Dave Barbier: My name is Dave Barbier. I'm the sustainability coordinator here on campus and so our office is responsible for coordinating the Earth Week event and so simply what that means is we help make sure that all of the events that are going on during the Earth Week can all be found and put together in one easy place. That's what our office has to do with the Earth Week this week so if you see the posters out and about showing you everything that's going on, we're not actually doing those. We're just letting you know everything that's happened.
Tonight it's my privilege to introduce our first speaker in our three-part series, Dr. Nate Hagens. This is Nate's third time on campus during Earth Week. Normally, someone else in the audience would be presenting him who knows him a little better than I do but such is not the case tonight. I'll take advantage of that to stand up in front of you all.
Let me see, one of the things about getting our speakers here, all of them, is that it's the work of our student groups on campus that have allowed this to happen. For our three-part speaker series, there have been 14 student awards that have contributed funds to getting all of our speakers here. I think it's really important to know that it's the students who are making this a priority to get these speakers in for Earth Week and sharing their wisdom and information.
I'll give you a little bit of background on Nate and then I will let him come, take over the show. Nate holds a master's degree in finance from the University of Chicago and a PhD in natural resources from the University of Vermont. He has spent a portion of his life on Wall Street so he knows what making money in the corporate world is all about and he has also spent a fair amount of time lecturing and traveling all over the world. He's appeared on stations you might know such as PBS, the BBC, NPR, ABC, things of that nature.
He's really well known in terms of the content that he's about to deliver even though it's my pleasure sharing you that most of that content would be new for this evening. You're in for a treat and knowing what I know I will just say buckle in because it's going to be a fast ride.
Nate Hagens:Thank you. I'm mic'd up, can everyone hear this? All right, cool. Why are we all here to Earth Day? If you're a normal human being you want to learn a lot about the future to impact your own life. You want learn maybe a little bit about what could help Stevens Point, the university, the county, and if you're non-sociopathic, 95% average American, you care a little bit about the environment and the future. Today, I'm going to talk about all those things and as Dave said, it's going to be a whirlwind.
How many were here last year to hear me talk? Okay, just a few so I've changed around a lot of things so this is the first time that this is going to be tried. We'll see how it goes. First of all, my parents are in the audience and it's ironic that here on Earth Day I'm talking about the deterioration of wild nature and animals. Of course, I have to thank them when I was two and three years old in the car I would be pointing the dead animals on the side of the road and they would drive me around and look where I've ended up.
When we think about the world, we often use lenses from which to make decisions and have opinions, yes.
Speaker 3: Sorry but you should have a picture of Bernie on there instead.
Nate Hagens: Wait, you haven't heard what I'm going to say yet. We have a political lens. We have international geopolitical lens. We have a financial lens. We have all these different lenses with which to view the world. When I worked on Wall Street, I started to figure out that the things that I was applying weren't really based in some solid foundation so I quit. I read books for a few years, I got my PhD and everything I've learned the last 15 years is going to be summarized in the next hour. I've learned to have a view of ecology which is three simple things about an ecological organism which humans are, their food, their environment and their behavior.
As Dave mentioned I teach a class at the University of Minnesota called Reality 101 and basically, it's 15 weeks on a lot of different subjects but these are three the conclusions which is going to be the first half of my talk today. Energy underpins both nature and human systems. Energy cost increases are going to result in declining benefits to human economies.
Number two, humans are causing the sixth great extinction and this is happening even before the larger impacts of climate change and ocean acidification become known. Number three, and perhaps most importantly and least recognized, is that our modern skulls house stone age minds and the agenda of the gene gives us a large handicap for dealing with issues on a planetary scale. Our brains were formed on the Pleistocene in Africa with small tribes of up to a hundred people not seven and a half billion so we're going to talk about that.
Now when most people think, "Oh what should we do? What's going on in the world?" the vast majority of people think about the next very, very short timeframe, the next five years maybe. Some people talk about the next 80 years and a very, very small percentage of people care what happens about 2100. Everything in my talk tonight is going to not be in the red. It's going to be for the future so that's both a blessing and a curse but I'm not trying to predict what's going to happen in the first five years. I could but that's not the focus here.
Okay, let's start with energy and the economy. Energy is vital in nature. Those organisms that have access to excess surplus energy have advantages. The cheetah spends a certain amount of calories getting its prey. If it got smaller prey or expended too many calories it wouldn't have survived or some other cheetah would have incrementally out produced it.
The same thing happens with humans in our ancestral past. Humans worked as individuals and in groups to get surplus for the tribe. Over time, surplus became the goal of larger societies and eventually, nation states and whole countries and it was the amount of surplus that dictated what that society could do. It took 100,000 slaves, 20 years to move 6 million tons of stone to build the great pyramids. That was huge amount of surplus labor went into creating something.
Since the dawn of the agricultural revolution around 12,000 years ago, we have been gifted basically or we have taken advantage of five pools of carbon which are present from our geologic past. Soil, which is the pulverized coal in forms that we can grow food from, trees and then the three mean fossil fuels, coal, oil and natural gas. If we think about, most of us don't think about it because we just think we're spending money, but fossil fuels are incredibly energy dense and powerful. One barrel of oil and those nine of you that were here last year will remember this fact. One barrel of oil has 5.7 million BTUs of energy and if you translate that into work potential it's 1700 kilowatt hours of work in one barrel oil.
Me and my dad digging ditches and planting vegetables and working an eight-hour-a-day generate six-tenths of 1 kilowatt hour. One barrel of oil which now cost 40 bucks, for us, generates 10 years of human labor. How does that manifest? Okay. An average human laborer gets paid $57 a day to work. How many man days of work can you get on the average global daily wage of $57? Well, for an average human you get one. For an average American you only get a fifth of one day because the average salary is five times what the global average is so you only get two or three hours of work for $57. If you have oil at $80 a barrel you get 6,000 man days of work. Oil at $20 a barrel is over 20,000 days of work for that $57.
The average American now consumes "230,000 calories of energy a day." Now our bodies we only 3500, maybe me a little more, but we eat six Big Macs worth. One Big Mac is 570 calories but we consume 409 Big Macs worth of energy and most of that energy is coal, oil and natural gas, even sitting in this room with the lights, there's some indirect footprint of this. We have 100 to 1 exosomatic buffer. A hundred times more energy than our bodies need is what Americans consume.
