What Happened in 2015 that Changed the World? "Peak Cement" may Signal the Turning Point of Civilization

"Peak Cement" may have taken place in 2015, stopping the exponentially growing curve that would have led us to turn the Earth into a bowling ball, similar to the fictional planet Trantor, Galactic capital in Isaac Asimov's series "Foundation" (image source).

When giving an example of an exponentially growing production curve, I used to cite cement production. Look at the data up to 2013: a beautiful growing curve with a doubling time of -- very roughly -- 10 years. Then, if we assume that the current concrete covered area in the world is about 2%  (an average of the data by Schneider et al., 2009 and the Global Rural-Urban Mapping Project, 2004) then we would get to Trantor -- bowling ball planet -- in some 50 years.

Of course that wasn't possible, but it was still a surprise to discover how abrupt the change has been: here are the most recent data (the value for 2018 is still an estimate from cemnet.com)

Impressive, right? Steve Rocco, smart as usual, had already noticed this trend in 2017, but now it is clearer. It looks like a peak, it has the shape of a peak, it gives the impression of a peak. Most likely it is a peak -- actually, it could be the start of an irreversible decline in the global cement production.

Now, what caused the decline? If you look at the disaggregated data, it is clear that the slowdown was mainly created by China, but not just by China. Several countries in the world are going down in terms of cement production -- in Italy, the decline started in 2010.

My impression -- that I share with the one proposed by Rocco -- is that this is not a blip in the curve, nor a special case among the various mineral commodities produced nowadays. It is a symptom of a general problem: it may be the clearest manifestation of the concept of "peak civilization" that the 1972 "Limits to Growth" study had placed for some moment during the 1st or 2nd decades of the 21st century.

Peak Cement is not alone another major peak was detected by Antonio Turiel for diesel fuel in 2015.








And, of course, we know that another major commodity went through a global peak in 2014: coal. (data from bp.com)

  

So, are we really facing "peak civilization"? It is hard to say. On a time scale of a few years, many things could change and, in any case, you don't expect peaking to take place at the same time for all mineral commodities, everywhere. A strong indication that the whole world system is peaking would come from the behavior of the global GDP. Rocco had proposed that also the GDP had peaked in 2015, but the data available at present are insufficient to prove that.

In any case, it has been said that we would see the great peak "in the rear mirror"and this may well be what we are seeing. Whatever is happening it will be clearer in the future but, if it is really "the peak", expect the Seneca cliff to open up in front of us in the coming years. And maybe it won't be such a bad thing(*): did we really want to turn the Earth into a bowling ball?





(*) Antonio Turiel lists in a post of his (in Spanish) all the advantages ensuing from a societal collapse: reducing emissions, less pollution, a saner society and more)

Why Economists Can't Understand Complex Systems: Not Even the Nobel Prize, William Nordhaus

The "base case" scenario of "The Limits to Growth" 1972 report to the Club of Rome. The strong non-linearity of the behavior of complex systems -- including the global economy -- is nearly impossible to understand for people trained in economics. William Nordhaus, the recent Nobel prize winner in economics, is no exception to the rule. In this post, I'll report how, at the beginning of his career, Nordhaus criticized "The Limits to Growth", showing in the process that he had understood nothing of the way complex systems work.

After having been awarded the Nobel prize in economics of this year, William Nordhaus has been often presented as some sort of an ecologist (see, e.g. this article on Forbes). Surely, Nordhaus' work on climate has merit and he is one of the leading world economists who recognize the importance of the problem and who propose remedies for it. On the other hand, Nordhaus' approach on climate can be criticized: he tends to see the problem in terms of costs and solvable just by means of modest changes.

Nordhaus' approach to climate change mitigation highlights a general problem with how economists tend to tackle complex systems: their training makes them tend to see changes as smooth and gradual. But real-world systems, normally, do what they damn please, including crashing down in what we call the Seneca Effect.

On this point, let me tell you a little story of how Nordhaus started his career at Yale by an all-out attack against system dynamics, the method used to prepare the 1972 study "The Limits to Growth," showing in the process that he had understood nothing on the way complex systems work.

In 1973, Nordhaus published a paper titled "Measurements without Data." It was directed specifically against Jay Forrester, the founder of system dynamics, accusing him of having developed a model able only to describe a world existing only in his (Forrester's) imagination. If you know something about how scientists think, you may understand that this is not just an accusation: it is an insult. And Nordhaus' paper didn't mince words, even getting into direct and personal accusations against Forrester, for instance that he was favorable to the extinction of the human race, that he lacked humility, that he wasn't testing his assumptions, that he ignored the previous literature, that his model was the equivalent of a "widow cruse", and a few more quips.

Nordhaus's attack was one of the first broadsides against world dynamics, possibly the pebble that originated the avalanche of political criticism that gave a bad name to "The Limits to Growth" in the 1980s and 1990s. To get some idea of the adversarial atmosphere of the time, note that, contrarily to all normal procedures in science, the editor of the journal that published Nordhaus' paper refused to publish Forrester's rebuttal - he was forced to publish it in a much less known journal, where it remained basically unknown while the "Limits-bashing" went on.

But what was the substance of Nordhaus's criticism? Nearly half a century after the publication of his paper, it would make little sense to go into the details of its 29 pages, dense with formulas and reasoning. Basically, the paper demonstrates how Nordhaus just didn't understand Forrester's ideas and methods, claiming over and over that standard economics was a better tool to describe the world system. He couldn't understand -- just as most modern economists can't -- that standard economics doesn't account for the kind of oscillations -- including crashes - which are observed in history and that system dynamics describes very well.

This is an especially serious limitation when dealing with the earth's climate, which is a complex system subjected to abrupt changes and tipping points: here the approach of economists is not only wrong but outright dangerous because it leads decision makers to a false sensation of safety and control which, in reality, we don't have.

The whole story is told in some detail in my book "The Limits to Growth Revisited" (Springer 2011. Below, an excerpt dedicated to Nordhaus's criticism

_________________________________________________

From "The Limits to Growth Revisited"
by Ugo Bardi, 2011


We can now examine the work of William Nordhaus, who emerged out of the debate as one of the major critics of the LTG study and, in general, of system dynamics as a method for modeling economic systems. In 1973, Nordhaus published a paper titled “World dynamics: measurements without data” [Nordhaus 1973] taking as a target Forrester’s book [Forrester 1971]. However, it is clear that Nordhaus’s attack broadly included also the LTG work.

Nordhaus's paper spans 27 pages and contains much material worth discussing, but it would be out of scope to go into all the details here. Forrester himself used 21 full pages in his response that was published in “Policy Sciences” [Forrester et al 1974]. For what we are concerned here, we may summarize Nordhaus's criticism as pertaining to basically three categories: 1) accusations ad personam, 2) unsubstantiated statements of disbelief and 3) quantifiable criticism.

