This afternoon I started leafing through a book that wasn't Freakonomics. It was interesting! I wondered: should I drop Freakonomics and start readingThis afternoon I started leafing through a book that wasn't Freakonomics. It was interesting! I wondered: should I drop Freakonomics and start reading this other book straight away? Or should I stick with Freakonomics a little longer?
Pretty quickly I realised that I had no idea what Freakonomics was trying to tell me and that the few things it had told me were suspect. Thus, I fucked it off.
Freakonomics claims that it's an economics book and that in contrast to ethics, which studies the way the world should be, economics studies the way the world actually is. And that in contrast to morals, which are reasons why people should act a certain way, economics concerns itself with incentives, which are reasons why people actually do the things they actually do.
For example, one reason why you shouldn't steal a bagel left in your work lunchroom is because stealing is wrong. The wrongness of an action is a moral disincentive. But there are other, non-moral reasons why you might be incentivised not to steal. Perhaps you know the person who left the bagel there and you don't want to make them sad. Perhaps you don't like bagels but would have stolen it if it was something else, say a BLT sandwich. Perhaps you would've stolen it but know that management has recently installed cameras in the workroom to prevent exactly this kind of thing from happening. Maybe you're coeliac. And so on.
There are all sorts of reasons why someone might not steal the bagel. Most of them aren't moral. Therefore, incentives can explain more of human behaviour than morals can and they ought to be studied and used more. The authors could've based their book on this idea. They could've said that policymakers who want to change society should ditch their moral posturing and focus instead on creating wise incentive structures. For example, the aforementioned workplace management could've simply asked people not to steal food from the fridge even though installing security cameras would likely have led to far less theft.
Instead, the authors seem to have settled for something completely different, far more general, less focused, less exciting, less rigorous, and only occasionally related to the concept of incentives. They seem to have decided to look at a whole bunch of interesting scenarios in need of explaining--cheating in sumo tournaments, nation-wide drops in crime, influences on kids' success in school--and sought counterintuitive explanations for them by trying to ferret out hidden incentives. In some cases, this method was truly enlightening, such as when they explained which kinds of sumo wrestler are most likely to cheat (the ones who can't afford to lose a single match), against which other kind of sumo wrestler (the ones who've already secured their overall victory and so can afford to throw a single bout), and in which kinds of matches (the critical match for the desperate sumos). They then found data that had been leaked by salty ex-sumos that confirmed their ideas. This was a great example of the authors using incentives to discover unconsidered truths and question official narratives (the national body that oversaw the sport of sumo officially and categorically denied the existence of fraud in the sport).
However, most examples weren't like this. Some, such as the aforementioned bagel-theft example, were theoretically sound but suffered from weak and unconvincing data. In this instance, the data was collected about a single business by a single sole-trader. It's the kind of data that might instigate further research; it certainly isn't the kind of data that ends research. It was obvious the authors were grasping at straws and I wondered why they bothered. Their use of weak data immediately made me suspect that the authors were more interested in pushing an idea and selling a book and getting publicity than in discovering and conveying truths.
Other examples weren't related to incentives at all. For example, the authors tried to find things correlated with good school outcomes. They did this by performing regression analysis on a bunch of school tests after which they confidently pronounced stuff like (and here I paraphrase), "Kids raised in houses with lots of books probably have parents who care about education". OK? Cool? But what's this have to do with incentives?
And sometimes the incentives commentary wasn't counterintuitive at all. In fact, it was often really obvious. For example, they said that one reason dealers in poor Black communities sold drugs was because they didn't have many other prospects and they wanted to climb the criminal ranks to become one of the very few actually rich drug lords. Groundbreaking!
Freakonomics has few true insights, lots of questionable ones, some commonsense stuff, and a few random attempts to find "counterintuitive" explanations for phenomena even when those explanations don't involve incentives, which is what the book is supposed to be all about.