Okay, so what does this mean? Incredibly, incredibly cheap fossil carbon set down hundreds of millions years ago. We extract it. We add a little price for profits and we apply it to almost everything you can imagine in modern industry. When you apply large amounts of very, very, very cheap energy to something that humans used to do, what happens is you get higher wages, you get higher profits and you get lower priced stuff.
If you imagine in Wisconsin example here, hand milking, zero external energy other than the milker. You make $5 an hour. This five, 10, the scale could be split anywhere you wanted between cheaper milk, more profits for the factory owner or higher wages so it's just an aggregate of those. Then parlor milking, you have to add 180 times more mechanical energy in the form of electricity and the embodied energy and the machines and your wage goes to $20 an hour. Then there's a fully automated milk machine where the cow just walks up and gets milked and walks out and the next one comes in, that requires 400 units of energy per cow but the wage since energy is so cheap is $25 an hour.
This is a summary of almost everything that exists in human society now. We've replaced what humans did with robots, simply, because they're so cheap. If you think about what the average human consumed, even a couple hundred years ago, 500 years ago, right now the average human a day consumes 20 times more in terms of GDP than the average human in the year 1500. As I said, 90% of the work done in human economies is not done by people. It's done by coal, oil and natural gas. That has raised profits, raised wages, and reduced the price of stuff.
We also have significantly more people than we did a few hundred years ago. We have seven and a half billion people so if you include this, the human enterprise, the whole pie as it were, is 400 times what it was 400 years ago or 500 years ago.
Okay, so back to this example. Wow, if energy is so unbelievably cheap then even if oil is $200 a barrel or a $1,000 a barrel, it's still a really good deal, right? Well no, because we're adding so much at once. Take a look at the blue bars. They're from the prior graph which is at 5 cents kilowatt hour energy our wages go up. When energy doubles to the brown, 10 cents, you still make quite a bit of extra money in the intermediate stage but in the advanced stage you actually are making very little because you're adding so many units of energy that that extra energy cost adds up.
Let's look at 15 cents a kilowatt hour, still making quite a bit at the intermediate level but now you're losing money in the really energy-intensive situations. This is just as an example. This is industrial electricity prices in Wisconsin for the last 25 years ticking up and this is part of the explanation of why things are getting harder. It's a big part.
Okay, all this energy doesn't replenish itself. It's fossilized sunlight which we are mining and we've got the good stuff out and now we're going to the medium and the harder to find stuff, and so the low cost is going towards higher cost and higher environmental externalities. I don't want to spend too much time on this. This is a graph of US oil production. It peaked in 1970. It's getting close again right now because we're doing this light title oil which is basically the source rock.
This is a graph, pretty much recent that it peaked in the middle of last year and now is declining because at $40 a barrel they're shutting down drilling because it doesn't make sense. They need 70 or $80 in Bakken to make money. This is the rig count, it's crashing, and what's very interesting is half of our wells now have been drilled in the last two years and they deplete. The first month of the production is the peak and after that they deplete. It's like this treadmill that we're running faster and faster on.
Okay, to understand energy we first also have to take a little bit of a sidetrack to money. Energy is what powers modern society. Money is a claim on energy. We're told that the banks are intermediaries, they just move money around but the reality is that banks create money from nothing. They create money with no tether to natural resources of the environment. As long as you have a good credit rating, they put a million dollars in your account, a million dollars in the bank IOU account and everything is even to the bank's perspective. From the world's perspective, all of a sudden there's a million dollars that can go out and buy trips and houses and cars and buildings and stuff and this has worked out for quite a while because we had a lot of open spaces and lots of natural resources.
What happens is we're going to that at a very, very…I don't want to spend too much time on this but it is an important part of the puzzle. From 2000 to 2014, the world output went from 41 trillion to 57 trillion, our gross domestic product. In the same time, our debt went up $120 trillion so we're adding more and more debt just to grow a little bit.
If you understand that energy is our real capital and that money is a marker for that capital, at some point they cross and there's too much money that represents the same amount of underlying energy and I would argue that point happened in the 1970s. Okay, what does that mean? Well, right now everyone's like, "Oh, what are you talking about? Oil is so cheap, there's no problem." That's the price of oil. The price of oil is what we pay at the pump. The cost of oil is something different.
The cost of oil is what the oil companies have to pay to get it out, and this is a long-term chart of what the cost of oil is averaged in the world and it's gone up significantly over the last two decades. I would argue that there's going to be this seesaw battle between energy and money over the coming decades. We print too much money to offset the recessions that happen from expensive energy and then that money can't generate return and it crashes right now which is what happened with commodities the last few years. Then we don't draw enough oil fields, wells and the price goes back up and it's going to probably follow that trajectory.
Energy is going to be moderately too significantly expensive the rest of your lives more than today, not saying the next five years. It could go anywhere then but after that, I'm very confident in that.
To end this section, there's one other thing that's happened and that is that the pie slices, once we have the big pie, the pie slices have changed in their distribution. Usually, someone leaves when I start talking about evolution. This was weird with the energy. Basically, this purple line here is the bottom 90% of society after inflation real income and you can see that most of the gains have gone to the top 10% and the bottom 90% is pretty much the same as it's been the last 30 or 40 years.
Okay, why is knowledge about energy important? Energy is what we have to spend. Money is just a marker. That's why. Okay, environment/climate change. How many of you are environmental students or something like that? Well, quite a bit of you. Okay, well, I'm not going to…Okay, I'll go through this as best I can. Most of you are aware that we are in the midst of a mass extinction of nonhuman life that depending on the estimates there's between 20 and 200 species are disappearing every day.
You could spend all day long looking online of the disastrous things that are happening and then just new things come every day. Last week they've tested all this salmon in the Puget Sound by Seattle and they had cocaine and antidepressants in them and just all kinds of stuff like that. The human juggernaut is impacting wild nature.
How much? Well, if you look at the chart here. Before the agricultural revolution this is represented here. All these wild things were the terrestrial wild animals on earth. This was humans, tiny little, tiny little sliver. By the year 1900, this goldfish was humans and this blue fish was our livestock. In the year 2016, this is humans, this is livestock and this is the rest of the wild animals. We outweigh wild animals 60 to 1. You add up all humans and all of our cows, pigs, goats, sheep, chickens, that outweighs all the elk, the bison, the deer, the rhinos, elephants, everything by a factor of 60 to 1.