As for the first category, we can take as an example the accusation of “lack of humility,” made against Forrester. The gist of this accusation is that carrying world simulations all the way to the end of the 21st century is much too ambitious to make sense. This is a legitimate opinion, but not something that can be evaluated on the basis of objective criteria. On this point, however, it is worth noting that Nordhaus himself, later on, committed the same intellectual fault – according to his own definition - with his DICE (Dynamic Integrated Climate Economy) model [Nordhaus 1992, (b)].

The second category of criticism from Nordhaus, “statements of disbelief,” collects alleged shortcomings of world modeling which, however, are not substantiated by actual proof. One such statement, taken as an example, is the following: (p. 1166)

“..we discover dramatic returns to scale of the economy: if we double both the number of blast furnaces and the number of ore fields the output of pig iron quadruples”

But nowhere in his paper does Nordhaus demonstrate that Forrester's model produces such obviously unrealistic results. In fact, Nordhaus is simply looking at one of the several equations of the model without realizing that the output of each equation will be modified by the interaction with all the other equations and that will insure correct returns to scale. This is the essence of systems thinking: that parts interact.

Let’s now consider the accusation of “measurements without data” which is the most important part of the paper and gives it its title. This is a quantifiable criticism: if it can be shown that Forrester (or the LTG group) were making models which are totally unable to describe the real world, then it is correct to dismiss their work as useless and irrelevant.

In “World Dynamics” (1971) and in “The Limits to Growth” (1972) one thing that can be immediately noticed is that historical world data do not appear in the calculated scenarios. For a reader accustomed to the common approach of “fitting” the data, that gives a bad impression. Is it possible that the authors of these studies were really so cavalier that they did not care to compare their results to real world's data?

But a more careful examination of the text of both studies shows that the authors do state that their calculations were calibrated on actual historical data. Not showing these data in the figures was a choice made in order to improve clarity. As a choice, it may be criticized, but not ignored.

On this point, note also that, in the “Models of Doom” book [Cole et al 1973] examined before, none of the several authors engaged in the study felt that Forrester’s work (or the LTG book) could be criticized in the terms used by Nordhaus. In the chapter by Cole “The Structure of the World Models” [p. 31 of Cole et al 1973] the data used in the models are examined in detail. Some of the approximations utilized are criticized and in some cases it is said that the data are insufficient for the purposes of the model. But it is never stated that the models were “without data”.

So, it is clear that the world2 (Forrester's) and world3 (LTG) were calibrated to the historical data – at least within some limits. On this point, although both Forrester and the LTG team made an effort of choosing the parameters of the model on the basis of historical data, they also felt that their models had a heuristic rather than explicitly predictive objective. Therefore, there was no need for their scenarios to use a rigorous data fitting procedure of the type used in physical studies. Again, this is an attitude that can be criticized, but that cannot be ignored.

Forrester himself describes this attitude in his book “World Dynamics”” [Forrester 1971]. On page 14 (2nd edition) he says:

There is nothing new in the use of models to represent social systems. Everyone uses models all the time. Every person in his private life and in his community life uses models for decision making. The mental image of the world around one, carried in each individual’s head, is a model. One does not have a family, a business, a city, a government, or a country in his head. He has only selected concepts and relationships that he uses to represent the real system. <..> While none of the computer models of social systems existing today can be considered as more than preliminary, many are now beginning to show the behavioral characteristics of actual systems.

System scientists have a structured approach on this point, as described, for instance, by Sterman [Sterman 2002, p. 523].

… it is important to use proper statistical methods to estimate parameters and assess the ability of the model to replicate historical data when numerical data are available <..> Rigorous defining constructs, attempting to measure them, and using the most appropriate methods to estimate their magnitudes are important antidotes to causal empiricism, muddled formulations and the erroneous conclusions we often draw from our mental models. Ignoring numerical data or failing to use statistical tools when appropriate is sloppy and lazy”

Of course, the very fact that Sterman feels that it is necessary to criticize those modelers who “fail to use statistical tools” indicates that the problem exists. Modeling socio-economic systems using system dynamics tools is not immune to the biases that are easy to see in the ordinary political debate.

So, taking into account all this, how should we understand Nordhaus's criticism? If it is intended as meaning that system dynamics models provide only approximations of the historical behavior of the world, then it is a weak criticism that hardly justifies the statement “measurements without data.” This point must have been clear to Nordhaus himself, who tried to substantiate his criticism by the following statement, referred to Forrester's world2 model (emphasis in the original) :

…..contains 43 variables connected to 22 non-linear (and several linear) relationships. Not a single relationship or variable is drawn from actual data or empirical studies. 

Let’s analyze this sentence. First of all, Forrester's model, as all models, contains three elements: the mathematical relationships, or equations, the variables (populations, resources, etc.) and the constants which appear in the equations and which determine the quantitative behavior of the model. Nordhaus speaks here only of two of these elements: variables and relationships, but not of the third; the constants. Clearly, he was aware that Forrester was using constants derived from real world's data. But, then, what does it mean that “Not a single relationship or variable is drawn from actual data or empirical studies”?

Evidently, Nordhaus thinks that the equations and the variables of the model should have been determined by fitting the experimental data. This is an approach that often goes under the name of “econometrics.” This term does not describe a specific type of model, but it refers to a series of methods and techniques used to fit a set of data, typically a time series, to a model [Franses 2002]. Econometrics can be used to test a model but, in some cases, it is the “best fit” of several models that determines which one is to be chosen. This is a legitimate technique, but one that may easily lead the modeler astray if the physical elements of the system are not sufficiently understood.

In any case, the “best fit procedure” tells you little about the physics of the system being studied. Think of Newton's law of universal gravitation. The scientists who worked before Newton on planetary motions, from Ptolemy to Johannes Kepler, had basically used a “data fitting” procedure to describe their observations but never could derive the law of universal gravitation using that approach. Instead, Newton devised a law that he thought plausible. Maybe he got the idea watching an apple falling from a tree, but that hardly qualifies as data fitting. Then, he calculated the motion of the planets according to his law. He found that simulated bodies orbiting around the Sun would describe elliptical orbits, just as it was observed for the planets. At this point, he could vary the “g” constant in his law in such a way that it was possible to use the equation to describe the movement of real planets.

So, if Nordhaus’ criticism to Forrester were to be applied to Newton’s gravitation law, then one should criticize it because it is not “drawn from actual data or empirical studies” One could actually criticize Newton for performing “measurements without data.”

Of course, Forrester’s model is much more approximate and tentative than Newton's law of universal gravitation. Nevertheless, the considerations about the validation of the model remain valid. So, in order to prove his point, “Measurements without data”, Nordhaus needs to do more. He needs to demonstrate that Forrester's model is totally unable to describe reality.

