How increasing complexity somehow increases reliability
Unless you’re a chemosynthetic organism who lives off hydrothermal vents deep on the ocean floor, it’s more likely than not that the energy that you have ultimately comes from the sun like so:
Sunlight -> plants -> humans;
Sunlight -> plants -> animals -> humans; or even
Sunlight -> plants -> animals -> animals -> humans.
Looks pretty simple, right? That simple 3 to 5-step should leave us with plenty of free time to do other things, like watching cat videos for instance. But somehow, the activities of our lives (i.e. things we do all day) are predominately about the story of the never ending quest of searching, building and managing flows and transfers of energy for our long term survival. And for some reason, we’ve built for ourselves a very complex flow of energy throughout history. And for some weird reason, this increased complexity increases our chances for survival.
How, you might ask? Here’s the abridged version of the story:
Two microscopic life forms decided that harvesting energy from sunlight is going to be a viable business model. But to increase the probability of them being successful, they decided that they need to move in together to save on rent and to split the workload that comes with founding a startup. The chloroplast would do the work of using the sunlight to convert carbon dioxide and water into sugars. The other partner would focus on the supply chain side of keeping the chloroplast fed with raw materials, and to find places to keep their finished goods. It is a beautiful partnership. They created whatever they needed directly from the sun, and their descendants became the modern day plants.
At the same time, two other microscopic life forms decided that pursuing an aggressive acquisition strategy to be a viable business model. One partner, the mitochondria, would breakdown and repackage newly acquired assets. The other partner would always be on the lookout for new targets. This partnership is not particularly picky - it can choose to acquire from other businesses like themselves, but it also can acquire assets from assets from those in the sunlight business. Despite the fact that this business model adds one layer of indirection from the ultimate source, this was also a very beautiful partnership, and one of their descendants eventually became us humans.
Some of us humans later decided that foraging for plants and hunting for animals (i.e. the aggressive acquisition strategy) was a very volatile and lumpy business - if the hunting gods are not smiling on you that day, you’ll never know when would be the next time you come across an animal that is edible. But when you do come across a mammoth, suddenly you have all the meat in the world, and you’ll need to worry about food preservation practices due to the abundance of food in such a short period. Volatile and lumpy businesses, these humans thought, weren't good from a long-term planning perspective (it’s very hard to model, even if you have Excel!), nor was it good for their peace of mind.
So as a middle finger to the hunting gods, whose minds were perceived to be fickle, humans decided that farming was a good thing - instead of expanding energy to hunt, we decided that we could spend it instead on ploughing the fields, or watering the plants, or going out to harvest the plants. Fine, it’s not necessarily another layer of indirection here, but merely a redirection of energy, but we’ll get to it.
Somehow, we have decided that farming at this stage is still an extremely volatile business. For example, who knew if the rain gods would randomly be displeased, and the crop would die of dehydration. Or maybe the gods would decide to send too much rain, and the fields would get flooded. So at this point, we decided we needed to build a whole irrigation system of canals, water storage ponds and levees to protect against floods. Hence, we’ve added another layer of indirection to our energy flow - there would now be dedicated teams of humans whose job wasn’t to grow the plants or animals themselves, but to build a whole physical infrastructure around it.
But building large infrastructure projects by hand is extremely tedious and inefficient. Tools need to be made to speed things up, otherwise, the floods may come in before even the levees are ready. Hence, we add another layer on indirection by having dedicated people to build tools for the people who would build the physical infrastructure that would support the farms.
And, hey, if you want to build something on this scale, you are going to need people with the expertise to gather resources (or capital) for the tool making and infrastructure projects. You’re also going to need people who know how to keep track of things, or advise on best practices. Hence, we add yet another layer of indirection to our flow of energy by having people dedicated to banking, accounting, IT, and consulting functions.