This has progressed over time and wild nature is losing badly. The two main points, we outweigh wild animals and the other main point is that the total biomass has dramatically increased over the last 12,000 years. Why would that be?
Speaker 4: [inaudible 00:20:48]
Nate Hagens:Yeah, but …
Speaker 5: We move around fast enough [inaudible 00:20:52].
Nate Hagens: Well, the answer is that we're not only using current sunlight on the crops but we're using ancient sunlight as a fertilizer and to grow more food for humans and livestock, et cetera.
Climate change. I have a PhD in natural resources. I've read a human climate change papers. I have no idea what's going on. I know first principles which I'm going to tell you, it's so horribly complex that I don't think anyone human or any group of humans really can predict with any accuracy but there are some things that we absolutely do know and so I'm going to give you a few points that are islands of knowledge in a sea of unknowns.
Number one, CO2 is a greenhouse gas. I could argue that CO2 is the greenhouse gas. Number two, carbon pulses in the past have been linked to many/most or potentially all the mini and mass extinction events in Earth's history. The Chicxulub meteor that hit 66 million years ago and caused the dinosaurs to go extinct, there was a carbon pulse that had started 150,000 years prior to that and some people are now linking that to the mass extinction. Humans are emitting carbon 10 million times faster than it was sequestered. We know this.
Fossil carbon accounts for 90% of the work done in human societies and then this, I'm skipping ahead a little bit, but humans are delusional and we have an inability to say I don't know. You got smart people up there debating about something and they will never end the argument by saying, "You could be right, I don't know." They're like, "Well, did you see this paper," and we liked to be confident of our opinions.
Okay, so having said that, here are some egregious assumptions regarding climate, in my opinion. The IPCC has four scenarios. The RCP 8.5, the 6, the 4.5 and the 2.6 that show much fossil fuel will be admitted this century. None of them take a biophysical view of what I just shared with you which how much energy it cost to get energy out of the ground. It all is based on if humans demand a certain amount of energy that will be produced because we're clever and we will find it somehow and higher prices will cost that to come.
I think the RCP 8.5 is insanity. There's no way we are going to produce that much, eight times the amount of fossil carbon as we have today. Even the lowest scenario is 2.5 times as much fossil fuel today at the end of the century. In that scenario they also have some very optimistic assumptions on new technologies that will be developed to sequester the carbon. I think the climate science is probably very accurate but one of the things is the inputs is by econometrics which is I think is very suspect.
Using biophysical models, emissions peak soon in my opinion. Soon enough? I have no idea. Well, here's the other thing, if we look at the models of all the papers I've read, they all reference RCP 8.5. I'm yet to find an Armageddon type climate paper that references one of the lower scenarios. Having said that, not being a climate scientist, you can also look from the bottom up instead of the top down. We've just had seven months in a row of record temperatures.
Artic Sea ice has just hit another low and you could take recent results and extrapolate them forward and come to a different conclusion which would be a very scary conclusion so I admit there is a chance that there's a runaway process, I don't know.
Another thing I think is important is that Earth systems sensitivity are all that should really matter. Most of the climate models they only care about what happens out to 2100. The moment I'm dead I don't care one minute or a thousand years or 10,000 million years after I am gone. All are equal to me and so I think we need to start talking about what are the long-term equilibrium impacts from what we're doing.
Finally, the risks and odds are divorced from the ethics. I think what is the prudent thing to do when we do don't know? We're now insisting on a 95% certainty of doom before considering any action when a 0.00001 certainty of doom should motivate us. This is insane.
We're waiting to be ultra-certain that we understand everything before doing anything meaningful. Why is knowledge about environment important? I think everyone in this room knows that. The environment is our home. The only home that we know of that has life such as us.
Okay, human behavior, I would love to spend a whole hour on this but I'm going to do it in like six minutes because it's one of my favorite topics. We are all stardust. Every molecule on this earth is from the stars that coalesced.
We are related to all life on earth starting three and a half billion years ago and rotating out into every other living organism on earth which we share some percentage of our DNA with, including some very high percentages with the other ape lines and very high with other mammals like dogs and cats. Yup, happens every year.
No, I'm kidding, I'm kidding. Okay, so we descended from apes, not the apes that are alive today but other ones five or six million years ago and it might be my mom only that recognizes me down here.
Okay, I have a golden retriever, that's Quinn up there. How did dogs come about? They evolve with human selection from wolfs. We selected them for the traits that we wanted. If you look at a behavior meter, what shouts loudly to a golden retriever? Well, it's going to be the stuff that was in their ancestral environment that we selected them for. They're not going to go up a tree and want to go like a cat, that's not in their repertoire. They're going to want to chase Frisbees and have hamburgers and bones and really listen to what their masters say and above all, they're going to want to play and wrestle and fight with other dogs.
That is their neural scaffolding and what shouts loudly to them via neurotransmitters. You know where I'm going with this. Humans evolved on the Pleistocene in tribes of 150 other humans for a very, very, very long time, thousands of generations. The things that led to success in that environment are food and novelty and salience, and things that are different that we pay attention to and pornography, and Facebook, and drugs, and highest of all, is sexual signaling, status, competition, debating, social engagement where we are incredibly social creatures and so the thought of someone dissing you on Facebook shouts louder to you than the threat of nuclear war two weeks from now. Our brains are attuned to that sort of a dynamic.
Our brains are like analog computers with thousands of subroutines running at once. My dad is a snake fanatic and few of you know but we have a coral snake and a king snake and he released them on the floor about an hour ago. No, really, we do have snake detection modules going right now. They're just not really that active. We have tons of modules that are working right now at the same time. It's just your neocortex is paying attention to me and every few seconds your feeling maybe like wow, is it hot in here? I better pay attention.
There's all kinds of subroutines that are going on at once and whatever shouts loudest is what gets our attention at the moment. I was kidding about the snakes, obviously. Boo. Okay, so that was another subroutine of like fight or flight and you're thinking, yeah.
Okay, there's a long, long list of why humans are not rationale about our biases and I'm going to just go through a few of them. There's one called a time bias which is that for evolutionary reasons we distinctly care about the very near term future rather than the past.
James Schlesinger, former Secretary of Energy says we only have two modes, complacency and panic. Johnny Carson made a joke in 1973 on The Tonight Show that said the United States had a total paper shortage. By 10 a.m. the next morning all stores were sold out of toilet paper around the country. In-group basis/conformity bias, there's a famous Ash test where people went into a room. One person with seven other confederates and if the seven people agreed that line B was the most similar to this line, 70% of people agreed that line B was the same as this line. People are incredibly influenced by what their peer group and what people around them say, we are social creatures.
