Written by William F. Pickard   

“… Doubling America’s Rate of Economic Growth … Is a Complete Fantasy …”



In a recent Opinion essay in the New York Times, Nobel Laureate economist Paul Krugman opined that “… doubling America’s rate of economic growth, as Jeb Bush has promised he would, is a complete fantasy”. As propounded by Professor Krugman, this was an assertion presented without an associated rigorous proof.

Having no proof to study but being aware that the World Bank is a gold mine of interesting statistics, I tapped into them and found that America’s constant dollar per capita Gross Domestic Product has grown by an average of 3.42% a year over the period 1994-2014. Doubling that would push the real growth rate to around seven percent. That may or may not be realistic to hope for, but within the 98% there are lots of folks who might at least favor giving it a try.

So are those folks who might buy into Jeb Bush’s vision hopeless dreamers? I don’t think so! Sure, we all know that economic growth can not go on forever. But we also know that three centuries ago, at the start of the industrial revolution, things began to change in ways previously undreamt of: the world economy took off, going where it had never been before.

I might be willing to accept (provisionally, of course) a prediction that our economy “as presently configured” will not be able to grow at a seven percent rate. But why should I assume that an altered economy will not? For example, suppose that the next Administration goes rogue and actually takes seriously the inexorably approaching exhaustion of fossil fuel. I mean, it’s not as if Shell and the others are scrambling to drill the Arctic because it’s the macho thing to do: they’re doing it because our presently known deposits of fossil fuel are running out, and where else is left to drill that we haven’t already exploited? A sensible White House that worries sensibly about fossil fuel exhaustion has no choice but to put its faith in renewables, and renewables are intermittent: they simply will not provide a reliable supply of electricity unless buffered by Massive Electricity Storage. Therefore, a sensible White House has little choice: it has to worry about Massive Electricity Storage.

But Massive Electricity Storage does not exist as a reliable commodity for which a dependable manufacturing industry exists. Each instantiation of it has been unique, and the USA hasn’t built any in decades. Do the following simple calculation. Pew Research Center claims that the USA will have 400 million residents in 2050. Right now our average resident is enjoying the benefits of around 1300 watts of electricity; and that accounts for only 40% of our total energy expenditure! Virtually none of those residents will be happy with the capricious brownouts and power failures that characterize the developing world. In fact, they can be predicted to be furious. Therefore, each cohort of a million Americans will, AT A MINIMUM, demand a whole gigawatt-day of storage: that’s a billion watts for twenty four hours! And even optimists would be unlikely to price that gigawatt-day at less than 3.5 billion dollars. Providing such storage for every American by 2050 prices out at forty billion dollars a year. And, in the process, a whole new industry will be created!

But forty billion dollars a year of new expenditure just for adding Massive Electricity Storage is only the tip of an iceberg. The generation and transmission infrastructures for that renewable electricity have to be created as well. And also remember that only 40% of America’s primary energy expenditure goes to electricity generation. The other 60% isn’t being wasted and somehow has to be replaced before the fossil fuel becomes critically scarce. In short, coping with the end of the Age of Fossil Fuel is:
 o Predicted to cost a bundle.
 o Expected to transform our economy in unpredictable ways. And
 o Might even induce a multi-decade spurt in GDP growth.
The only way to find out for sure is to do the experiment, artfully.




William F. Pickard, older ‘n’ dirt, is a retiree (from Washington University in Saint Louis) who specializes in energy matters. He’s pretty much clueless as to how the crises confronting America might be surmounted. But at least he has had the good grace not to stand for public office.