So, Nordhaus sets up in his paper to “evaluate the specific assumption in the subsectors of World Dynamics.” (p. 1160). The examination of the population subsystem is crucial in this analysis. In fig 3 of his article, Nordhaus plots data on the birth rate as a function of the Gross National Product for several countries, together with what he claims to be the results produced by Forrester's model.

Figure 15. Nordhaus model of the population subsector in Forrester's “World Dynamics.” From Nordhaus 1973


From this figure, it would seem that Forrester’s assumptions are completely wrong and this is, indeed, Nordhaus's conclusion. But what is the curve that Nordhaus calls “Forrester’s assumption”? In the article, we read that this curve is “Forrester’s assumed response of population to rising per capita non-food consumption when population density, pollution and per capita food consumption is held constant” (emphasis added).

But this is not Forrester’s assumption. Nordhaus had simply taken one of the equations from Forrester's model and had plotted it keeping constant all parameters except one (the “non-food consumption” that he equates to GNP). But Forrester’s model was never meant to work in this way. [..] In the “world3” model all the equations need to be solved together to make the model work as it is supposed to. Nordhaus’s obvious mistake was noted and described by Forrester himself [Forrester 1974]:

“The case made by Nordhaus against the population sector of World Dynamics rests on the use of real-world data that he attempts to relate to model assumptions. However, Nordhaus incorrectly compares a single dimensional relationship in world dynamics (between net birth rate and material standard of living) with time series data. He fails to account for the presence of other variables influencing the time series. As a result, he erroneously asserts that the model is inconsistent with the data. In fact, the data Nordhaus present support the validity of the World Dynamics model assumptions.”

Subsequently, Forrester runs his complete model and produces the following figure:

Figure 16 – Forrester’s response to Nordhaus


In this figure, we see that the behavior of birth rates as a function of GNP produced by Forrester's model is qualitatively consistent with the historical data. Later on, Myrtveit [2005] re-examined the question and arrived at the same conclusion.

It appears clear from this discussion that Nordhaus, in his criticism of Forrester's book, had missed some basic points of the methods and the aims of world modeling by system dynamics. Unfortunately, however, Nordhaus’s 1973 paper left a strong imprint in the successive debate, owing in part to Nordhaus’ reputation and in part to the fact that Forrester’s response [Forrester 1974] wasn’t so widely known, mainly because it was published in a scarcely known journal (Policy Sciences) which wasn't even dedicated to economics.

On this issue, it is surprising that the editors of the “Economic Journal,” who published Nordhaus’s paper, did not ask Forrester to reply; as it is a common policy, and even courtesy, in cases such as this one. We have no record that Forrester asked to the “Economics Journal” to publish his rebuttal, but that was the obvious first choice for him if he wanted to reply to Nordhaus; as he did. Consequently, it seems probable that the editors of the “Economic Journal” refused to publish Forrester's reply and that for this reason he was forced to publish it in another journal. Another indication that the debate about world modeling was especially harsh and that it did not follow the accepted rules for this kind of exchange.

[..]

The debate about world modeling by system dynamics flared again, briefly, in 1992, when three of the authors of the first LTG book (the two Meadows and Jorgen Randers) published a sequel with the title “Beyond the Limits” [Meadows et al. 1992]. In this second book, the authors updated the calculations of the first LTG study, obtaining similar results. The publication of “Beyond the limits” generated a new response from William Nordhaus; this time with the title of “Lethal Models” [Nordhaus 1992]. This new paper took up again some of the earlier arguments put forward by Nordhaus in his 1973 paper, but with considerable differences. 

Facing the 43 pages of Nordhaus' 1992 paper, we immediately see that it does not contain anymore the ad personam attacks of his first paper on this subject [Nordhaus 1973]. On the contrary, Nordhaus explicitly thanks the authors of LTG for their comments and their assistance. We also see that this paper does not contain anymore the accusation of “measurements without data” that was the main theme of Nordhaus's 1973 paper. All that Nordhaus has to say in this respect is (p. 14):

In Limits I, no attempt was made to estimate the behavioral equations econometrically, although some attempt seems to have been made to calibrate some of the equations, such as the population equation, to available data.

It appears that this is not the only point where Nordhaus is backtracking. On  page 15, for instance, we read that,

“the dynamic behavior of the enormously complicated LTG was not fully understood (or even understandable) by anyone, either authors or critics”

And we may wonder whether with these “critics” Nordhaus intended also himself.

___________________________________________

You can find Nordhaus paper here:

http://static.stevereads.com/papers_to_read/world_dynamics-_measurement_without_data_.pdf

And Jay Forrester's rebuttal here.

https://link.springer.com/article/10.1007/BF00148039

Did the Club of Rome Ever Disavow "The Limits to Growth"? A Story of Ordinary Disinformation

Aurelio Peccei in 1969, when he was appointed the first president of the Club of Rome

The Club of Rome is inextricably linked to the legendary report that it commissioned to a group of MIT researchers in 1972, "The Limits to Growth." Today, nearly 50 years later, we still have to come to terms with a vision that contradicts the core of some of humankind's most cherished beliefs. The report tells us that we cannot keep growing forever and that we have to stop considering everything we see around us as ours by divine right. 

Not surprisingly, the report generated strong feelings and, with them, there came plenty of disinformation and legends. Some cast the Club of Rome in the role of a secret organization with dark and dire purposes, others aimed at the Limits report, claiming that it was "wrong" or, worse, purposefully designed to deceive the public. I wrote an entire book on this subject (The Limits to Growth Revisited): in short, most of these stories are false but some contain grains of truth and all of them tell us something about how we humans don't just deny bad news, we tend to demonize the bearers.

One of these legends states that the leaders of the Club of Rome disavowed their brainchild, The Limits to Growth and, in doing so, they admitted that it had been not only wrong, but actually an attempt to mislead the public. It is an old legend but, as all legends, it is surprisingly persistent and you can still see it mentioned in recent times (for instance, here and here) as if it were the obvious truth. It is not: it is a good example of how disinformation works.

The origins of the legend go back to Julian Simon (1932-1998), flamboyant defender of economic growth and self-styled "doomslayer." Simon was a skilled polemicist who used with remarkable effectiveness all the standard techniques of disinformation. So, in his book, "The Ultimate Resource" (1981 edition, p. 286) Simon writes (highlighting mine)

The most compelling criticism of the Limits to Growth simulation, however, was made by the sponsoring Club of Rome itself. Just four years after the foofaraw created by the book's publication and huge circulation -- an incredible 4 million copies were sold -- the Club of Rome "reversed its position" and "came out for more growth" [..] The explanation of this reversal, as reported in "Time" is a masterpiece of face saving double talk.