Optimism bias, we like to think positive thoughts. We like to think positive thoughts about our own abilities because it's adoptive to do that. If we thought we were losers and we thought that we suck and had no abilities we never would have left the cave so optimism actually reduces stress hormones. It boosts helper T-cells to help your immune system and it reduces cortisol and so to have an optimistic view on life might not be accurate but it's healthy.
Intelligent people mostly think the same way. This is a G7 finance ministers a few months ago. Authority bias, there have been studies, a lot of studies that have been shown that someone that's very confident and very charismatic, even if the footnote says this guy has a crappy track record will be believed and followed more than some nerdy guy who's really meek and not too sure, even if he has a stellar track record. This goes back to our storytelling shaman past where we respond to authority.
Dave did not mention but I'm writing two books with a guy that runs an organization called Earth Trust for young people and most of what's in my talk tonight is adapted from the books and one of our core themes is that we have a relationship with reality. We don't know reality and we have a virtual world in our brain that is the interface with the real world but they're not the same. That is really in one sentence the explanation that we find ourselves in this environmental economic predicament.
Okay, if we think about the agenda of the gene, the genes that got us here, all of us sitting in this room, let's just answer these questions to yourself silently. Temperature, you prefer 10 degrees, 65 or 110? Late night snack, would you rather have some ice cream or a veggie salad? Group situations, you prefer everyone to like you or prefer ostracization? Wealth, you prefer to be poor or prefer to be rich? Number of children wanted, zero or greater than zero? Spare time, sitting quietly by a tree, scanning social media?
Fee most comfortable with, friends or strangers? Prefer to be miserable, comfortable. Need to be in town by tonight. You want to drive a car or take a bus? Prefer to be viewed as more or less successful than your neighbor. Care more about your life is next year or 10 years from now? You want to win a war or lose a war?
Then anticipating the night's weather I added this little one. Earth Day lecture, yes, no, anything else but that. You're all ahead of the game and thank you for whatever else you would have been doing like Game of Thrones. "I've seen it three times, this one, but I don't want to go to that Earth Day lecture," so thanks for coming.
This is what the agenda of the gene leads to and this is happening in China and India and everything. The agenda of the gene is perfectly situated for humans to create a giant low-entropy slurping amoeba that's slurps forward and takes all the natural resource goodies without any plan. If you're living in one of these houses, it seems great but from an aerial view you can see that the human impact is metastasizing over the planet. That sounds awful but it's closer to the physical reality than the virtual reality. That's Cape Canaveral by the way.
If we think about the castle of sustainable futures we think about the things that we envision in my mind, what might be a sustainable Stevens Point. There's this giant moat around the castle that has these blockages of some of these human interfaces that I've mentioned some, cognitive dissonance, addiction, time bias, status, fairness, denial, et cetera, so this is an issue.
Why is knowledge about evolution important? Well for many reasons. Number one is it cuts through some of the BS we see on TV and in the media about what's really happening, about our social interaction with each other. It also gives us a pretty good glimpse as to why we're missing some of the larger societal issues, some of these biases. It's also important to know what we really need and what do we want. It doesn't mean that we all have to have huge resource consumption and own yachts, we're happier with much less.
It's a very key part to know the evolutionary resource and synch balance sheet of the natural world, but it's also important to know what we really need. Then finally, and obscurely, facts are not sufficient. Learning about human behavior and delusion now and then cognitive biases teach us that telling someone the facts is not sufficient so knowing the buttons to press might be able to allow young crafty people to find workarounds and get things done.
Okay, so that is the first half of my talk. We've now briefly touched on these three lenses of viewing the world, energy, environment, behavior. Using these lenses will now allow us to see 25 flawed narratives that underpin modern human society and there are 50 in the book and I chose 25 and apologies to at least one of you in the audience who I know is an economist because I'm sure you're a nice fellow, but I'm going to be pretty hard on economists because I think well, you'll what I think.
We live by stories. We are storytelling species and the stories that underpin the United States and the world right now are like a round peg and a square hole. They don't fit the future that is likely to come, so what I'm going to do now is be pretty critical of our stories and suggest what might be more aligned with the truth. Then at the end I'm going to give you about 20 recommendations as young people how to cope with what's ahead and engage with the future.
Okay, major flaw in economics is that labor and capital explain economic growth. There's something called the Cobb-Douglas function which is this thing here and basically, it says that some productivity factor, labor and capital, and that explains how our wealth comes about.
Every single thing in our economy that results in GDP first requires an energy input, and $40 worth of oil is to an economist worth $40 worth of tequila or beef or a coffeemaker or a hat. Energy is treated the same as any other commodity, in reality it explains 60 or 70% of our economic growth which you can imagine because one barrel of oil at $20 is over 20,000 days of human labor. The reason economists miss that is because there was always cheap energy and there was cheap energy to replace it the last century so it never really became an issue. Fossil slaves explain a large part of economic growth.
Number two, there are no limits to growth. Here's a Julian Simon quote. "We have in our hands now the technology to feed, clothe and supply energy to an ever growing population for the next 7 billion years." That quote's only 15 years old.
For most people now growth is already over in the OECD nations. Ninety-five percent of Americans, everyone except this top blue line, have lower household income after inflation than they did a decade ago. For the most people, the median income has been the same the last 30 or 40 years.
Okay, this s a little nerdy of a graph but I went to business school, in business school they teach you that the cost of capital is the treasury note. The treasury 10-year note and that's what business decisions are made on. The 10-year note has been declining and declining in yield so cost of capital is very cheap but now you all know that energy really underpins our society and the cost to extract a barrel of oil has been going up right now around $50 a barrel. It's coming down a little bit now because there's a deflationary pulse in the world economy but it's going to go up again.
Our real cost of capital is increasing yet we're making decisions as if it were decreasing. Demand creates its own supply. Until very recently, our international energy, our energy information agency in the USA would make a 20, 30 or 40 year forecast of how much energy there would be. It's based on not some analysis of how many hydrocarbons are under the earth but what the demand forecast will be. Whatever the demand will be, that's what our oil will be.
