Human capital, population growth and the resource-pyramid

One of several very smart comments by reader Soylent on Barry Brook’s BNC essay What is your energy philosophy? There are many thoughtful comments on Barry’s essay – enjoy…

@David M – “Anybody want to tell me what won’t improve with less people? Anybody want to tell me what won’t get worse with more people?”

Human capital. Our most precious resource and without which all other scarce resources are useless. Oil is just a toxic goop that occassionaly seeps up to the surface and poisons the water supply until you figure out how to make asphalt, oil lamps, oil furnaces, internal combustion engines, gas turbines…

All other resources, including energy, are secondary. We don’t need neodymium if we can figure out how to cheaply make a special form of iron nitride(Fe16N2), which is a much better magnet. We don’t need so many rare earths for LEDs and fluorescent lights if we can make “artificial atoms”(quantum dots) from abundant zinc oxide. We don’t need inferior copper if we can cheaply make CNT quantum wires.

We will need a lot of energy, but we don’t need oil, coal and gas. We are positively swimming in energy that is available for the taking; there’s more energy available in uranium, thorium, deuterium, lithium and sunshine than we know what to do with it; it just happens to be a form we don’t like; just like oil, coal and gas happened to be unusable forms of energy not many centuries ago.

An aging population where the shrinking productive slice of the population is forced to waste an increasing amount of resources taking care of the elderly would be extraordinarily bad.

@David M – “I think it means you reach a point when the economics have you discovering new sources at the same level that you are retiring old sources. My impression is overall we are almost there and shortly after peak the drop on balance of useable fossil fuel is precipitous.”

I think you are dead wrong and that if we don’t abandon oil because we find something better the decline will be ridiculously slow.

There is a “resource-pyramid”. The high-grade resource is a tiny little tip at the top of the pyramid and is long gone for oil . We’ve been working our way slowly down this pyramid and we’re getting ridiculously good at accessing the vast resources nearer the bottom of the pyramid as we go along.

Almost every graph of oil discovery by peak oilers will contain back-dating of reserve growth to the discovery date of the oil field(power-law size distribution => on average oil fields are larger than you have reason to estimate because a few of them turn out to be gigantic. Improvements in drilling and secondary, tertiary recovery technology allows extraction of more of the original oil in place); this is an attempt to obfuscate ongoing and future reserve growth. Most of them also ignore unconventional oil; it wasn’t long ago that deep-sea oil was unconventional and it won’t be long until tar sands and oil shales are conventional oil.

In the US the decline rate has been 1.4%/year average for 39 years since the peak. When the world peaks, the decline rate will be even slower; the world is a bigger, more diverse place and when the US peaked you could just go drill oil some place easier, where as when the world peaks the price shoots up and we proceed further down the pyramid.

A slow squeeze extending a century or two into the future is what failure will look like.

Asia's graying populations could roil the global economy

Need something new to worry about? How about how the Old Age Tsunami will impact the global economy? If Eberstadt is correct “Tsunami” might be a bit of hyperbole, but this will prove to be one of the geopolitical Big Trends:

Over the past decade, an ocean of ink has been spilled over the problem of population aging in the world’s richest societies (Western Europe, Japan and North America). Low-income regions have attracted relatively little attention: Yet over the coming decades a parallel, dramatic “graying” of much of the Third World also lies in store, and it promises to be a far uglier affair than the “aging crisis” facing affluent societies. The burdens of aging simply cannot be borne as easily by the poor; low-income societies and governments have far fewer options, and the options available are considerably less attractive.

For some poor countries, the social and economic consequences could be harsh indeed: Graying could emerge as a factor directly constraining long-term growth and development. In fact, rapid and pronounced population aging may represent one of the most least appreciated long-term risks facing many of today’s developing economies.

Population aging is driven mainly by low birth rates rather than by long life spans–and since fertility levels in poor regions continue to drop, the momentum for Third World population aging continues to build. Not, to be sure, in sub-Saharan Africa, where the median age is likely to remain a mere 20 years some two decades from now. And certainly not in those parts of the Arab/Islamic expanse where total fertility-rate levels still apparently exceed five births per woman per lifetime (viz., Yemen, Oman, Afghanistan). But in much of East Asia, South Asia, Eastern Europe and Latin America, sub-replacement fertility is already the norm.

China: Of all the impending Third World aging tsunamis, the most massive is set to strike China. Between 2005 and 2025, about two-thirds of China’s total population growth will occur in the 65-plus ages–a cohort likely to double in size to roughly 200 million people. By then, China’s median age may be higher than America’s. Notwithstanding the recent decades of rapid growth, China is still a poor society, with per-capita income not much more than a tenth of the present U.S. level.

How will China support its burgeoning elderly population? Not through the country’s existing state pension system: That patchwork, covering less than a fifth of the total Chinese workforce, already has unfunded liabilities exceeding China’s current GDP.

Since the government pension system is clearly unsustainable, China’s social security system in the future will mainly be the family unit. But the government’s continuing antinatal population drive makes the family an ever-frailer construct for old-age support. Where in the early 1990s the average 60-year-old Chinese woman had five children, her counterpart in 2025 will have had fewer than two. No less important, China’s retirees face a growing “son deficit.” In Chinese tradition it is sons, rather than daughters, upon whom the first duty to care for aged parents falls. By 2025, a third or more of Chinese women approaching retirement age will likely have no living sons.

Paradoxically, despite all China’s material progress, the nation’s elderly will face a continuing, and quite possibly a growing, need to support themselves through their own labor. But as China’s elderly workers tend to be disproportionately unschooled, farm-bound and less well-trained than the general labor force, they are, perversely, the ones who must rely most upon their muscles to earn a living.

On the current trajectory, the graying of China thus threatens many tens of millions of future senior citizens with a penurious and uncertain livelihood in an increasingly successful emerging economy. The looming fault lines for “impoverished aging” promise to magnify yet further the social inequalities with which China is already struggling.

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