"The Club's founder, Italian industrialist "Aurelio Peccei, says that Limits was intended to jolt people from the comfortable idea that present growth trends could continue indefinitely. That done, he says, the Club could then seek ways to close the widening gap between rich and poor nations -- inequities that, if they continue, could all too easily lead to famine, pollution, and war. The Club's startling shift, Peccei says, is thus not so much a turnabout as part of an evolving strategy"

In other words, the Club of Rome sponsored and disseminated untruths in an attempt to scare us. Having scared many people with these lies, the Club can now tell people the real truth. 

So, where does all that come from? I can't find on the Web the original "Time" article that Simon cites, but there are other reports available on the declarations that Aurelio Peccei (founder, and at the time president, of the Club of Rome) released in 1976, during a meeting held in Philadelphia. The journalists who interviewed Peccei were impressed by what they perceived as a reversal of previous Club's policies, to the point that Newsweek titled its report (according to the St. Louis Post) "Has the Club of Rome publicly abjured?" Peccei was said (according to the New York Times) to have stated that, "Naturally, we realize that no-growth is neither possible nor desirable,"

Is that enough to say that the Club of Rome had "reversed its position"? Not at all. There was nothing new in Peccei's statements. Already in 1973, one year after the pubblication of Limits, the Club produced a document about the report signed by the executive committee and titled "The New Threshold."   The document stated that:

An erroneous image of the Club has, therefore, formed as a group advocating zero growth. Again, the possible consequences of unregulated growth of the industrialized societies and, still more, those which would arise if growth were abruptly brought to a halt, has disturbed some of the less developed countries where, we have already said, the report is all too easily seen as a selfish proposal from the developed world which would still further aggravate the difficulties of the great mass of underprivileged on our planet.

And that is not a "face-saving double talk," as Simon claimed. It is a necessary consequence of the views of the Club from its formation. Aurelio Peccei had started the Club on the basis of what he called the "problematique" or the "predicament" of humankind. From his first public speech on this subject, in 1965 (you can find it here), it is clear that he saw the problems facing humankind mainly in terms of a fair distribution of the available resources, avoidance of wars, elimination of poverty, health care for everyone, and the like. (see also this post by Irv Mills). Peccei didn't imagine the future of humankind in terms of a collapse: the concept of "overshoot and collapse" of socioeconomic systems didn't exist at that time, it was developed and diffused only in the 1970s by Jay Forrester.

So, the results of "The Limits to Growth" study, with their scenarios of probable collapse, must have been a shock for Peccei and the other members of the Club of Rome. Still, it is clear from what they wrote afterward that they understood the logic and the consequences of the report they had commissioned - they never "disavowed" it, even though over the years some individual members criticized the study in various ways, but that's anther story.

Over the years, the Club of Rome and the Limits have been seen as the same thing, sometimes confusing who did exactly what. In reality, they are two distinct and different things. The Club of Rome had its roots in the "problematique" devised by Peccei and its members worked at integrating the Limits results within their worldview. It was clear to them that "The Limits to Growth" aggregated all the world's national economies into average parameters. As a consequence, "zero growth" as a global policy would have meant maintaining the economic gap separating the rich and the poor country. And that was not what Peccei and the others had in mind. Hence, Peccei's statement in 1976 "Naturally, we realize that no-growth is neither possible nor desirable," In another report, they said that the Limits "is a beginning and not an end." That is the origin of the other 1976 statement by Peccei "the limits‐to‐growth report had served its purpose of “getting the world's attention.”

And here we are: no lies, no disavowal, no scare tactics. What we have, instead, is a stark reminder of how disinformation works. Note the narrative technique used by Simon: he says that "Having scared many people with these lies, the Club can now tell people the real truth." You need about 3 seconds to deconstruct this statement and note how it makes no sense: if the Club successfully told lies to the public, why should it stop doing that? What could the Club possibly gain by publicly confessing of having lied? But narrative follows special rules and what we have here is a common trope of many modern movies: at some moment, the villains may explicitly confess their crimes (sometimes called badass boast) out of pure arrogance. So, the trick Simon is using here is to cast the Club of Rome into the role of the villains in narrative terms. It is an effective trick in an age in which we can't distinguish reality from narrative anymore: it is the dark art called "creating one's own reality."

Nearly 50 years have passed since the Limits report was published and it is safe to say that most people remember it the way it was described by the propaganda of the 1990s, as a "wrong-headed" study (if they remember it at all). But does that mean that it has been forgotten forever? While it is true that "Google Trends" doesn't show any increased interest in the "Limits" itself, there is growing interest in the concept of slowing down economic growth or avoiding altoghether. And "The Limits to Growth" is showing a remarkable return of interest in the scientific literature. Does that means we will see a return of interest in it also in the mainstream debate? Why not? After all, in the long run, truth always beats disinformation.

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Here is the article on the St. Louis Post about Peccei's declarations, with several errors resulting from OCR, but overall readable

Time magazine wrote recently in an essay on futurology, "Men hunger for predictions as they hunger for bread in a famine." The starving have recently been thrown a few loaves by the self-appointed prophets of the twentieth century. The oracular prophecies out of the computer have been muted since the oil crisis of 1973 broke the back of their optimistic curves of growth. The guild of soothsayers fell out of favor. Now after a long penitent silence they are making a comeback. Herman Kahn, director of the Hudson Institute and an unshakable optimist, has published a new study of the future entitled. "The Next 200 Years." His conclusion is that in the year 2176 the world population will have reached a total of 15 billion and will be living comfortable with a per ants than were predicted for 1975. The Wall Street Journal says the dreams of unlimited energy, cheap nuclear-generated electricity, fivefold increase in farm yields and the final victory over cancer before the end of the century can be forgotten. The "revised future" looks somewhat different. By the year 2000 food will be three times as dear as it is now, hot counting currency inflation. Automatic highways will not be built. At best, automobiles will have a more efficient fuel consumption. The super-jumbo jets with 1000 seats will not be flying by the end of the '70s, but at the earliest, by the '90s. The future was being revised in Philadelphia also. "Has the Club of Rome publicly abjured?" asked Newsweek, in view of its new slogan. The club, a loose association of about 100 industrialists and academics from various countries, has been regarded so far as a stern warning against too optimistic forecasts. If the present growth trend continues, it said in 1972, the limits of growth would be reached sometime within the next 100 years. Aurelio Peccei, founder of the Club of Rome, denied in Philadelphia that its members had put themselves forward as capita income of about $20,000. Kahn's collaborator, Edmund Still-man, in a study commissioned by a French private bank, prophesies a particularly rosy future for the French. Very soon after 1980 France will overtake West Germany in production of goods and services to become Number One in Europe. The "Club of Rome," which in 1972 postulated the "limits of growth" and attracted powerful criticism, has come up with a slightly less pessimistic view of the world. Its new motto is "organic growth" and the optimistic slogan for its latest congress in Philadelphia was "New Horizons for Humanity." In a 10-part series the Wall Street Journal discusses which of the prophecies made 10 years ago have come true and which of them have to be corrected. The paper's researchers have found that the biggest mistake made by the futurologists has been their projections of population growth. On the one hand a birth explosion and a declining death rate in the developing countries have combined to increase the total world population much faster than anticipated. But in the United States, for instance, the trend is reversed. Already now there are 12,000,000 fewer inhabit advocates of zero population growth. Their study "Limits of Growth" which has sold in the meantime, 2,000,-000 copies was only intended, he says as a shock and a way of directing public attention to the problems. "Naturally we realize that no-growth is neither possible nor desirable," he said. According to the modified formula, developed by the West German, Prof. Eduard Pestel, and his American colleague, Mihailo Mesarovic, what is needed now is "directed growth." "The important thing is in which way growth takes place, with what technology and in what branches of the economy," said Professor Ervin Laszlo of the United Nations Institute for Training and Research. The outlines of a new world economic order are being drawn up in a new study commissioned by the Club of Rome from the Dutch economist and Nobel prizewinner Jan Tinbergen. Working with 20 other experts, he expects to have it ready by autumn of this year. The rough outline was already plain in Philadelphia larger currency reserves for the speedier financing of development projects in the Third World, stricter control of the multinational concerns and a world-wide co-ordinator of energy 'Men hunger for predictions as they hunger for bread in a famine . . .