There's something that's interesting that happens. I would argue that price is not a good indicator of scarcity. Here's a straw in a pool taking out some liquid. We just pay attention to the liquid and the fact that it's $80 a barrel. Here's a bigger straw and here's the same liquids coming out and oil is cheap. It's $40 a barrel but until we hear that slurping sound, we don't really know that we're nearing the end of the source rock.
Okay, major flaw, that society runs on money. Society doesn't run on money we just think it does. Society runs on energy and creating new money doesn't create new energy, it just extracts some of the next expensive tranche of energy faster. I don't want to overly burden you with this graph but this is a debt on the major countries in the world. This red thing is very interesting. This is the money created from scratch from the government of China. In the last seven years they went from 3 trillion to 39 trillion from nothing and 50% of the increase in global oil consumption came from China.
They're building buildings so that people will come. They're doing it all on the come not based on what the future will be but based on now. The point here is that money is a marker for energy and we base our decisions assuming that energy will always be available as it was in the past.
Technology can offset resource depletion. There's a rumor out there that 10% of internet traffic is related to cats and cat videos. Around 12 or 13% of our electricity use in the United States is for server farms. There's a decent chunk of our energy that goes to cat videos. That's kind of silly but the truth is that a lot of our energy goes to gadgets that don't really have an influence on improving our life.
Peter Thiel's a billionaire venture capitalist, "We wanted flying cars but we got 150 characters." The vast majority of technology creates something that we use and it creates a larger demand for energy. If technology were to create a car that was half as costly, what would happen? That's great for our economy. Well, yes, it would be great our GDP, a lot more people would buy cars. Those who had cars would have a lot more money to spend on other things and then a lot more people in India and China could afford cars. Other than direct energy efficiency and new technology with solar panels and other energy things, most technology is just a vector for larger energy use.
The American Dream is based on hard work and cleverness. It is a common story. Well, we have used more in the last 15 years, the last 30 years, the last 50 years, the last 100 years since the dawn of time. This country has used more fossil carbon than any other country. We've had the benefit of all that natural resource and we have the seignorage of the world's reserve currency.
I think Americans are special in that we have some unique attributes and we're helpful and we're creative and we have some things going for us but a lot of our success was based on energy and natural resources.
The environment as a subset of the economy is what most economists teach. Well, I'm not going to go into that because you guys are environmental students so you know that the economy is definitely a part of the environment.
Humans are self-interested utility maximizers. Microeconomics says that we care about our self-interests. Evolutionary biology and common sense shows that humans are not just self-interested. We are incredibly social and emphatic and other-regarding. Just smile at a baby and he'll smile back. At three months old you'll see that we're not just self-interested.
Economic theories are natural laws. This is not the case. Economic theories, I won't bore you with the whole this is geologic time up to 300 million years ago. These last 20 million years in large here, the last 12,000 years in the bottom, human population is this black line. This little section A is when economic laws were invented. It's not based on these other eras. It's based on a correlation of what happened the last 30 or 40 years.
Given that 90% of our work is done by fossil slaves, incidentally we got rid of our real slaves in this country about the time that we really started to expand fossil, coal and oil use.
A country that keeps all of its natural resources untouched is going to have very low GDP but a country that finishes its natural resources and chops everything down is going to have high GDP. What is a job anyways when 90% of our work is done by machines?
Eighty years ago John Maynard Keynes predicted that a hundred years from now, meaning 10 or 15 years from now, that humans in America would only have to work 10 hours a week because we would be so rich because of all this technology and robotics and fossil fuels and stuff. Well, we're working longer hours than ever.
Well, the real stock market is crashing. I don't want to belabor this point but as our Dow Jones hit 18,000 today there's a huge litany of negative environmental results that are coming out. Just for one example I was in Tanzania a while ago, when, right here. Their elephant, their population's gone from 300,000 down to 50,000 elephants. This is just some of the biomass and the oceans that have declined. I could spend 50 slides with things like this. Why doesn't anyone pay attention? Because of shifting baselines, it looks the same as yesterday and yesterday looks the same as the day before.
Imagine some of you students have grandparents that went up to Hayward and had pictures of nine muskies and all kinds of fish and you go up there now and you catch a little musky and you're excited because well, I never saw a musky before but it used to be different. My hope for you is that when you're in my age the largest animal around these parts isn't a squirrel or something like that. I mean I'm not predicting that but we need to value those things.
Finance is good and helpful. This is what I was taught in business school. I got a master's in finance. We are the cleaner fish. We go out there and we allocate capital so that the economy goes in the right direction and the capital is allocated wisely. Sometime in the last 20 or 30 years the cleaner fish have morphed into barracudas. Right now, finance, the finance investment real estate section of the economy dwarfs these other areas and this was seen in the 1800s and economist Thorstein Veblen made a distinction between business and industry. Industry was what got our shoes and our food and our transportation and business was making money off of money. Those have diverged in our economy and I would say it's not a good thing.
Economic theory has no plan for the future. The plan is for next quarter's earnings and it just continues and then we just hope that that ends up in a good place. For those of you that play poker, that's like going all in with Jack, six, off suit. Few last, that's all, that's good.
We have chosen the right shamans. This is Warren Buffet. This is Dennis Meadows who is an ecologist. I just picked a couple quotes this afternoon. "I made my first investment at age 11. I was wasting my life until then." Then just a quote from Dennis, "Running the same system harder or faster will not change the pattern as long as the structure is not revised." We have a biologist professor in the front and second row who is fond of the term from Garrett Hardin called ecolate. She wants her students to be literate, they can read; numerate they can do graphs and numbers but also ecolate, which means they are literate in ecology, in how the world really works.
I think this is totally missing from our schools today and it's not the fault of you all, it's just our education system misses ecology.
I would argue that the Warren Buffet generation was the hare and the tortoise and they were the hares. I expect that the rules of the tortoise will win out in the end. In listening to people I would say we should listen a little bit to businessmen but we should listen a lot more to ecologists and both are humans therefore, both are delusional so you got a handicap part of them out.
Money is the ultimate goal. Well, why do you want money? Have you ever thought about it? You want money for three reasons I would argue. We seek money for basic needs but that's only a really small part of it. We seek money so as to stockpile future novelty and experiences and comfort. Then by far and large, the biggest is it's a social signal to others on how successful or lack we are of.