It's a shame that this book's a mess, because the idea that incentives are powerful tools for understanding human behaviour is a rich one....more
The great tragedy of early-21st century politics in Australia was the reign of the Coalition government from 2013 to 2022. This decade was a pivotal oThe great tragedy of early-21st century politics in Australia was the reign of the Coalition government from 2013 to 2022. This decade was a pivotal one in the fight against climate change and its potential was largely (though not totally; I'll touch on that later) squandered due to nothing more than absurdly petty factional politics and, in the cases of Tony Abbott and Scott Morrison, sheer unadulterated gross stupidity. Our leaders were selfish and dumb (I am not one of those cynics, whose numbers seem to have swelled like the belly of a pregnant sow recently, who believes that all politicians are psychopaths; many, clearly, want to improve society; indeed many have been veritable saints). That decade was important because efforts to mitigate the effects of climate change need to be more intense the longer they're delayed--in other words, if Australia had started its renewables transformation one decade ago, the transition would have been much less costly. Instead of working slowly and deliberately over the course of many years to gently prepare our country for a massive economic transformation (because the renewables transition means much more than simply the generation of power by solar, wind, etc; for Australia, at least, it means becoming a globally-competitive manufacturer of products such as green ammonia and silicon and it means processing its vast stores of mineral ores at home; in other words, the renewables revolution will see Australia transform itself once more into a world-class manufacturer; but more on that later), Australia, now under the leadership of the recently elected Labour government, will have to push for society-wide reform in the extremely short timespan of 8 years. This will be unavoidably and, probably, massively disruptive, and it didn't need to be this way.
Thank God, then, for Ross Garnaut.
Garnaut was commissioned by the federal Labour government in 2007 and 2010 to review the impacts climate change will have on the Australian economy and to make policy recommendations that would ensure Australia's longterm prosperity in the face of climate risk. He has spent much of his life since then studying those same things. Nearly 10 years elapsed between the publication of his final Report to the government and the publication of this book, which, because he hasn't posted anything of comparable size or symbolism since, can be considered his definitive thoughts on the matter. And for the reasons mentioned above, few have more learned thoughts about Australian renewable energy economics than Ross Garnaut. It inspires confidence, then, that the best book by perhaps Australia's best thinker about the renewables transition believes that we can safely transition to a low-carbon economy in the timeframe demanded by the current Labour government.
8 years. It sounds crazy. It is crazy. But we can do it.
As one more prolegomena, let is be known that this book is very dense. It isn't easy reading. I legitimately can't remember the last time a book made me strain the old bean with as much force as I strained it for this one. I thought of docking half or one full star from my rating of this book because Garnaut makes absolutely no concessions to the reader. It doesn't explain its jargon and its prose doesn't contrive to be anything except simple, dry, and precise. As such, I remain unsure who this book's target market is: it's designed and looks as though it's aimed at a popular audience but it's written for hardcore economics wonks and people who like reading those big old paperweight phone directories.
But it's precisely this wonkish insistence on facts, rigour, and detail which makes this such a convincing and important book. Garnaut explains in minute detail the pitfalls and promises of many topics. He notes that electrifying everything will raise energy demands; that the increased adoption of electric vehicles will do the same; that people charging their electric vehicles at peak time, i.e., after work, will crash the energy grid in its current form; suggests that EVs be incorporated into the energy grid as batteries; suggests (and this could be automated by a government-supported app) that EVs should supply household energy during times of peak demand and recharged only in off-peak; notes that, because renewable energy sources are intermittent (the sun stops shining, the wind stops blowing, etc.), energy security can only be guaranteed by renewables if multiple forms of renewable energy are utilised; this means that we need to invest in as many renewable energy sources as possible and that we cannot invest in just one; he notes that some forms of renewable energy, such as hydro and geothermal, are geographically constrained (solar farms in deserts, wind farms in oceans and valleys, etc.); notes that transporting renewable energy is much less cost-effective than transporting fossil fuels; notes that, due to Australia's geographical isolation, this means it will be cheaper for Australia to use its own renewable energy; notes that this means Australia will soon have some of the lowest energy prices in the developed world (which it used to have before fossil fuel reserves were privatised and exported from NSW and QLD so that we have, now, some of the most expensive energy prices in the developed world); notes that this means it will become feasible again to pursue energy-intensive manufacturing of things such as mineral ores, silicon, ammonia, green steel, hydrogen, etc., domestically; notes that Indigenous burning techniques can radically increase biomass and carbon sequestration; that the enormous Australian landmass can sequester vast amounts of carbon, amount which are especially large per capita given our small population, and that the credits for these can be sold on international carbon markets; etc.
In sum, the enormous Australian continent is home to a wide variety of landscapes which can provide multiple types of renewable energy, vast stores of biomass for carbon sequestration, is geographically isolated which incentivises domestic use of renewable energy because it's expensive to transport, and world-class human capital in the sciences relevant to the energy transition. We can have secure and extremely cheap renewable energy, and we can have it more easily than virtually any other country in the world.