The View From Les Houches: What Are Models For?

Sandra Bouneau, researcher and lecturer at the university of Paris-Sud, shows her model at the School of Physics in Les Houches, France, in March 2018. As you can see from the image, her model is complex and detailed. It is one of the several models presented at the school which attempt to describe the trajectory of the transition.

Overall, all the models based on physics (including Bouneau's one, as far as I understood it) arrived to similar conclusions, confirming the calculations that myself, Denes Csala, and Sgouris Sgouridis published in 2016. In practice, the transition is possible, but it won't happen all by itself. The economic system needs to be pushed in the right direction, in such a way that it will be able to provide the necessary investments.

The problem is that the system is not being pushed hard enough. Some parts of it, including the US governments, are pushing in the wrong direction, dreaming of an impossible "energy dominance" (and even if it were possible, what good would it be for America?).

At the bottom of the whole problem, it is the fact that policy-makers don't believe in models, although they may declare the opposite. There have been many models developed during the past century or so which would have created a different world if the powers that be had acted on the advice provided - first and foremost "The Limits to Growth" of 1972. But that model was not only disbelieved but positively demonized.

In the end, All models are made to search for trajectories which avoid collapse, so ignoring models ensures collapse. And that's what we are doing!

The Seneca Paradox: if mineral depletion is a problem, how is it that we don't see its effects?

With oil prices remaining low and with production apparently more than sufficient to satisfy the demand, most people have jumped to the conclusion that all mineral resources are abundant and not a concern for the foreseeable future. Yet, the problem remains: mineral resources are not infinite. The solution to the conondrum may be in the "Seneca Effect." It is an insidious kind of effect that hides future risks behind an apparently safe and robust growth. 

The story of the Club of Rome starts with the issue of natural resources. In the 1960s, it had become clear to the Club's founder, Aurelio Peccei, that the world's resources were finite and to ask the question of how that was to affect humankind. It was the origin of the first and the best-known report to the Club of Rome, "The Limits to Growth," published in 1972.


The 1972 report already provided answers to the question of depletion. It turned out that resource scarcity would limit the growth of the world's economy and, eventually, lead it to decline. This conclusion was often misunderstood as meaning that humankind would soon "run out" of oil, gas, or some other resource; but that was never stated in the report and it never was the point.


In 2014, the Club of Rome produced another report titled "Extracted" in English and "Der Geplunderte Planete" in German that reiterated the earlier conclusions. The author of the report, Ugo Bardi, a researcher at the University of Florence, Italy, concluded that the problem of mineral depletion was real and that it was progressively getting worse.

Yet, these conclusions are far from being generally accepted. Depletion, it seems, is still considered a non-problem, especially in the extractive industry. "If depletion is really a problem," industry representatives often say, "how come that we are still producing mineral commodities at the highest rates ever seen in history? Besides, we observe that our production costs are not significantly increased when we use lower grade ores."

So, is mineral depletion an existential threat to human civilization? Or is it just a marginal problem that can be fixed by some technological improvements? This is truly a fundamental question for the future of humankind. An answer is provided by the latest report to the Club of Rome that was published in 2017, "The Seneca Effect."

Taking inspiration from something that the ancient Roman philosopher Seneca said, the author of the study, Ugo Bardi, examines the trajectory of an economic system subjected to the dual strain of mineral depletion and pollution. The result is the "Seneca Curve", a graphical depiction of Seneca's statement that "Increases are of sluggish growth, but the way to ruin is rapid." It is something well known in everyday life, but the study could confirm it using mathematical models. Here is the curve as calculated by simulations.

The "Seneca Effect" or the "Seneca Paradox" explains why mineral depletion is a problem but, at present, we are not feeling its effects. We haven't yet reached the summit of the curve and we are not seeing the cliff awaiting us. So far, the extractive industry has been able to mask the effects of depletion by means of economies of scale. That has been possible as long as production keeps increasing, which has been the case up to now for most mineral commodities. The problem is that this strategy cannot last forever: mineral resources are not infinite. 

A good example of this effect can be found in the oil industry. At present, all fears of "running out" of oil seem to have been dispelled by the low market prices and by the still increasing production. Both factors give the impression of an abundance of cheap oil that could last for a long time - if not forever. But this is exactly the result of the shape of the Seneca Curve. As long as we don't reach the start of the cliff, we don't see it. 

But ruin, as Seneca said, may be rapid. Consider the current climate situation and the urgent need of reducing carbon emissions. Consider the rapid switch to electric vehicles, often seen as a way to fighting climate change. Consider that in the US more than 60% of the market for crude oil product is for private vehicles. Then, you see that if people were to start replacing their old cars and trucks with electric ones (something that they should do by all means for the sake of our survival), the oil industry would lose a big bite of its market. 

For the oil industry, losing a significant fraction of their market is not just a question of downsizing;  it is their death knell. It is here that the "Seneca Effect" starts playing its role. The economies of scale which had allowed the industry to overcome the effects of depletion become diseconomies of scale, increasing costs and reducing profits. The industry becomes unable to attract new investments; it starts shrinking and eventually disappears: it is what Seneca said, "ruin is rapid". 

The decline of the oil industry has already been ongoing in several regions of the world and the loss of efficiency due to scaling down is well documented (see, e.g. Hall et al. 2014). In recent times, the US industry has been able to start a new cycle of oil extraction with "Shale oil" (more properly, "tight oil") but that simply means to postpone the unavoidable and the Seneca Cliff of shale oil may be just around the corner. 