Happiness is a function of physical wealth. It's a corollary of what I just said but we know that this is not the case that if you're really poor and you get an increase in income or goods you get a very large increase in wellbeing. Until you make around 55, $60,000 a year in America, much lower in other countries your benefits, your hedonic benefits start to level out. I'm going to talk more about that later.
Another flawed assumption is that everyone is entitled to an opinion on something like climate change, like a bus driver and a caddie are telling me that ocean acidification, we shouldn't worry about it. I don't even know what there is to worry but this is an ubiquitous thing in our society that democracy entitles people to opinions on things that they know.
A corollary to this is on the other side is that these narratives going on in environmental circles right now that it's the fossil fuel companies' fault are just silly. We're using those fossil fuels. There are corporation that are providing them. To blame Exxon for climate change is a bit like blaming Hitler's gallbladder for the holocaust. Yes, it played a role but it's really not the driver. If you really want to blame Exxon don't drive, don't eat food that you didn't grow yourself, et cetera.
On that note, as far as blaming, what's happening always seems to be someone's fault especially on TV, that's what they always talk about is the blame. The reality is, is that our fossil slaves have been asking for pay raises and they're going to continue to ask for pay raises. It's not the fault of the rich or the poor or the Chinese or the Republicans or the tree huggers, we're all in this ecological hotbed together.
We are the only people on Earth. This is my writing partner Don White who singlehandedly and he's never admitted this publicly, this will be the first time that someone says this, I think. He was responsible for 1500 driftnet boats being shut down. He was responsible for the Flipper Foundation and the Dolphin Safe Tuna and it's estimated that over a million dolphins are alive today that wouldn't have been without his efforts. He's told me amazing stories about doing yoga with dolphins and the dolphin would lead the yoga routine and choose different music and the culture and he was the guy that did the first self-awareness test on dolphins. Put some zinc oxide on the dolphin's face and it swam by a mirror and was like, "Whoa, what have I got in my face?"
We never thought to do that before. We're exploring other planets and we don't even know our own. I think there are other people on earth. We no longer really need wild ecosystems. Well, this is a long-term view of humanity's energy sources and at some point I would say in the next hundred years or so these fossil fuels will largely be gone. We're going to need the healthy rivers, healthy soils, et cetera.
Humans are the result of progress, the crown of creation is the myth. Well, we are pretty special and we manifest in all different diverse shapes, sizes, beliefs, activities, skills but we are not the crown of creation. We are a clever rapacious primate who has been unbelievably successful in accessing resources. Is that our destiny? No. that's the agenda of the gene but we are subject to the rules of nature the same way as other animals are.
Leadership and change is going to come from the top. I disagree with this. I think leadership and change is probably going to come from the bottom, why? Think about these debates you've been watching with the presidential primaries. The main issues that we're talking about tonight are not even vaguely mentioned except climate change maybe for 20 seconds.
I want to be reelected, more social status access for me. I have no answers for the real questions. I don't even want to acknowledge the problems at hand. I don't want to admit I have no idea about these things. I will do what I think keeps me in power. There are good politicians and bad politicians probably but right now, we need different narratives and then we get better politicians in my opinion.
It's over, it's too late is a common theme when people learn about these things. Well, the human brain is perfectly designed to say, "It's no problem. You're crazy, there's no problem. There's no problem, there's nothing to worry about. Holy crap, it's too late. Let's just have some drinks. It's too late." There's a tiny little window in between those and it's just not true. Yes, there may be some dark futures but they're under the curve as a possibility. There are also some bad, very bad, good, slightly good, they're all still on the table and we can't forget that.
Renewables can replace fossil fuels, maybe a common theme in your classes. I'm going to just briefly talk about why I don't think that's the case. New technology and renewable energy are possible due to existing societal energy surplus. All of us in this room are here tonight because of existing societal energy surplus. We're not home like planting, although some of us probably should be, but we are here because we have enough food in our refrigerators to come here and listen to a talk about the state of the world. Renewable energy has the fossil infrastructure already built to create it.
No combination of fossil and renewable energy will maintain economic growth for that much longer and that's because of our debt and the huge debt overburden. There's going to be a reset there and when it comes back we won't be able to get back to this level, in my opinion.
Fossil carbon underpins all mining, extraction, industrial processes needed for renewables. They're not really renewable either, at best they're repeatable. Renewable is the sun and the wind, the machines are repeatable.
One third or more of societal energy use would have to be set aside meaning not used for Disneyland, NASCARs, schools or hospitals if we were to dedicate enough energy to invest into creating a renewable future. [inaudible 00:55:21] in the back, this is being videotaped and I can get you my slides if you want. You're taking notes but you're welcome to.
Currently, scaling renewable energy is not replacing fossil fuels but actually building a bigger heat engine overall. Keep in mind that 80% or so of US energy use after conversions is nonelectric but most renewables, wind and geothermal and well mostly, geothermal and solar are electric so there's a mismatch there.
Renewables can replace fossil fuels but society will look much different. We can have a vibrant and meaningful society using mostly renewable energy. My rough guess would be a quarter to a third of the current size. We'll have to work when the wind blows and sun shines and not bake two turkeys at 3 a.m. if we have a craving. We'll need to keep some fossil carbon industry going to maintain high-quality liquids fuels or adopt the $100 trillion of existing built machines to electric and this will not be affordable to the masses.
Can financial markets and democracy work with contracting economies? I don't know.
The future isn't real. Well, the next half hour is real because I have some more slides to share with you on what to do. The next few days are real because you guys have some quizzes and some papers to write. This weekend is probably real because you have some plans. Maybe even the end of this year is real. Next year gets a little dicey. Ten years from now is like fantasy for most people. A hundred years from now most everyone here won't be around anymore. That doesn't even seem real. What about a thousand years? What about 10,000 years? What about 2 million years from now?
If there were humans alive in a hundred thousand years from now that is so fantastical for us to believe that we would probably sell them for soup stock or slavery or something if we could monetize them today. To most people, the future is about as real as leprechauns. We in this room not that long ago were a conditional probability of existing and here we are. I think this time bias thing about what really can exist. I mean we're closer to the year 2100 than we are to World War I so the future will arrive.
Then my final flawed assumption that I have for today and you have to get the book to hear the other 25 and it will probably be available for free because it's for young people to figure out what to do this century, is our culture is pursuing the right goals. What are our cultural goals? No offense, but our cultural goals are heaven and quarterly earnings.
