Tag Archive for: abundance vs scarcity

Two Visions for California’s Future

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The average retail price of regular gasoline in California as of April 3, 2024, was $5.15 per gallon. Since that’s an average, there are spots where the price of regular gasoline is significantly higher, as I learned over the weekend while spending $6.15 per gallon to fill the tank. Californians now pay more for their gasoline than Hawaiians, which is quite an accomplishment. The state of Hawaii is a remote archipelago in the middle of the Pacific Ocean, with no in-state petroleum resources to speak of, whereas California is sitting on some of the most abundant reserves of oil and gas in the world.

Despite proven reserves of 2.3 billion barrels of oil and potentially another 10 billion barrels locked in California’s so-called Monterey Shale formation, California imports over 70 percent of its crude oil. Most petroleum geologists agree that if oil exploration were permitted in California, the quantity of proven reserves is likely to triple. But through a relentless barrage of legislation, California’s state legislature and the activist agencies that oversee the industry are doing everything in their power to shut it down. The same regulatory assault is underway with California’s natural gas industry, where, despite plentiful in-state reserves, over 90 percent is imported.

It’s not just energy that is expensive and in short supply in California. Every essential building block of a successful economy is subjected to politically engineered scarcity. The state’s water infrastructure is neglected, and instead of investing in new ways to harvest and store the roughly 200 million acre feet of rain that hits the state even in dry years, billions are being invested in systems designed to ration urban water use while farms throughout the state are taken out of production for lack of irrigation water. Freeways are neglected as billions are wasted on a high speed rail project that, even if it is ever completed, will do virtually nothing to alleviate freeway congestion.

California even has a shortage of developable land, which is absurd since the vast majority of California’s nearly 40 million people live in urbanized areas that only consume 5 percent of the state’s total land area. You could build homes for 10 million people, at four per household on quarter-acre lots, with an equal amount of space set aside for roads, retail centers, parks, schools, and commercial/industrial facilities, and you would only increase California’s urban footprint to 6.5 percent. Such new “sprawling” developments would only consume 2,000 square miles in a state that occupies 156,000 square miles. But there’s “no room.” There’s also not enough water, energy, or good roads and freeways to accommodate newcomers.

All of this is by design. All of this is a political choice. It is the result of a consensus reached between a coalition of special interests that together wield almost unimaginable power. California’s public sector unions collect and spend nearly a billion dollars per year, using a sizable percentage of that money to make or break the campaigns of every elected politician, all the way from local water boards to the governor. They want endless environmental regulations so they can grow their regulatory and enforcement bureaucracies, and to pay for it, they don’t want to see public money invested in practical physical infrastructure. They’re not alone.

California’s public utilities, quasi-private and owned by stockholders, are held to a fixed profit by regulators. This means that the only way they can increase their earnings per share is by raising their revenue. No wonder investing in “renewables” is so favored by these utilities. With no competition and captive ratepayers, their stock price will be a lot higher when they’re charging $.50 per kilowatt-hour and passing 9 percent down to the bottom line than when they’re charging $.05 per kilowatt-hour. How convenient that the state has decreed “net-zero” by 2045.

Anti-growth politics also benefit the homebuilding industry, at least what’s left of it. With exorbitant fees, artificially inflated land prices, ridiculously overwrought building codes, unnecessarily costly building materials since almost nothing can be sourced in-state, and punishing delays in acquiring permits from a Byzantine array of hostile agencies, it is impossible to profitably build most types of housing in California without subsidies. But why fix that? The small builders give up and find new professions. The big builders that have opportunities to profitably build affordable market housing in less regulated states without crawling to the government for subsidies have done so. That leaves California with a handful of politically connected mega-builders collecting billions in subsidies to build “affordable housing.”

If that were a complete list, it would be enough, but almost every special interest in California wants scarcity. Tech billionaires love it because elevated energy prices allow them to develop and sell every manner of green product, from energy management systems and electric cars to chipsets for “connected” appliances ala the “internet of things.” The data gathering sector alone stands to gain billions in revenue by collecting and parsing behavioral data from consumers using connected appliances. In a state where energy and water were abundant, these products and services wouldn’t sell. As it is, not only does the backdrop of high prices make them rational consumer choices, but just in case, the state legislature is mandating their adoption.

Finally, there are financial special interests that profit from high asset values. From California’s mammoth public employee pension systems to hedge fund investors and real estate investment trusts, the contrived scarcity of land and resources makes investments in land and resources more rapidly appreciate in value. There’s big money in scarcity.