You can probably see a theme here - the reason why we have built for ourselves such a complex web of energy flows, even though everything ultimately does come from the sun, is that many of us don’t like to be beholden to the whims and fancy of nature. We collectively put in all the effort in the world to reduce the uncertainty of our survival, at least from a food security perspective. Now, it is debatable if we even consciously decided on this path, or this is merely evolution and chance at play, but in hindsight and on a high level, it looks as though we might as well have.
An economy that “uses 100% of its brain”
It shouldn't come as a surprise that introducing indirection introduces overheads. Afterall, the construction workers, bankers, tech people, and accountants need to eat. But as long as the amount of food that comes out from this new system is way more than the food that’s needed to feed them, these overheads are worth it. (Of course, the discussion on what’s equitable, i.e. who gets what proportion of the additional food produced is an important question, but something that I’m going to ignore in this newsletter for brevity).
But of course, if we have the opportunity to reduce the energy required to maintain these overheads without sacrificing the benefits they give, we’ll take it any day. A simple example would be more efficient tools that help us amplify our bodily movements, like wheelbarrows (we can carry heavier things around), or handpumps (we can get water more quickly than carrying it in buckets).
Other means of reducing overheads would be better husbandry practices (for breeding cows that produce more milk or more meat), or cross-breeding plants so that we get higher yields, or better pest or flood resistance.
But what if life gave us an opportunity to ignore our overhead problems? What if we didn’t need to think about the efficiency of our practices? What if we had all the energy in the world to simply maximise the absolute volume of food produced (as opposed to maximising the food produced per unit energy).
Well, turns out that life did give us this opportunity. And that opportunity was in the form of fossil fuels.
Now to be fair, fossil fuels still don’t violate the fact that in practice all energy comes from the sun. Fossil fuels are simply old dead plants and dinosaur juice that derived their energy from the sun or other things that take sunlight (okay, maybe “dinosaur juice” isn’t entirely accurate, but it’s still fun to say it).
But the key difference is that we don’t have to wait for the plants to gather the energy, it’s already there in such an easily transportable, easily stored, and easily extractable form. Such high energy density, once extracted, enables us to run machinery that isn’t powered by us humans or animals. In short, one person could now harness the energy of hundreds of humans without actually hiring hundreds of humans.
Couple this with advances in seed technology, as well as the exploitation of guano (i.e. bird excrement. Humanity has fought manywarsfor control of this) as fertilizer, and then later with the invention of the Haber process to create artificial fertilizers, we have indeed seen that we require fewer farmers than we needed traditionally.
In 1870, 50% of the US’s population were farmers according to the US Bureau of Labor Statistics. This means that each farmer was only able to feed him/herself and one other person. In May 2020, the US had only 0.15% of its population feeding nearly 300 million people. In other words, one US farmer today can feed nearly 700 other people. This miracle is known as the “Green Revolution” that roughly began in the 1950’s.
Source: US Bureau of Labor Statistics
In short, an individual farmer today, thanks to modern technology coupled with dense and easy energy sources, has the ability to feed more people to the point that the principal economic activity is anything but farming. Instead, what was once probably considered as overhead (construction crews, tool manufacturers, consultants) is now the main part of the economy, along with people like actors, YouTube/Twitch/TikTok stars, musicians, artists who sell their wares as Non-Fungible Tokens, etc.
An addiction to progress
But you see, relying too much on fossil fuels to enable one person to do the work of 700 people eventually brings its own set of problems.
Before the Green Revolution, there was this dude named Thomas Robert Malthus who formalised a worry that many people had during that time - that there was the threat of a world overpopulation problem, i.e. there simply weren’t enough resources to support a continuously growing population.
The Green Revolution put that fear completely to rest, especially during the height of this exhilarating growth in the 50’s to the 70’s. Here, for example is a Forbes headline that reads “7 Billion Reasons Malthus Was Wrong”. As a result of such an abundance, we could only logically think that the good times would never end, and as a result, the world’s population more than doubled between 1960 to today, from 3 billion people in 1960 to more than 7 billion today. Global GDP also exploded - according to the World Bank, the total world GDP in 1960 was $1.4 trillion. Today, it’s $88 trillion.