This is my own viewpoint here. I would argue that heaven, in the way that I think about it, was the natural world pre-agricultural revolution on this planet. I think we have to save and preserved what's left of that heaven first and foremost above everything else then we talk about earnings and surplus. Down the way, we can have any pursuit of your belief of heaven. It's the prioritization of how things are.
The agenda of the gene is perfectly suited for these two goals and I think we now know enough to move beyond that in theory.
Conclusions, it's all revolving around energy. The extraction cost is going up and how much humans can afford in societies is going down. That's going to clash after the next five years.
In nature if a cheetah goes from an antelope to a rabbit to a mouse, that has implications for his life. Imagine that you have a motor scooter that has a one tank of gas and it can go a hundred miles on that tank. Your gas station is two and a half miles away. You go fill up, you come home, you got 95 miles left to go do whatever productive activity you need to do. All of a sudden the biophysical situation is such that the gas station is five miles away or seven and a half miles away. You got to go seven and a half, come back seven and a half. Now you only had 85 miles left to deliver your pizzas and whatever else.
Now, in theory, at some point, the gas station could be 50 miles away. You got to go there, fill up and come back. Well then, you got to go back and fill up and come back and you get no work done at all. This is where we are facing the next couple of decades is there's a pyramid where we need energy to extract energy, then we need to refine, then we have transport, growing foods, supporting family, education. The things at the top of the pyramid need a very high energy surplus to continue.
I would argue that this scooter is what we built our economic and institutional policies around where energy was around 5% of the total pie. Even if the economy gets bigger, the blue circle is bigger, the energy component of it is bigger still and that has implications much like being able to drive fewer miles. We're going to have to either give something up or people will be poorer or some combination.
At the core of this talk really is the dichotomy between doing things to save the environment and doing things to help the economy. In most cases they're kind of at loggerheads.
What are some things that would reduce climate risk and save environment species? Steep carbon tax, which I'm in favor by the way but it would hurt the economy, steep consumption tax, a baby tax. What are some things that would help the economy? Well, cheaper energy. If we come across some three cent, four cent a kilowatt-hour or $20 barrel oil energy source, everything I've said about the economy will not be valid but everything I've said about the environment will be five times worse because we're not mature enough as a species to have too cheap energy at this point.
$50,000 forgivable government loan for every American, that would be great. Industrialize African and Asian subcontinents. You see there's this and we're never going to know what to do until we decide what we want. Right now we want heaven and quarterly earnings.
This graph again. In a realm of increasing energy cost the areas of the world, the Stevens Points, the Wisconsins, the United States, the areas of the world that are super dependent on really high-end energy use are going to be at a disadvantage. Airlines, aluminum smelting, these are some of the really high-energy intensive stuff.
The castle of sustainable futures, we have these human behavior barriers but there is a moat here and cultural evolution moves far faster than genetic evolution. We really, really care what others think about us and if all of a sudden some new things take hold and other people are like well, look at what they're doing and I don't want to be left out and hey, why aren't you with. I mean cultural evolution is difficult but when it moves it moves lightning fast. For you budding activists in the room, you, you were the first person that signed up to come to this event on Facebook I saw. I saw.
For the budding activists there's a secret underground tunnel in the back but you have to understand human behavior to be able to get there.
Nearing the what to do as young people. We know what we're doing to the planet. We know where we came from. We know what drives us. We know we're the first generation in history to have the knowledge that you've all just heard tonight even if it's 10% wrong around the edges or whatever. This is largely the physical reality of the century. We know where we came from. That has some non-negligible value I think.
Summary, we don't face an energy shortage but rather longage of expectations. For most, not all, people growth is already over and the same or less is going to be the new reality. Current high consumption levels are being supported by central banks creating money and guarantees around the world. I didn't really talk about that. A carbon tax is a tax on 90% of our workers and would reduce GDP. Solar and wind are getting cheaper but not cheap enough to continue growth. Without growth we have poverty and greater inequality. We need much larger than baby steps, but our policies and institutions were designed for baby steps.
We're unlikely to do much in advance of a crisis, toilet paper, time bias. Resource scarcity and social equity crises are likely to manifest in fiscal chaos which sounds a little hokey after the Dow hit an all-time high today. The main difference between us and earlier humans are two, two main differences. One, we use fossil carbon and two, we finally have figured all this stuff out.
What to do? I have no answers for what to do because I don't think there are answers. I think those people who claim to have answers are probably going down the dead end, not necessarily. I think to admit that you don't necessarily have answers is two or three steps ahead of some that do. There are various trajectories. Having said that, for young people to engage with this future I have a list of suggestions.
It's natural for an evolved creature to care about this stuff the most, food, family, money, novelty, next week. Simultaneously, we're also a little bit thinking about next year, a little bit next 10 or 20 years and a little tiny bit the next thousand years, healthy ecosystems, living oceans, Earth Day type stuff.
Number one, if you think about the milking example and then you think about that applied to a country or a city, think about applying it to your own life. I would advise you over the next 20 years to not become incredibly dependent on a large energy infrastructure. Don't be buying huge SUVs and boats and things like that when you can get your novelty and neurotransmitters a different way.
We don't know the future. We can see little glimpses of it and for some of you tonight this is probably a sledgehammer to the head because you haven't heard some of this stuff and it's a little scary. I know that. I think you have to be scared first to actually engage with things but once you realize that, first of all, our brain can handle all different things at once and you just make the really scary stuff a little smaller and focus on the things that you need to be effective.
I think in my experience there're four types of people. There's the super pessimistic guns and gold and we're going extinct by 2040, there's nothing we can do. There's the super optimistic, mostly economists, who think that energy will magically arrive and that efficiency and technology will save things. I think most of the beneficial things that we need to happen are going to come from these middle two groups, the mildly pessimistic and the mildly optimistic people.
My second advice is to embrace uncertainty. It's okay to not know exactly what's going to come about but to be positive and try and make things pay forward some pro social aspects into the future.
Welcome and consider alien thinking because conventional thinking is what's gotten us to this mess.
Number four, do something for the future this week can be really small but most importantly, don't tell anyone about it. So many people in activist and environmental circles do something, blog about it because it's social attention to them. Just try doing something small for your community, for someone else, for the future, and don't brag about it, don't tell anyone and see how it makes you feel.
