Roberta X’s recent post stirred up a few brain cells and made me put my Economics hat on.
Meanwhile, Tam tells us the stock market’s tanking. Cheerleaders keep claimin’ the States have now got an “information economy” as opposed to making, oh, cars, water heaters and kitchen tables, or growin’ tasty comestibles. Well, fine, as long as all the plates we like to call Global Civilization are spinnin’ and balanced atop the poles, that does generate a lotta bucks but you know what’s the real problem with it? When the plates fall, “information” is something you can’t eat, drink or sleep in, on, under or with. You can’t smoke it and it won’t dance with you. It’s…nothing. When the barbarians are at the gate, you cannot scare ’em off with software or algebra or ray-tracing
That’s a valid point. While we’re bootstrapping ourselves past the singularity, we’re still susceptible to disasters that could ruin everything. Comparative advantage is what drives the modern global economy, but it only works as long as the transport mechanisms are working. Right now oil is what fuels the transportation engine. In the long run we can engineer around the lack of oil. (Nuclear powered container ships would be cool.) But in the short term, with refineries operating at 100% and oil production maxed out, a shock could knock all of Roberta’s plates off their sticks.
A few months ago, on a flight back to DFW, I had an interesting conversation with an engineer who works for Saudi Aramco. He told me the Saudis were working very hard to bring additional capacity on line, both in oil production and additional refineries. The Saudis are desperate to get the price of oil lower because at $100 plus a barrel, alternative technologies are now price competitive with oil. Witness the increased interest in electrical cars and ethanol in the US over the last couple of years.
I think it’s unlikely that oil production will be able to increase enough to give us $10 a barrel oil again so we can expect to see continued work on alternatives to oil. That’s a good thing because it decreases our susceptibility to oil shocks that would cause the plates to fall.
My rational side says the market can adjust to anything given enough time, but my dystopian, child of the 70’s side worries about how those idiots in Washington can screw up anything. As we saw in the Carter years, there’s no recession that can’t be made worse with a little help from the government.