perfect blog…

Economics is not a science—it’s a way of understanding the world. Models are of limited use.

But you are exactly right that it’s the speed of adjustment that matters. The very same debate is taking place (not that the public is interested) about whether our country’s unprecedented, ballooning borrowing abroad—led by our federal government’s dogmatic policy of cutting taxes, raising spending, and massively borrowing—will gradually work itself out or collapse suddenly when the ground disappears from under us and the global economy spirals into recession.

If we’re talking about oil shocks, that’s one thing (but remember, the dual oil shocks of the 70’s produced gas lines, but we did not shift to an agrarian society). But Peak Oil is not about shocks, it’s about the observation that oil will run out someday. What I am arguing is that over a span of 20 or 30 years, we have the capacity to adjust without the foundations of our society collapsing, and that economics will force us to whether we like it or not. We’re not just going to wake up one sunny day and realize the world is out of fuel.

I totally agree on the gas tax; let’s make it a general, global carbon tax (while we’re dreaming) and deal with global warming a bit, too — to save my apartment, which is considerably down the hill from Adriana’s. (Oh what do I care, I just rent.)

I am comforted by the idea that our economy and our society will adjust to declining oil supplies and the higher energy costs they bring. I guess that’s the point of disagreement between the people who think peak oil will be a disaster and those who don’t think it will be too big a deal. How gradual will the transition be? How sharp the price spikes? How robust is the economy in its ability to handle the shocks it will be put through? The oil shocks of the ’70s had fairly nasty results, and they were temporary.

I don’t know. I would like to see some different modeling approaches to these scenarios, I guess. But then I also wonder whether models could take into account enough relevant factors, and whether all the relevant factors are quantifiable — I don’t know enough about economics. But I do recall a line about it being a “science of single instances” — i.e., not a proper science at all, or at least much more limited in its predictive power than physics or chemistry. So I guess we should take both sides with a grain of salt. Does that make sense?