Humankind is facing a difficult situation right now, with the twin threats of depletion and pollution working together to cause a decline that could be very rapid, as it is has been often the case for past civilization. The "Seneca Effect" makes the situation all the more insidious because at present we have only a few hints of the future decline but when we will see the cliff in front of us it may be too late to avoid it in full. 

Yet, today we have powerful tools in the form of the science of complex systems. If we are willing to use them, these tools allow us to understand the future and to be prepared for it. If we understand the threats we face, they may be seen as opportunities. So, the impending ruin of the oil industry is not a threat but an opportunity to avoid, or at least mitigate, a future climate disaster. 

Once we understand this point, the strategy becomes clear: do not fight the unavoidable; do not try to keep the oil industry alive at all costs; that's exactly what makes the Seneca Cliff steeper. Instead, favor the unavoidable change. it means helping the oil industry to disappear by favoring its replacement by something less polluting and more sustainable. Similar strategies are possible for many polluting industries still common today.

As always, the future is nothing but the choices we make and there is still time to make good choices. The Seneca cliff of the human civilization will happen only if we choose to make it happen. 

Is it a Bad Idea to Have Fewer Children? Jorgen Randers at the Summer Academy of the Club of Rome in Florence

Jorgen Randers speaks at the 1st Summer Academy of the Club of Rome, in Florence, Sep 2017

The Summer Academy of the Club of Rome saw an interesting debate when a young participant asked to take the floor and speak about what he and his group were seeing as a problem: the current tendency of having fewer children. He showed data about the resulting unbalanced age distribution with too many old people who turn out to be a burden for society. And he said that having such an unbalanced distribution could be a disaster in the case of an economic downturn or even a collapse.

Jorgen Randers produced a strong response to this presentation. I am reporting from memory, but I think I am being faithful to the gist of what Randers said, which was something like this:

"Young man, you gave a very bad presentation. I think it was truly horrible and you should stop giving it. You see, the problem you are presenting is a completely fake problem. It comes from the fact that, in the past, an agreement had developed in most Western societies that the families would provide for children, whereas the state would support the elderly. Now, of course, with more old people, the state must pay more. But we forget that having fewer children the burden for families - and for society - is much reduced. So, there is a simple solution to what you see as a problem: raise the retirement age. That's what my country, Norway, did. They leave citizens to choose when to retire, but they give favorable conditions to those who retire later. And most citizens decide to retire at a late age. Look at me: I am 72 years old, I am still working and I think I'll keep working until I turn 85; then maybe I'll retire. But I keep working and I am not living on a pension, so I am not a burden for society. And I am still caring for my 99-year old mother, who is not a burden for the younger generations. So, the problem you pose is mostly of our own creation and it vanishes when compared with the much larger and difficult problem of overpopulation. We need to take into account that there exist limits to growth and that if we want to solve the problem of overpopulation, we need to have fewer children."

This story is interesting for various reasons. Perhaps Randers was too harsh on the young activist, who wasn't saying that we should keep having many children. But it is remarkable how emotionally charged the issue of population is. For some people, any effort aimed at reducing the burden of the human population on the ecosystem amounts to little less than a sacrilege. An insult to the human right to dominate everything which is not human.

On the reasons for this attitude, I can say little, but it seems to be rather common. I was surprised to see it appearing in a meeting dedicated to sustainability and, surely, it has to be even more common outside the world of people concerned with this subject. As a further example of this humanocentric attitude, I think it is appropriate to reproduce here a post that I published last year on "Cassandra's Legacy"

(note: The presentation criticized by Randers is available upon request, just ask me - ugo.bardi(thingette)unifi.it)


Saturday, June 18, 2016

If Switzerland had a Sahara Desert, it would be a small Africa. Does the world really have an "overpopulation problem"?

Dealing with such issues as oil depletion and climate change is already politically and emotionally charged but, at least, these are physical problems that we can examine using the scientific method. But overpopulation? It is the perfect recipe for an instant politicized quarrel.

The movie "Population Boom" by Werner Boote is a good example of how emotional the population question can become. It starts almost immediately with a potshot at the Reverend Malthus, accused to "have predicted a catastrophe for 1860" (something that poor Malthus never said.). Then, it goes on for one hour and a half in the attempt to demonstrate that there is no such a thing as an "overpopulation problem." Rather, the film's thesis is that the world is seeing a conspiracy by the elites of the rich countries who are trying to stop the people in poor countries from having as many children as they want so that they could become rich, too, and challenge the world dominance of the present elites.

If we accept the idea that all opinions are legitimate, then also this one should be - even though probably a bit too extreme for most of us. The problem is that the way the film tries to demonstrate its thesis oscillates between the boring and the silly; without ever providing a serious argument. Mainly, we see the filmmaker, Mr. Werner Boote, walking around while carrying his umbrella in places where it never seems to rain. In his ramblings, Mr. Boote interviews people who, frankly, don't seem to have a clue about overpopulation, except for seeing it as an invention of the evil Western Elites (and the same is true for global warming, explicitly defined as such in one of the interviews).

Most of the arguments made in these interviews are so silly that they are not even worth deconstructing. Just as an example, in a scene we see Mr. Boote (for once without his umbrella) discussing with a man who tells him that Africa is not overpopulated because it has only 40 inhabitants per square km, compared with the 170 of Europe. Then, the man takes Boote somewhere on top of a hill and he shows him an empty landscape, saying, "do you see? Africa is not overpopulated!"

Now, there are several problems here. First, the numbers are wrong, at least in part. The datum for the population density in Africa seems to be correct, but the population density in Europe is 105 inhabitants per square km, not 170. Maybe Mr. Boote's informant meant Western Europe, but if you take that as meaning the European Union, then the population density still is only 116. Then, one would be tempted to remind to Mr. Boote's informant that Europe doesn't have a Sahara desert; to say nothing about the Kalahari desert and other areas unsuitable for human occupation in Africa. So, he conveniently forgets that an African country such as Nigeria has about the same density of population as Switzerland (nearly 200 people per square km), to say nothing about Rwanda, that has 460 people per square km (more than twice than Switzerland). Finally, one could show to Mr. Boote and to his informant the Yosemite Valley or the Death Valley and then tell them: "you see? Almost no one lives in California!

I could go on, but I think this is enough for this movie. Let me just add that if you think that the poor do not pollute the ecosystem, you would do well reading this post by Jacopo Simonetta.

Testing the MEDEAS world model during the Summer School of the Club of Rome in Florence

The Summer School of the Club of Rome in Florence. Above: one of discussion groups engaged in proposing parameters to be run with the MEDEAS world model. In the back, standing, Ilaria Perissi (researcher at the University of Florence) and Jordi Sole (Coordinator of the MEDEAS project). 