When I made this letter I forgot my mom was going to be in the audience. This is me the day I graduated finance school and I was about to go to Wall Street. This is a few years ago when I was hiking. I don't have a lot of money. I teach and I consult a little bit. Someone in Wall Street that's making 400 grand a year or a university teacher, which one of those is a success or a failure? Most people would say that the Wall Street guy is a success. I think that's starting to slowly shift.
For me, I feel like I've never been living a more meaningful life and happier than now except when I get a phone call or visit from one my hedge fund buddies and then I feel like a closer. Because well, yeah, we went to Costa Rica and we went fishing in this tuna boat and I had drinks for 200 people and I don't want to do those things but yet I still felt like there's no way I could afford those things so I feel badly in those situations.
My third advice to you, it's very important to choose your tribe. Choose who you hang around with. Choose who you're going to experience the future with and make sure they're quality people, of the type of things that you care about, that's really important.
Go on internet, social media, and even electricity holidays. This is good for the brain.
Periodically reset your hedonic ratchet. Your hedonic ratchet is like a ratchet that can only set higher and we get addicted to higher and higher things. We didn't really talk about that but with all the technology and the Facebook, and the Vines and the Pinterest and all these things we get to a point where we don't have the attention span to just plant a tomato plant or sit in the forest and read a book. I strongly advise you to periodically go back to nature and reset your brain the way that our evolved past was.
This was last week. I was in the Appalachian Trail in Tennessee with my little brother. He's doing 500 miles. I did 54 miles with him. We had our packs with our tents and our mountain house food and our water. Let me tell you, a human being with a roof over its head or a tent, food, some friends, and a purpose is about as rich as a human being could ever be. If you surround yourself with the wrong stimuli you won't realize that, so try and just remind yourself of that from time to time, which leads to this advice.
We are incredibly social and we look to others to get our feedback of whether we're doing something right or wrong. In nature, relative fitness is what drives behavior. Everyone in this room is fabulously rich relative to most humans that have ever lived. A lot of these advices are bending the agenda of the gene so that you can live better lives.
What I'm suggesting here is that compare yourself to all humans who have ever lived and just revel in the magic and the things that you can do today and don't compare yourself to what other people may be consuming.
Avoid blame as much as possible. Take ownership and responsibility. Try to reject the consensus trance. This is another thing where we look to others to see what we should think. Try to be independent thinkers. This guy was saying buy as many tickets as you can afford to increase your chance of winning the lottery.
We need more facilitators between energy and the economy because these two camps don't really speak to each other.
Homo sapiens isn't here yet. We need to strengthen the agenda of the sapient mind versus the agenda of the gene. Our brain has all these little modules and you can say I'm really, really nervous about climate change and it's freaking me out but portion that over here and then be productive and engage with the other things over here.
We can, I've learned to do this and to suppress the uncomfortable things so I can be productive. You really have to do something called metacognition which is thinking about how you think, like observe how you do your own thinking sometimes.
In pursuing fairness and justice we cannot forget our cousins, nephews and nieces that we share the planet with because we don't see them sitting in this room but they're out there. I think there are so many endangered species that if every human in America would just choose one species to do some effort to save, it might be a pretty wonderful thing and you wouldn't have to do it full time. You would just dedicate some research and learning and get involve with that one issue. I'm working on maybe something like that.
Educate and inspire others on new aspirations and values. I think a lot of us are so used to social shaming that we have to recycle and we can't eat meat and we can't fly and we got to drive a Prius and it's like crazy. You can't keep on top of it all. Don't worry about being perfect, just try to be effective. As such, I think we need more warriors and mystics rather than someone saying, "I'm just going to go off and live in the woods and I don't want to consume too much so I'm just going to live in this cabin." That's not really saving what we have at stake.
Next to last, aspire to be net positive. All of us being alive today have a footprint. This is not our fault. It's not the fault of anyone in this room what's happening. We were born into this but now we know. I think it's time to engage and figure out this, your impact, and try to aspire to do something greater for the future. It doesn't have to be for animals or dolphins. Could be for Stevens Point, people living in 2060, could be something else for your family but try to involve the future in your aspirations.
I will summarize all these but this is the list. The number one thing I would recommend to you is think about the things I've talked about tonight. Think about the landscape of your next 20 or 50 years. The environmental crisis, climate change, energy depletion, the economic growth, it's a lot of heavy stuff. Who do you want to be? Are you your urges or your principles? Are you some combination?
Have a conversation with yourself about how all this plays out and then live up to an ideal that you like yourself. You don't have to be perfect. None of this might appeal to you but like yourself and figure out who you are.
I'm going to finish with a few quotes, kind of corny, from Lord of the Rings but I think they're good. "There's some good in this world, Mr. Frado and it's worth fighting for." "Even the smallest person can change the course of the future." "The board is set, the pieces are moving. We come to it at last, the great battle of our time." "I wish it need not have happened in my time," said Frado. So do I," said Gandalf, "and so do all who live to see such times, but that is not for them to do decide. All we have to decide is what to do with the time that is given us."
I don't know what to do but I think we have to try things. There could be a million different paths and we won't know until well after the fact which five or which 300 of them were really impactful to the future.
This is the carbon pulse. We're living in between those two stars. We are social species overly focused on the next five to 10 years. Fossil fuels are leaving us this century. Can we leave them and save the world?
I'm just going to quote to you something Don and I wrote in our book because I couldn't memorize it. "Any of you here could be heroin addicts as a life path but probably very few of you are planning that. Why not? Because it's a waste of an aware, interacting, unique life which could be excellent. You can do far better. You can do extraordinary things with your life by your own high definition of extraordinary. Living a life you are proud of means actually being an individual, actually having a real morality and occasionally swimming upstream rather than downstream. You are the mind of life on earth. The things which are difficult for you are utterly impossible for any other being. To the extent the future can be consciously shaped, it would be done with the minds like yours which strive to be self-aware, proactive and good rather than self-satisfied, reactive and reward-seeking.
"You're the most powerful sort of being ever to have existed, a self-aware mind in a society which leaves you free to move and innovate with the resources of a culture at a peak of industrialization and energy use. It took this world billions of years to produce you and now you're here against all odds living a too brief life at an amazing and dangerous time. You can own your aspirations and decide what your ethical standard should be. There are countless adventures for the highest stakes hiding in plain sight in our collective blind spots. Learning roughly where the blind spots are is the first step towards self-awareness and away from the gene's mindless and self-destructive agenda. Once you learn that, you're free."
Thank you. Thanks.