Eagar

    Excuse me? The national income accounts very much do capture price effects on productivity, it’s how they calculate real income.

  • Josephbleau

    I have to chuckle at the Norge reduction from 75 to 27. Are they expecting to fire all the public communications directors?

  • FriendlyGoat

    There is just a LOT of difference between information technology used by oil producers and mining companies vs. information technology used by most ordinary citizens to access Facebook, Twitter, games, photos, music, video content and general surfing. Some tech makes us more productive——and then some may be making us less so. It’s not that information access isn’t great, but the distraction factors are now off the charts.

    • James

      I think ordinary citizens are probably more productive when they are actually working, but less productive overall because post modern social media technology is such an addictive waste of time and makes people spend less actual time working.

      • FriendlyGoat

        That’s it.

  • Proud Skeptic

    I give the guy who developed the peak oil curve a lot of credit. The curve survived for a very long time. But, as with most long term projections, it could not foresee the incredible changes that might come in the future.

    • Gene Frenkle

      Unfortunately Bush, Tillerson, and the Saudis accepted the “peak oil” conventional wisdom and it contributed to the Financial Meltdown. I will never understand why Trump rewarded Tillerson with the plum Cabinet post because Tillerson was the worst CEO in America from a Trumpian perspective creating zero American jobs while CEO of the largest American companies.

  • VitaminP

    Scarcity caused prices to rise. Rising prices attracted investment. Investment brought innovation. Innovation increased supply. Greater supply caused prices to fall. Pay attention, folks. This is how the marketplace, if left to itself, corrects looming shortages. Not just in oil, but in generally everything, including food, water, education, and health care.

    • James

      Profit opportunity is what attracts investment, not merely rising prices. Those who think they are able to take advantage of the lower costs of production will want to be early investors in the market, because it would be logical to expect relative prices to fall due to the lower costs, wiping out some of the profit potential.

  • Jerome Barry

    You have put your finger on a feature, not a problem, of Moore’s Law. While my career has been involved in developing the ever-smaller generations of computer chips, the real societal fruit of our efforts is only beginning to appear. Yes, an African villager in, for instance, the village of Soroti, Uganda, now has the exact same access to information as any of us reading or writing for TAI, but the real thing is that the crowd from which ideas come is expanding as fast as smartphone market penetration. The cures for cancer, malaria, and agricultural problems can arise from any point on the globe now. I mention Soroti because I have family living there. It’s a mountain-top village of thatched roof huts with a bank, an airport, and cell service. More to the point, this emergent society of interconnected everybody is soon going to realize that the age of nation-states must draw to a close, and we won’t wait for the last head of an expired state to admit it.

    • James

      Nation states are a political phenomenon, impacted by economics but not controlled by it. Why would your example of primitive people now having banking services, an airport, and cell phones lead to the end of the “nation-state?” Since nation states are at least in theory supposed to serve a political purpose for the people who support them, why might it not be the case that your mountain-top village of thatched huts will want to be their own little nation state? The Republic of Who-Ville, maybe, er something?

      • Jerome Barry

        Easy. When we on opposite sides of the planet can communicate and care about one another and share information with one another, we can decide separately that those who have the power over us locally are without our support.
        Trump or his successor will be no more safe in office than Museveni or his successor. Consider this, nations exist with borders, borders which meant something 500 years ago. 500 years ago, it was difficult to cross border regions, think of the English Channel, the Pyrenees, the Rhine, and the Alps. Right now, migrating masses of people are demonstrating that the geographic features which became borders in the Westphalian system are no longer substantive. Something much change, and it is the Westphalian system that will.

        • James

          The Westphalian system was not invented out of whole cloth in 1648, dummy. The Peace of Westphalia was the result of negotiations between long existent nation states. They agreed to generally recognize and respect their separate nations’ existence as a way of keeping the peace. It wasn’t like they made up a random system and then imposed it on the world from out of left field. People had already begun to coalesce into their own nations based on somewhat natural and organic national identities. What you globalist imbeciles are talking about when you propose to end the Westphalian system of national identity is not local control but rather Globalist control, the opposite of what you claim. So you are either a liar or an idiot. I would actually agree that most nations are too big and smaller nations would help to promote more local control, but what you are suggesting is in fact the creation of one big fat giant ugly Global “Nation.” The more I think about the stupider you idiots seem to me to be.

  • James McDonald

    costs of living are falling down because product costs are falling but wages are also being pressured by immigration and that keeps the man on main street still falling behind.

  • GS

    I’d say that the increase in journalistic productivity leads to the collapse of quality and a deluge of garbage. H. L. Mencken operated without a word processor, and so did Ambrose Bierce.

  • Kartik Gada

    Dear Walter,

    You *must* read this. This publication takes the idea you have described much further, with several policy recommendations.

    In the ‘Media Coverage’ section, there are many independent reviews and video clips from media appearances.

  • ChristopherChantrill

    Let’s plug this into Deirdre McCloskey’s notion of the Great Enrichment, trade-tested betterment through innovation that the ruling class fails to smother in its cradle.

    Marx’s idea of “immiseration” is the idea that innovation stops now, and everybody is left scrabbling for scraps.

    So far, Marx is wrong. Just when you think the Great Enrichment is all over some punk in North Dakota comes up with a new idea to drill for oil and natural gas.

    As long as innovation keeps making a fool of Marx then the central argument of the Left, that power is everything, fails too.

  • Daniel Nylen

    “The oil industry is more than 150 years old, and oil ‘should’ be getting more expensive to find and to pump, not less. The most obvious oil fields should have been found first, and the most promising wells dug long ago.” This is a typical thought pattern of badly educated liberals. Please refer to Simon vs the Ehrlich bet etc. I guess we know where Mead falls along the Rational Optimist (Ridley) vs Average is Over (Cowen) scale.

  • You know, this is a fascinating fact. Before the Internet I used to spend $2 a day buying the New York Times and Wall Street Journal. Now I can have nearly any newspaper on earth for free or almost-free. So I am getting a lot more for my money, but my spending is far less. Thus a significantly decreased GNP in money, but I am actually much better off than before.

    And the last time I went to Best Buy the price of gorgeous 55-65″ LED TV sets had collapsed to pennies on the former dollar.

    So our lifestyle is getting cheaper, what we get for our money is getting much better, but our incomes are collapsing.

    It sure feels strange …

© The American Interest LLC 2005-2017 About Us Masthead Submissions Advertise Customer Service