A Comment by Gianni Comoretto


42 years ago, when I was 16, I read “The Limits of growth” and it changed my life. I was already worried about things like pollution and overpopulation, but I did not suspect the entity of these problems. I was fascinated by these models, by the possibility to at least have hints of the future we were approaching. I learned programming and I was even able to put the simplest models in a programmable hand-held calculator (a Texas SR52), and some years later on an AppleII. I began to tackle more seriously the problems of an exponential growth in a finite world, sustainable development, renewable energies, energy efficiency…

Therefore when I heard that the Club of Rome was organizing a summer academy in my city, I subscribed enthusiastically. Even after 42 years of activism and study, I have plenty of things to learn. And I met about a hundred of wonderful persons down all over the world. Some I know from a long time, some were for me just names on the front pages of books and papers I read. Most of them much younger than me. Saturday we were presented a new, much improved model of the world resources, society and economy, developed as part of a European framework program. It is much more detailed than the original one, but the basic results are quite similar, and equally gloomy than those of 45 years ago: in the “business as usual” scenario the global economy will still be able to grow for a few years, slowing down until, in 15-20 years, it will begin to collapse very quickly, leaving little behind. 

But this is a school, and the best way to learn is trying. So we divided into 3 groups, and each one had to decide which measures were necessary to guarantee at least a minimum of energy and services for everybody. We settle to 30-40 gigajoule per person per year (about 1 kW of average power use). Of the three groups mine was the only one to be able to guarantee this level at least up the end of the century, basically by adopting: an immediate “controlled recession” of 1% per year a decrease in the global population at a rate of 0.5% per year, that we considered feasible just preventing unwanted pregnancy and increasing women education an increase of 22.5% per year of the installed renewable energy capabilities measures to control the financial market, to reduce inequalities massive reforestation 

Other groups were less aggressive, both in the PIL decrease and in the necessity of installing renewable energies. As a result, their economy stayed significantly higher than ours for a couple of decades, but collapsed only a bit later than in the “business as usual” model. Our controlled recession strategy gave us more time to implement renewables, that in the end saved the day to our slightly reduced population. This lesson taught us lots of things. First, even among people dedicated to these problems, it is not easy to understand what is really necessary. Renewables are not a luxury, and we have not much time to implement them. Last but not least, we will never win the next elections with our program.

Below, Sara Falsini, researcher at the University of Florence (white shirt, standing), engaged with another group of testers of the MEDEAS model.

Jay Forrester: the man who saw the future

Jay Wright Forrester (1918-2016) may have been the source of inspiration for Hari Seldon, a fictional character in Isaac Asimov's Foundation series. In Asimov's novels, Seldon develops "pyschohistoric equations" that allow him to predict the impending collapse of the Galactic Empire. In the real world, Forrester developed "system dynamics equations" that allowed him to predict the impending collapse of the modern human civilization. The predictions were ignored by the Imperial powers of both the fictional and the real universe.

Jay Forrester, one of the great minds of the 20th century, died at 98, a few days ago. His career was long and fruitful, and we can say that his work changed the intellectual story of humankind in various ways, in particular for the role he had in the birth of the Club of Rome's report "The Limits to Growth"

In 1969, Forrester was a faculty member of the MIT when he met Aurelio Peccei in Italy. At that time, Peccei had already founded the Club of Rome, whose members were worried about the limits to the natural resources that the Earth could provide. They were trying to understand what the consequences would have been for humankind. From what Peccei wrote, it seems clear that he was seeing the situation mostly in Malthusian terms; thinking that the human population would have been growing until reaching the resource limits, and then stay there, kept in check by famines and epidemics. The main concern of Peccei and of the Club of Rome was to avoid human suffering by ensuring a fair distribution of what was available.

The encounter with Forrester changed this vision in ways that, perhaps, neither Peccei nor any of the Club members would have imagined. In the 1960s, Forrester's models were already well advanced. Based on a completely new method of calculation that Forrester had dubbed "system dynamics," the models were able to take into account how the many variables of a complex system interacted with each other and changed in time.

The result was the study that the Club of Rome commissioned to Forrester and to his research group: simulate the future of humankind over a time range of more than a century, all the way to 2100. Forrester himself prepared a complete study with the title "World Dynamics" that was published in 1971. A group of Forrester's students and coworkers prepared a more extensive study titled "The Limits to Growth" that became a true intellectual revolution in 1972.

Forrester's system dynamics provided results that proved that Malthus had been an optimist. Far from reaching the limits to growth and staying there, as Malthus had imagined, the human civilization was to overshoot the limits and keep growing, only to crash down, badly, afterward. The problem was not just that of a fair distribution of the available resources, but to avoid the collapse of the whole human civilization. The calculations showed that it was possible, but that it required stopping economic growth. That was something that nobody, then as now, couldn't even imagine to do.

You know how things went: I told the story in my book "The Limits to Growth Revisited". Forrester's work was mostly ignored, but the better known "The Limits to Growth" study was not only rejected; it was actively demonized. The legend of the "wrong predictions" of the study was created and it spread so much that it is still widely believed. Yet, the intellectual revolution that was the creation of System Dynamics never died out completely and, today, world modeling is returning. We need to study the future in these times of great uncertainty. It is difficult, unrewarding, and often leading us astray. But we must keep trying.

Perhaps of Forrester's unknown achievement was of having inspired Isaac Asimov for the character of "Hari Seldon" in the famous "Foundation" series that Asimov wrote starting in the 1950s. We have no proof that Asimov ever met Forrester or knew his work, but they both lived in Boston at the same time, so it is at least possible. Then, Hari Seldon and Jay Forrester share similar traits: both are scientists who develop powerful methods for prediction the future. Seldon develops a field known as "Psychohistory" while Forrester developed "System Dynamics." In both cases, the equations predict that civilization will undergo a collapse. In both cases, the scientists are not believed by the Imperial authorities of their times, fictional or real.

In Asimov's story, Seldon goes on to create "Foundation" a planet where the achievements of civilization are kept alive and will be used to rebuild a new civilization after that the collapse of the old one. The plan succeeds in Asimov's fictional universe. In our case, the real Earth of the 21st century, nobody seems to have been able to create a safe haven for the achievements of civilization that we can use after the collapse. Seeing how things stand, maybe it is the only hope left?


But, maybe, Asimov wasn't directly inspired by Forrester for his Hari Seldon. Maybe he was just inspired by the archetype of the wise man that, in human history, has been played by people such as Merlin, Laozi, Kong Fuzi, Prince Gautama, Socrates, and many others. Perhaps Jay Forrester deserves to be listed among these wise men of old. Perhaps, the wisdom that Forrester brought to us will come handy in the difficult future that awaits us.



