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Principles of Ecology: Resources and economic growth

Principles of Ecology: Resources and economic growth. Seminar II November 12 and 16, 2010 Karl Seeley, PhD Hartwick College, Oneonta NY. Growth: the standard list. Saving and investment More capital makes workers more productive Innovation Better capital makes workers more productive

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Principles of Ecology: Resources and economic growth

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  1. Principles of Ecology:Resources and economic growth Seminar II November 12 and 16, 2010 Karl Seeley, PhD Hartwick College, Oneonta NY

  2. Growth: the standard list • Saving and investment • More capital makes workers more productive • Innovation • Better capital makes workers more productive • Trade • Each side concentrates on its relative strength • Resource boom Jeffrey Sachs, The End of Poverty: Economic Possibilities For Our Time (2006)

  3. The growth cycle Consumption Saving Increased output Investment Output B. Innovation A. Innovation Increased, improved capital

  4. The growth cycle, with resources Consumption Saving Increased output Investment Output B. Innovation A. Innovation Increased, improved capital Capital Available resources Potential resources

  5. Growth: the standard list • Saving and investment • Gain access to resources • Build things that make use of resources • Innovation • New ways of using resources • Access to previously unreachable resources • Trade • Availability of greater quantity and diversity of resources • Resource boom

  6. Limits to growth? • Malthusians neglect innovation and substitution • New things become resources • Existing resources can be used more effectively • Innovation makes low-quality resources useful • Technological innovation tends be accompanied by increased resource use • Past supply crises were failure to produce from known reserves • Cheap resources have been possible w/ cheap energy • Cheap energy has no good substitute

  7. Stages of industrial growth • For each of the following developments, identify: • How it contributes to growth • How it depends on human action • How it depends on resources • How it depends on previous stages

  8. Stages already covered • Spread of mechanization • Canals • Coal in ferrous industry • Improved metal working

  9. Further steps • Contribution to growth • How it depends on human action • How it depends on resources • How it depends on previous stages • Group I: Increased use of metal • Group II: Increased scale of manufacturing • Group III: Coal for stationary power • Group IV: Coal for transportation • Group V: Oil • Group VI: Electricity Plastics • Group VII: Communications, electronics

  10. Increased use of metal • Improved efficiency of transferring kinetic energy in manufacturing • Improved strength and durability of many goods • Increased abundance, lower cost of many tools • Requires investment in increased production capacity, new ways of making things from metal • Requires supplies of coal and ore • Requires lower cost of metal (from increased coal use) and improved metal working techniques

  11. Increased scale of manufacturing • Economies of scale: greater specialization of labor and capital makes labor more productive • Requires designing and building larger factories • Requires improved mechanization and metal working • Requires larger input of cheap raw materials • Colonies, cheap navigation, cheap shipbuilding • Canals reduce cost of bringing supplies • Requires larger market • Canals expand the area in which one factory’s goods can be sold

  12. Coal for stationary power • Replaces water power • Not weather dependent, not as location dependent • Greater potential for expansion • Invention and improvement of steam engine; construction and installation • Requires large new energy source (usually coal) • Rests on improved metal working, cheaper metal

  13. Coal for transportation • Further reduction in locational restrictions • More flexibility in siting factories • Cost of trade reduced • Larger market to serve, further economies of scale • Improvement of steam engine for greater efficiency and power-size ratio • Requires coal, cheap steel (to make the locomotive and rail construction financially viable) • Requires improved metalworking for high quality engines

  14. Oil • More flexible ground transportation • Light, liquid fuel and internal combustion engine (ICE) make cars possible • Flight • Greater mobility, faster global interconnection • Invention of ICE, airfoil, jet • Investment in cars, buses, planes, roads • Requires oil • Requires abundant, high-quality metal

  15. Electricity • Greater industrial efficiency • Greater consumer convenience • Cheap electricity makes aluminum possible • Crucial for large-scale aviation industry • Big innovation, massive investment • Powered first by water • Later needs coal, oil, nuke to provide sufficient quantity • Whole electric infrastructure requires cheap metal

  16. Plastics • Lighter, cheaper material • More durable in some situations • Innovation • Requires oil

  17. Communications, electronics • Information can be used better • Ability to control events at a distance • Innovation • Requires ubiquitous and reliable electricity • Which rests on improved metalworking, cheap metal, cheap electricity, … • The “Information Age” seems to be about the dematerialization of the economy • Yet it rests on a long chain of increased material use

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