Reading this book was one of the most overwhelming intellectual experiences of my life. Smil very much deserves to be called a polymath. His eruditionReading this book was one of the most overwhelming intellectual experiences of my life. Smil very much deserves to be called a polymath. His erudition is extreme: almost half the book is footnotes! The footnotes are so extensive because almost every sentence contains either an historical fact or some informative data-crunching, each instance of which Smil scrupulously documents. This meticulous documentation means very few statements are expressed as mere opinion. Rather, Smil, who repeatedly and proudly calls himself a scientist, qualifies almost every assertion with a piece of primary evidence. This battery of knowledge made me want to bow down before Smil's brilliance, as his champion Bill Gates has done. If nothing else, this book was a riveting testament to an exciting and keen intellect.
Smil has published around 40 books on a wide variety of subjects, but his main interest seems to be the history, generation, management, and sustainability of energy. In this book, the apotheosis (so far) of his wide-ranging interdisciplinary career, Smil focuses on the energy demands of what he considers the 4 pillars of modern civilisation: steel, concrete, plastic, and ammonia. His analysis is sobering. In brief, Smil concludes, as so many others have concluded, that the energy demands of modern civilisation are unsustainable, that they may never lessen, and that for the foreseeable future they will with perfect certainty get much worse. The first part of this conclusion is nothing new; we've known for decades that we are living beyond our means by exhausting as well as squandering the finite resources of our one precious biosphere, but the massive amount of data that Smil corrals to show the intensity of our rapacious appetites transforms this empty platitude about the end of nature into a radically informed understanding of the true depths of our predicament.
One need only look at the consumption patterns of China to imagine a future where India and Africa are also well-to-do. The pursuit of a better life by hundreds of millions of middle-class Chinese has transformed China into the world's leading exporter, consumer, and producer of almost everything—and at unprecedented scale. To whit: 'in just two years—2018 and 2019—China produced nearly as much cement (about 4.4 billion tons) as did the United States during the entire 20th century (4.56 billion tons).' This quote so perfectly sums up the unfathomable scale of China's largesse that I don't feel the need to cite another. Yet Smil cites dozens more. It's enough to make you reach for your pill box. As he asks defiantly in the book's closing chapter, who will deny the billions of the world's poor the opportunity to clothe themselves, feed their children, and live the privileged lives that we in the West live now?
Smil is very pessimistic about the renewable energy revolution. One disheartening comparison revealed that the worldwide adoption of SUVs has wiped out, and will continue to wipe out for some time to come, the energy savings of electric vehicles. Renewable energy is increasing as a percentage of total energy usage, but absolute fossil-fuel energy consumption has increased dramatically, rendering the relative increase in renewables generation propitious but currently mostly useless in the quest to offset fossil fuel emissions. I've misplaced the exact statistic, but as a case in point, despite decades of investment by Germany in its nationwide transition to renewables, energy demands have increased and the percentage of energy derived from fossil fuels have increased by a few percent. This seems to be the dilemma worldwide. Despite record investment in and adoption of renewable energy generation, and despite a slow but steady increase in the share of total energy generated by renewable sources, nonetheless energy demands have only risen and thus more fossil fuels than ever are being extracted and consumed. Smil concludes from that this data that the transition to renewables, if it is ever successful, will probably not occur before the end of this century, by which time enormous long-term damage to the climate will already have been irreparably wrought.
Smil also repeatedly emphasises the importance of the discontinuous shocks of world history on energy markets. Who could have predicted the scale of Japan's post-war reconstruction; the OPEC price hikes; the fall of the USSR; the unprecedented rise of China; and the global backlash against nuclear energy in the wake of the Fukushima disaster? In our present day, who could have foreseen a Russian dictator holding the energy supply of the entire European continent to ransom and causing an energy crisis unlike anything ever seen outside of war? In my homeland of Australia, who could have foreseen a conservative government holding the one country more perfectly positioned to benefit from the transition to renewables than any other to ransom due to to nothing more than petty party politics? The key takeaway from Smil's emphasis on the contingency of human affairs is a need for much more rigorous and proactive research into making civilisation antifragile to discontinuous shocks.
There is so much more to be said about this book and I'm absolutely certain that I'll read it again. I'm also absolutely certain that I'll be reading many more of his books. Smil is hugely instructive. He might be more pessimistic than I'd like, but there's no doubt that his gloomy interpretations are founded on piles and piles of high-quality data. I consider Smil essential to understanding the existential role of energy in modern civilisation. I took from this book 2 things: a completely new interest in energy economics as perhaps the prime mover of all civilisation, and a radically deepened conviction about the need to accelerate as quickly as possible the transition to renewable energy, not because climate change is an existential threat, even though it very well might be, but because the transition will be extremely difficult and, it seems at present, disastrously inadequate and slow....more
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