Forrester's achievements are many besides those of World Modeling. He developed a completely new magnetic computer memory that became the world standard, he developed a complete programming language (called "dynamo"), he is the originator of several fundamental ideas in system management: the "bullwhip effect," the concept of "Urban Dynamics"; of "Industrial Dynamics" of the "leverage points" in complex systems, and much more. A true genius of our times. 

MEDEAS begins

The European project "MEDEAS" is starting. The acronym has little to do with the mythological figure of Medea but stands for "Modeling the Energy Development under Environmental And Socioeconomic constraints" and it is an ambitious attempt at creating a new model that will define the future of the energy system in Europe, taking into account the physical constraints involved.  This is not a new idea, it goes back to 1972, at the time of the "Limits to Growth" study. What is new is that the concepts developed at that time are re-emerging after a period of neglect and are now sponsored and financed by the European Union. A remarkable vindication of the ideas of the group of pioneers who carried out the early 1972 study and that turned out to be prophetic, beyond perhaps the expectation of even those who had developed the model. 

As one of the partners of the MEDEAS project, I'll see to cover the development of the project in the "Cassandra's Legacy" blog. As a start, let me propose to you a post by Antonio Turiel, also involved in the project, from his blog "The Oil Crash"

The MEDEAS project begins

by Antonio Turiel




Dear readers,

Today and tomorrow (Feb 18 and 19 2016) the institute of sciences of the Seas of the Consejo Superior de Investigaciones Científicas - CSIC hosted the kick-off meeting of the MEDEAS project.

MEDEAS (acronym of Modeling the Energy Development under Environmental And Socioeconomic constraints" is a European project financed in the framework of the "Horizon 2020" program to finance European research. This project is coordinated by my institution, and in practice by my colleague, Jordi Solé.

From the institute of Marine Sciences, we have in this project Antonio García-Olivares, Joaquim Ballabrera, Emilio García and yours truly.

Two more Spanish institutes also participate in this project: CIRCE (with Alicia Valero among others) and the University of Valladolid (with Luis Javier Miguel as head, but there are also well known people, such as Margarita Mediavilla and Carlos de Castro).

The other partners ar the Consorzio Interuniversitario Italiano di Scienza e Tecnología dei Materiali, INSTM (Ugo Bardi), The Centre for Renewable Energy Sources and Saving, The University of Masaryk, The Anglia Ruskin university, the Sdruzhenie Chernomorski Izsledovatelski Energien Tsentar, the International Institute for Applied system analysis (IIASA), the Friends of the Earth (Czech Republic), the Austrian Energy Agency and Blue4You. 

The objective of MEDEAS, as shown by its acronym, is to create the tools necessary to support the planning of policies that would favor the transition of the European Energy system toward a new system, based on renewable energy. On this task, the principal objective of MEDEAS is to produce a socio-economc model, the "MEDEAS model", that will be flexible enough to be modifiable in such a way to be able to study different scenarios and pathways toward the transition. The MEDEAS model will be programmed in a free code, (Python) so that it will be easy to use by different social and economic users. It will be based on the WoLiM model, developed by the System Dynamics Group at the University of Valladolid. The MEDEAS model will be a system dynamics model which will introduce new variables, additional to the ones habitually considered, so that it will be possible to adapt the model to create a more detailed analysis model for what is needed to implement a pathway or another, mostly as a function of specific socio-economic aspects, such as the evolution of the unemployment or of income inequality; parameters not always taken into account by the models.

MEDEAS implies a remarkable effort of coordination between the compilation of the necessary data that will be used to define and verify the sensitivity of the model, and the creation of the model itself (to be also compared with some already existing models) and the verification of the different scenarios. MEDEAS is an ambitious attempt to create a new model that might go much beyond the presently available models, in particular being sufficiently flexible to accept very different scenarios, and that will be able to carry out a detailed analysis both at the European scale, as well as that of single countries

Given my role in the project, and its interest for the questions discussed here, during the coming 4 years, I will be informing the readers about the development of the actions of MEDEAS. MEDEAS needs time in order to propose answers in a world where the questions about the future are multiplying. Stay tuned: we hope in good news from MEDEAS.

ATB

Antonio Turiel

Greece: the bad apple of the bunch?

Image by Vicky Brock


The present debate about the Greek financial situation tends often  to pit Greece against the rest of the Eurozone. As an example, Joergen Oerstrom Moeller writes that:

Since 2010 the Eurozone economy has turned around from contraction to growth - the growth forecast for 2015 is 1.5 percent, work to set up a banking union is well under way, and measures constituting bulwarks have been put in place. The little stroke can fell great oakes was a proverb that ominously sounded in the corridors 4-5 year ago; not any longer.

and

Unless Greece is willing to restructure its economy implementing policy objectives and instruments used by the majority of the EU member countries why should the Eurozone bail it out? What is the virtue of having a member that consistently and continually refuse to bring its economy into a shape similar to the one that the rest of the club is running. Ireland, Portugal, Spain, and Italy have all gone through painful reforms and been rewarded with a much improved economic situation and a promising outlook for the future. What are the arguments for not asking Greece to do the same?

Unfortunately, the data tell a different story. Greece is not alone in having economic problems and all the Southern European countries tend to show similar trends. For instance, in terms of GdP per capita, the Greek decline is sharper than that of the others, but not qualitatively different. (image from Google public data) 





If this were not enough, take a look at the industrial production data (from Bilbo Economic Outlook). Greece is sinking, yes, but so are Italy and Spain, and France is hardly doing better.

There are other data showing similar trends: in short, Greece is not the bad apple of the bunch, but simply the weakest member of a group of countries that could never recover after the 2008 crisis. 


As I wrote in an earlier post about Greece, financial factors may be simply a reflection of a much deeper trouble. And this trouble was already identified long ago in the study titled "The Limits to Growth", published in its first version in 1972. Note how the results of the "Limits" model (below taken from the 2004 version of the study) are similar to the decline observed in the GdP and the industrial production index of the southern European countries.

If the "Limits" model describes the present situation, then the Greek decline is not a direct consequence of problems with the Euro or with wrong policies of the Greek government. Rather, the causes at the root of the decline can be identified as the gradual increase of the costs of production of natural resources - and of energy in particular - coupled with the increasing costs of fighting pollution.

These factors affect the weaker economies first, and there is no doubt that Greece is one. Weaker than others, but not different in its structure. So, the problem cannot be solved by purely financial measures: we need to go to the root of it. We have to free the world's economy from its dependency on fossil fuels and transform it into a "circular" economy, not any more dependent on badly depleted mineral resources. It can be done (it is described, for instance, in this recent report by the Ellen McArthur foundation). But we should have started much earlier;  now it may be too late for Greece to avoid major damage (and, most likely, also for the rest of the world).







h/t Graeme Maxton and Anders Wijkman