Monday, June 22, 2020

The Cinderella Strategy: How to Restart the Italian Economy by Building a Bridge Across the Messina Strait

The former Italian prime minister, Mr. Silvio Berlusconi, evoking the Messina Strait by a magic spell in an image taken probably around  2002. As a modern version of Moses, Mr. Berlusconi didn't manage to do much more than creating a scale model. But the idea of building this monster (it would be the longest suspension bridge ever built), has been recurrent in Italy for decades. It is a dream that refuses to come true, no matter how much politicians get their inspiration from Cinderella.

The story of the Covid-19 epidemic never ceases to surprise me for one reason or another. Wrong models, superstar scientists, terrorized citizens, non-existing vaccines sold at high prices, the police fining people for taking a walk, snake oil in great abundance, and more. But this really hit me badly: would you believe what the Italian government is considering, now? Yes, in order to restart the economy after it was hit so badly by the lockdown, they are thinking of building a bridge over the Messina strait to connect Sicily to Italy. (really!). The longest suspension bridge ever built, assuming that it were possible to build it -- not obvious at all. It is a Cinderella-style dream that, likely, will never come true.

Maybe it is true what some people said, that the Covid-19 can sometimes affect people's brains, but the real explanation is another one: the unbreakable grip of obsolete ideas on the way people think. In times of crisis, leaders simply tend to go back to the solutions to old problems, without realizing that times have changed. So, we need to return to growth, we need to stimulate the economy, we need to build large infrastructures, we need (this too is being said!) to get rid of these stupid regulations about pollution that prevent the economy from restarting to grow.

That explains the return to the recurring idea to build this bridge that has been around for decades. Probably, the leaders are sincere in their feeling that if it were possible to start building this monster, then it would be a good thing for the Italian economy (and, of course, some of their friends would make a lot of money as a side effect). The concept that the economy needs energy and resources to keep going (to say nothing about expanding) is wholly alien to the people in charge.

So, will the bridge be built? Of course not, (see below for an explanation). But we'll hear about it for some more time and some money may be wasted on preliminary studies. What's truly fascinating is how economic thought has not budged of an inch after that Robert Solow proposed his economic model that saw growth as generated by an entity called "total factor productivity." Whatever that was, it couldn't be defined or measured, but it was supposed to grow exponentially forever and push the economy to grow in the same way. Natural resources didn't appear among the parameters of the model.

And so we are condemned to follow our dreams in a Cinderella world, always thinking that, if you keep on believing, the dream that you wish will come true.

Why the Messina Strait bridge will never be built. A note on energy based economics

Image from Tim Morgan, "Surplus Energy Economics"

The idea that the economy depends on the supply of energy should be obvious to anyone who ever owned a car. Take away the gas, and the car doesn't move, no matter how much you tinker with the carburetor. And it is not just cars that work in this way. Everything that moves, moves because it uses energy to move. If you want to say that in a fancy manner, you can say that living creatures, engines, hurricanes, rivers, and more move because they dissipate energy potentials. No energy potentials no life and no movement. 

It is hard to think that the human economy doesn't depend on the same factors. Indeed, one of the founders of economics, William Stanley Jevons, had already understood the question in his work on coal in the mid 19th century. But over more than a century of work, economics has drifted away from concepts related to physical factors. For some reason, economics, as it is today, remains linked to the idea that things such as the energy supply are not fundamental in affecting the performance of the system -- if they are considered at all.

The idea that things are different -- a lot different -- remains marginal and heretic, but it persists and over time it may gain some space -- although it takes an awful amount of time and effort. To learn the basics of the idea you can check the blog by Tim Morgan, "Surplus Energy Economics". Right now, he has a post that reviews the whole concept. It is an interesting read, highly recommended. 

One remark about Morgan's description: When he discusses the entity called "ECoE" (energy cost of energy invested) he doesn't seem to notice that it can be set as equal to 1/EROEI, the energy return on energy invested. Of course, you have to measure the cost in some units, and energy is the best one in this case. 
The behavior of ECoE is described by Morgan in qualitative terms as a parabolic curve -- going through a minimum (maximum prosperity) and then shooting up. If we equate ECoE to 1/EROI, it is not exactly so. This rate tends to taper off with time, as we found in a study we are preparing right now with my colleague Ilaria Perissi. Here is how our model describes the behavior of ECoE for a non-renewable energy source, such as oil.

You see that it tapers off, rather than growing quadratically as in Morgan's qualitative model. But that doesn't mean Morgan's model is wrong, it is approximately correct and, in any case, note how the cost of energy increases of a factor of a hundred over the depletion cycle (in the assumptions of this specific run). It means that some energy is still produced at this high cost only because the amount produced is reduced to a trifle. Note also that Morgan's curve takes into account technological progress and jumping from one source to another; our model doesn't. For an in-depth analysis, wait for the paper we have in preparation 

In any case, no matter what measurement you want to use, EROI or ECoE, the result is the same: there is no hope to keep going forever with a non-renewable energy source. Maybe you don't need models to understand this point, but take this one as a confirmation of what common sense tells us.

h/t Rafal


Ugo Bardi is a member of the Club of Rome, faculty member of the University of Florence, and the author of "Extracted" (Chelsea Green 2014), "The Seneca Effect" (Springer 2017), and Before the Collapse (Springer 2019)