However, we now face this problem - for the past few decades, we have experienced such an aggressive growth that we now take growth for granted. But if you think about it, in the grand scheme of things, the growth that we have experienced is an anomaly. For example, if you were a farmer in the 1500’s, you would have carried your goods in an animal drawn cart, and you would have used candles to light your way in the dark. If you lived for the next 400 years, you still would have your animal cart as your main form of transportation, and you would still predominantly use candles. Yet, in one short century, with oil and technological advances, we now only have animal drawn carts for fun, especially in the richer parts of the world. (And in the richest parts of the world, we put horses into trailers that are pulled by cars, rather than the other way around).
We now face a new modern form of the Malthusian trap - once we have exhausted all of the large incremental gains that could have had from the extraction of all the stored energy that is fossil fuels, how are we next going to get our next kick to maintain this neck breaking pace of growth? We are already seeing some of the effects of this slow down in growth via the rise in prominence of protectionist policies (e.g. “Buy American / America First”, Brexit etc.).
And not just that, the other problem with relying too much on fossil fuels to enable one person to do the work of 700 people is that you suddenly get a lot of carbon dioxide and other greenhouse gasses into the atmosphere. Unless we evolve to have gills quick enough (or if we find a way to surgically implant them), that is not good for our long term survival.
In other words, in order to fulfill our dual needs of:
Getting our fix of aggressive economic growth in the absence of life-changing substances (yes, yes, yes, some of you might propose nuclear fusion, but call me back in another 50 years for that); and
Preventing global warming
we need to start thinking about reducing those overheads again.
Showing up to the office with a hangover
So, how has the US, the largest economy in the world, fared in terms of increasing efficiencies since the peak of the Green Revolution? Honestly, good effort I guess. On a real GDP basis (i.e. after accounting for inflation), on average, 1 exajoule of primary energy is needed to generate 67 billion USD in GDP in 1970. (1 exajoule is about 180 million barrels of oil equivalent, so imagine all the wood, natural gas, oil etc. that needs to be burnt). In 2019, 1 exajoule now produces 188 billion USD to the US GDP, or a 180% increase in efficiency.
Sources: BP Energy Statistical Review, Federal Reserve of St Louis.
What’s also encouraging is that on a marginal basis, i.e. for every additional exajoule of energy the US economy consumes, the additional GDP output is also increasing over time, as the chart below shows (note that it’s in the log scale). In short, we have yet to see diminishing returns on the US’s effort to be more efficient with its energy.
Sources: BP Energy Statistical Review, Federal Reserve of St Louis.
Okay cool, what about the second largest economy in the world then? Well, it’s still got some way to go, as the chart below shows that China’s average efficiency in converting energy to economic growth is still about half that of the US.
Sources: BP Energy Statistical Review, Federal Reserve of St Louis.
So, is this effort enough?
Hell, no. Of course not. We have a bloody long way to go.
The story isn’t complete yet. If you’re hoping that there’s an ending here, you’ll be sorely disappointed. There isn’t a happy ending (or a sad ending if you’re so inclined) yet. So come on, do something, so that I may actually have something to write about here.
But I will leave you with one chart that is both interesting and encouraging.
China is very much catching up with the US on its use of renewables as a proportion of total primary energy used. As the chart below shows, while indeed the absolute levels are low (only 4.5% of total prime energy used is from renewables), China is very much on par with the US now. (Of course, the other way to interpret the chart below is that the US is lagging behind its peers very badly)
Sources: BP Energy Statistical Review
Footnote
There is probably one practical exception to the “fact” or “rule” where “everything comes from the sun”. That would be geothermal energy, i.e. harnessing the energy of hot water that’s heated by the Earth, i.e. “using lava to generate electricity”.