Why Efficiency multiplies consumption - the growth effect and other things
notes on a conference presentation 10/17/09
P. F. Henshaw

Generally speaking, the hard clear data says is it's because:
-- Every business is competing to be more efficient to not fall behind the competition, all the time.
-- Improving the efficiency of something by, say, 50% could increase its power to do work 200%... 
-- on average the economy turns a 50% resource use reduction into a 75% increase, a 250% reversal

From 10/16-17   BioPhysical Economics 09, meeting  p.h. draft meeting notes
Covered in BUSINESS / ENERGY & ENVIRONMENT  section of NY Times
October 23, 2009 New School of Thought Brings Energy to 'the Dismal Science'  

10/17/09 PFH Talk 23 slide presentation : 36 min audio for slides*  

Outline notes below:
1 - Outline of reasoning presented  
2 - Supplemental outline list of efficiency effects usually overlooked

The bottom line, What in the world is really going on here??

+ a blog post used as an announcement with a short discussion how the moral issues got confused

+ a research notes page with the older short essays on the general subject

+ and Inside Efficiencies a new short overview of the subject and choices

* The following notes don't exactly following the slides.   If listening to the audio the first slide discussed is #14 and then back to the beginning.  As time runs short the later slides for raising related subjects are only mentioned quickly.

1 - Why efficiency improvement causes growing consumption
10/20/09

1.      Basic paradigm – economies as physical learning systems

a)     Start from physics first principles … like the conservation laws that imply transient complex system development processes are required for change

(1)  Representing natural processes with equations

(a)   neglects the complex development processes, by which they work.

(b)  neglects their limits and possibilities,

(2)  how to search for the great gaps in our models

(a)  physical systems represented as statistical equations that might recur over and over

(b)   opportunistic learning processes that occur only once

b)     Start from what’s naturally missing in the typical “S” curve of development.  What’s missing is the system’s environmental learning process. Slide 14

(1)  Make note of clear switch in kind and direction of learning at inflection point!!

(2)  from multiplying returns to dividing returns

(3)  from the past to the future,

(4)  from pumping up to fitting in.

2.      The data shows impacts growing faster than efficiency, as parts of a system working as a  whole.  

a)     The popular assumption is that they should go in opposite directions, but they don’t

(1)  Efficiency building codes, creative innovation strategies, all seem to have the opposite of intended effect.

b)     Economists have understood this all along, but it’s mysterious why working with sustainability planners for years and years they don’t mention that both groups are using the same solution for opposite effects.

c)     From inside a learning system, each part learns two things, how to reduce their effort and how to provide more service.

(1)  Efficiency as a measure of the “work it takes”

(2)  Productivity as the same thing, but considered as the “service it provides”

(3)  Decreasing the "resource it takes" increases "the work the resource can do"  so to get the impact you combine both

(4)  Difference in looking upstream or downstream in the flows of an opportunistic economic system

3.      Efficiency doesn’t steer systems.

a)     What really steers the direction of whole system development is what the surplus generated by that learning is used for, with two main choices  

(1)   Using it to fit into the world,

(2)   Using it to change the world to fit your image,

b)     Efficiency can accelerate either,… so efficiency is more like “the gas” and does not work like a steering wheel

(1)   presently accelerating our increasing control of nature and maximizing resource consumption

c)     Our mental and cultural models of change are radically detached from the nature of physical processes

(1)  Multiplying change is not a natural fixed state except in imagination, and nearly all discussion in our culture treats it as such.

(2)  We built our institutions around the cultural experience of the  former” limitless growth” period

(3)  financial information model represents multiplying change as a constant, but accumulates misinformation after the inflection point  ~ 1960

2 - When counting the effects of efficiencies - A few things we often leave out…
11/4/09

1.      Efficiencies that save money or resources create savings that get used for other things.  We tend to count the subtractions but not the additions…

a.      Saved money and energy are like “printing money” and “creating energy” not previously available, and often used for leveraging other things

b.      Say, a 10 year payback on insulating your house, uses resources to saves and create resources that didn’t exist before… having a positive EROI

                          i.      First you have the added energy use and other impacts of the work

                        ii.      You also free up energy as a resource for others to use for powering other uses with various impacts,

                      iii.      After the 10 years you have what amounts to a new source of income for spending on other entirely new resource uses yourself,

                      iv.      You’ve also given the bank a profit, maybe equal to half of the cost of the work,  for it to use in multiplying more investments…

                        v.      the reduced impact you counted is probably equaled by (i & ii) and exceeded by (iii & iv), thus the growth effect.

c.       When adding up impacts of spending we may count only what we see, and miss the hidden impacts of the whole system that delivered the goods.

                          i.      we add up the impacts of the physical processes by which things are made, and ignore the usually larger hidden impacts of:

1)      the employee, business operation and finance costs and impacts

2)      the embodied business development costs and impacts

3)      the resource depletion opportunity costs

2.      New efficiencies can collapse whole networks of mature technologies,

a.       Free internet media now threatens the model of professional journalism

b.      New technology used by low wage people can deny markets to formerly well paid people.

3.      Creating efficiencies does determine what other people will use them for

a.       Saving water where that was a supply barrier to development, invites development, expanded urban infrastructure and demand on all resources.

4.      "Do more with less" is what people want and but also and ever steeper climb

a.       Matching the efficiencies of competitors is needed to keep investors.

b.      With unlimited resources it has the effect of sharing ways to have more

c.       With limited resources the effect is sharing ways to take more from others.

5.      Efficiencies are a limited resource that gets ever more expensive,

a.       Finding ever greater efficiencies is a non-renewable resource, with the same depletion points of vanishing return as diminishing EROI resources.  You can plan on their becoming too expensive to use.  

b.      2nd law efficiency limits for technologies and whole systems may only be seen in diminishing returns on investment for no other apparent cause.

6.      Efficiency has two faces, like Jekyll and Hyde, benefits that become real dangers, like relying on increasing use of specialization or monocultures.

a.       Increasing control is decreasing tolerance.  It leads to loosing control due to complications that more tolerant designs can overlook.

b.      Environmental adaption benefits from complex diversity.  Uniformity reduces options, adds to inflexibility and instability in response to change.

c.        Accelerating coordinated change becomes accelerating uncoordinated change due to increasingly narrow learning and delayed response.

7.      Logic makes computers very efficient for problem solving, but needing perfect inputs to get meaningful outputs

a.       Computers treat complex questions as “garbage in” to result in “garbage out”.  

b.    Nature’s way of computing is wasteful in every step, but takes “garbage in” and produces “fruit and vegetables out” or “garbage in” with “art and music out” using physical system complexity as its tool.  

c.    The ability to sort out undefined complexities to select what problem needs to be solved, that computers can't do at all, seems to be an important efficiency too.