Most people seem to think, “The difference between models and myths is that models are scientific, and myths are the conjectures of primitive people who do not have access to scientific thinking and computers. With scientific models, we have moved far beyond myths.” It seems to me that the truth is quite different from this.
History shows a repeated pattern of overshoot and collapse. William Catton wrote about this issue in his highly acclaimed 1980 book, Overshoot.
What politicians, economists, and academic book publishers would like us to believe is that the world is full of limitless possibilities. World population can continue to rise. World leaders are in charge. Our big problem, if we believe today’s models, is that humans are consuming fossil fuel at too high a rate. If we cannot quickly transition to a low carbon economy, perhaps based on wind, solar and hydroelectric, the climate will change uncontrollably. The problem will then be all our fault. The story, supposedly based on scientific models, has almost become a new religion.
Recent Attempted Shifts to Wind, Solar and Hydroelectric Are Working Poorly Continue reading
Many people have the impression that recessions come from financial missteps, such as the US subprime loan fiasco. If energy is involved at all, the problem comes from high oil prices as supply becomes inadequate to meet demand.
The real situation is different. We already seem to be on the road toward a new crisis; this crisis is likely to be much worse than the Great Recession of 2008-2009. This time, a major problem is likely to be energy prices that are too low for producers. Last time, a major problem was oil prices that were too high for consumers. The problem is different, but it is in some ways symmetric.
Last time, the United States seemed to be the epicenter; this time, my analysis indicates China is likely to be the epicenter. Last time, the world economy was coming off a high growth period; this time, the world economy is already somewhat depressed, even before hitting headwinds. These differences, plus the strange physics-based way that the world economy is organized, explain why the outcome seems likely to be worse this time than in 2008-2009.
I recently explained what I see as happening in a presentation for actuaries: Recession Likely: Expect a Bend in Trend Lines. This post is based on this presentation, omitting the strictly insurance-related portions.