Another anti-growth special interest, if you want to call them that, are the Californians themselves. Not the newcomers, invited into the Golden Sanctuary State to take all those “jobs that Americans won’t do.” Rather, it is the group that’s been here for a few generations—those millions of Californians who live in homes paid for long ago, paying minimal property taxes, and don’t want another ten million people moving into their state. Many of them are retired and are indifferent to traffic congestion on the roads. Millions of them live close to the coast and don’t have significant expenses to heat or cool their homes. For them, the orchestrated panic over “climate change” provides moral cover for what they really want, which is to slam the door on opportunities for anyone moving here.

This extreme anti-growth vision defines California today. But there is another extreme worth imagining. California could be a state where the public decides it would be desirable to develop another two percent of the state’s geography with spacious suburbs filled with detached homes on spacious lots. They could embrace more drilling and refining of oil and gas within the state and set an example to the world of how to do it responsibly. They could build more safe nuclear power plants to generate additional gigawatts of electricity while substantially lowering the construction cost by streamlining costly state regulations and using their considerable clout to demand the federal government do the same. They could invest in practical ways to harvest additional millions of acre feet of storm runoff and build desalination plants to provide abundant water to coastal megacities.

In this alternate vision of California, millions of good jobs would be created, attracting talent from around the world, and since the cost of living would be dramatically reduced, even entry-level jobs would offer people willing to work hard the same opportunities for upward mobility that were present during the state’s last golden era, the 1950s and early 1960s, before the anti-growth forces began to take control.

It is left to the reader to decide which vision of California ought to prevail and which sort of example might inspire the rest of the world to emulate.

This article originally appeared in American Greatness.

Twilight of the Malthusians

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Thomas Malthus was an English cleric and scholar living in the early 19th century who developed the theory that global population increases exponentially, while global production increases arithmetically. His theory—and the eventual collapse of civilization that it implies—enjoys influence to this day. In California, it found early expression in a 1976 speech by Governor Jerry Brown, who announced that we had entered an “era of limits.” For more than 40 years now, influential politicians such as Brown, supported by like-minded environmentalists, have embraced the Malthusian vision. But an alternative exists.

First, global population growth was only increasing “exponentially” for a few decades in the middle of the 20th century. As the chart below indicates, using data from the United Nations, the annual rate of global population growth peaked in 1980 at just over 2 percent. Since then, it has already dropped to half that rate, estimated at around 1 percent per year in 2020. By the end of this century, global population is projected to be growing at a decidedly “arithmetic” rate of under 0.2 percent per year.

At the same time that the rate of global population growth is slowing significantly, global productivity continues to increase. Virtually all recent estimates—World Bank, International Monetary Fund, United Nations—forecast global GDP growth to exceed 3 percent per year into the foreseeable future. This rate of growth is low by historical standards and, notwithstanding temporary disruptions caused by future recessions, is likely to be much higher over the next several decades. Put another way, the rate of global wealth creation currently exceeds the rate of human population increase by at least 50 percent, and that ratio is likely to improve over the long-term.

Enough Resources to Sustain Global Economic Growth?

By now, most Malthusians have to acknowledge that global population is leveling off, but they will nonetheless assert that too many people are already here, and there simply aren’t enough resources left on Planet Earth to fuel long-term economic growth. But the prevailing challenge facing humanity when confronted with resource constraints is not that we are running out of resources, but how we will adapt and create new and better solutions to meet the needs that currently are being met by what are arguably scarce or finite resources. If one accepts this premise, that we are not threatened by diminishing resources, but rather by the possibility that we won’t successfully adapt and innovate to create new resources, a completely different perspective on resource scarcity and resource management may emerge.

Across every fundamental area of human needs, history demonstrates that as technology and freedom are advanced, new solutions evolve to meet them. Despite tragic setbacks of war or famine that provide examples to contradict this optimistic claim, overall the lifestyle of the average human being has inexorably improved across the centuries. While it is easy to examine specific consumption patterns today and suggest we now face a tipping point wherein shortages of key resources will overwhelm us, if one examines key resources one at a time, there is a strong argument that such a catastrophe, if it does occur, will be the result of war, corruption, or misguided adherence to counterproductive ideologies, and not because there were not solutions readily available through human creativity and advancing technology.

Energy, water, and land are, broadly speaking, the three resources one certainly might argue are finite and scrupulously must be managed. But in each case, a careful examination provides ample evidence to contradict this claim.

Abundant Energy: According to the most recent BP Statistical Review of World Energy, proven reserves of fossil fuel could provide enough energy to serve 100 percent of worldwide energy requirements at a total annual rate of consumption twice what is currently consumed for at least another 367 years. That is based on adding together the known reserves of the three primary fossil fuels. Using natural gas exclusively, 27 years; oil, 90 years; coal, 250 years. Moreover, additional reserves of fossil fuel are being discovered faster than fossil fuel is being depleted. And this abundance of available fossil fuel is estimated without accounting for vast deposits of so-called unconventional reserves such as methane hydrates.

In addition to fossil fuel, there are proven sources of energy such as nuclear and hydroelectric power, and new sources of energy including wind, solar, geothermal, and biomass, that have the potential to scale up to provide comparable levels of power production. And then there is the eventual promise of limitless, clean fusion power, and perhaps other sources of energy we can’t yet imagine. With these many energy alternatives, combined with relentless improvements in energy efficiency, it is difficult to imagine human civilization ever running out of energy.

Abundant Water: In many regions of the world, the challenge of meeting projected water needs appears more daunting than the challenge of producing adequate energy. But fresh water is not a finite resource. There are countless areas throughout the world where desalination technology can provide water in large quantities—in 2017 over 24 billion cubic meters of the world’s fresh water was obtained through desalination, an amount equivalent to 5 percent of all urban water use worldwide in that year. For large urban users, desalination is affordable and requires surprisingly little energy input.

Another way to provide abundant water is to redirect large quantities of river water via inter-basin transfers from water-rich areas to water poor areas. Finally, water is never truly used up, it is continuously recycled, and by treating and reusing water, particularly in urban areas, there should never be water scarcity.

With water, as with energy, innovation is providing solutions heretofore unimaginable. Densely populated urban areas around the world are turning to high-rise agriculture, where food is grown indoors using water that is perpetually recycled, fertilizer from waste streams, with zero need for pesticides.

Abundant Land: The question of finding adequate land for humans is clearly different from that of finding energy or water, since unlike energy or water, land is truly finite. But even here, key trends indicate land is now becoming more abundant, not less abundant. This is because for decades, all over the world, people have been migrating into densely populated cities. Using World Bank data, as summarized on the bar chart, the global rural population (red) has slowly increased from 2 billion in 1960 to an estimated 3.4 billion in 2020. By 2050, the rural population worldwide is actually expected to decrease, back down to 3.1 billion.

Meanwhile, the global urban population has accommodated nearly all population growth over the past sixty years. These urban populations are concentrated in megacities that, while vast, consume a small fraction of land area on earth. In 1960, humanity’s 1 billion urban dwellers constituted only 34 percent of the global population. By 2050, an estimated 6.6 billion people will live in cities, comprising 68 percent of all humanity. Moreover, this transition has been voluntary. Most people apparently prefer the amenities and opportunities of urban life.

This massive voluntary migration to cities from rural areas, combined with new agricultural innovations, is depopulating landscapes faster than what remains of human population growth will fill them. This seismic shift in the distribution of humans on earth, combined with new high yield crops, aquaculture, and urban high-rise agriculture, promises a decisive and very positive shift from land scarcity to land abundance in the next 25-50 years.

The Ideology of Abundance vs. the Ideology of Scarcity

If one accepts the possibility that humanity is not on a collision course with resource scarcity, entirely new ways of looking at policy options are revealed. Rather than attempting to manage demand, based on the premise that supplies are finite, we might also manage supply by increasing production. While, for example, utility pricing might still be somewhat progressive, if we assume resources will not run out, it doesn’t have to be punitive. If someone wishes to use more energy or water than their neighbor, if their pricing isn’t so punitive as to effectively ration their consumption, but instead is only moderately progressive, then overconsumption leads to higher profit margins at the utility, which in-turn finances more investment in supplies.

Another consequence of rejecting the Malthusian conventional wisdom is a new understanding of what may truly motivate many powerful backers of the doomsday lobby. By limiting consumption through claiming resources are perilously scarce and by extracting them we may destroy the earth, the vested interests who control the means of production will tighten their grip on those means.

Instead of pluralistically investing in this last great leap forward to build megacities and infrastructure for the future—in the process extracting raw materials that either can be recycled or are renewable—the public entities and powerful corporations who benefit from scarcity will raise prices and defer investment. It is the interests of the emergent classes, whether they are entrepreneurs in prosperous, advanced economies, or the aspiring masses in developing nations, which are harmed the most by the Malthusian notion of inevitable scarcity.

Abundance is a choice, and it is a choice the privileged elite must make—in order for humanity to achieve abundance, elites must accept the competition of disruptive technologies, the competition of emerging nations, and a vision of environmentalism that embraces resource development and rejects self-serving anti-growth alarmist extremism. The irony of our time is that the policies of socialism and extreme environmentalism do more harm than good both to ordinary people and the environment, while enabling wealthy elites to perpetuate their position of privilege at the same time as they embrace the comforting but false ideology of scarcity.

This article originally appeared on the website American Greatness.

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