#34. A Summary of ‘The Infinite Resource: The Power of Ideas on a Finite Planet’ by Ramez Naam


‘The Infinite Resource: The Power of Ideas in a Finite Planet’ by Ramez Naam (UPNE; April 9, 2013)

Table of Contents:

i. Introduction/Synopsis


1. How Good We Have It, and How Far We’ve Come

  • a. Life Expectancy
  • b. Infant Mortality and Health
  • c. Conveniences and Comforts: From Poverty Reduction to Clean Water and Electricity
  • d. Opportunities: From Education to Communications

2. How We Got Here

  • a. The Great Divide: The Developed World and the Developing World
  • b. The Beginnings of the Market Economy: 14th Century Europe
  • c. The Scientific Revolution & The Printing Press

i. The Scientific Revolution
ii. The Printing Press

3. Why China (and Other Countries) Fell Behind

  • a. Why China Fell Behind
  • b. Why Other Countries Fell Behind

4. From the Industrial Revolution to the Present

  • a. The Industrial Revolution
  • b. The Spread of the Market Economy


5. Resource Depletion

  • a. Peak Oil
  • b. Resource Shortages: Water, Food and Materials

i. Peak Water, Et. Al.
ii. Food and Commodities Shortages

6. Climate Change

7. The End of Growth?


8. A Plateauing Population

9. Advancing Technology = Increased Efficiency

  • a. Oil
  • b. Water
  • c. Land Use & Food Production
  • d. Water Desalination

10. Resource Substitution

  • a. Case Study: Whale Oil in the 19th Century
  • b. Oil Substitutes

i. Solar and Wind Energy
ii. Advanced Batteries
iii. 3rd Generation Biofuels

11. Stretching Materials: Recycling (and More Resource Substitution)

  • a. Recycling
  • b. New Materials

12. The Case for Optimism (and How We Can Help Spur Innovation)

  • a. The Case for Optimism
  • b. How We Can Help Spur Innovation


13. Addressing Pollution

14. Addressing Climate Change

  • a. The Carbon Tax (and Refund)
  • b. Additional Measures

15. Conclusion

i. Introduction/Synopsis

Ever since the industrial revolution the developed world (and increasingly the developing world) has enjoyed remarkable economic growth.  This economic growth has yielded wealth to a degree previously unimaginable. Indeed, many of us today enjoy conveniences, comforts and opportunities of a kind that have traditionally been unattainable by even the world’s wealthiest and most powerful people.

However, we may question just how sustainable all of this economic growth (and the resulting wealth) really is. For the economic growth has been accompanied by environmental depletion and degradation of a kind as unprecedented as the growth itself. And while some of the environmental crises that have come up along the way have been solved by new technologies, others yet remain, and are as daunting as any we have seen. Climate change in particular stands out as one of the greatest challenges we now face. What’s worse, many of the earth’s resources that we have used to generate the economic growth are dwindling, and face extinction. Indeed, the very resource that has powered the industrial era (and that has also caused many of our deepest environmental woes), fossil fuels, has now nearly peaked.

Looking to the past, we find that we would not be the first civilization to perish at the hands of a resource shortage brought on by overzealous extraction. Indeed, such an event has occurred on several occasions (including amongst the Mayan civilization, and that of the Easter Islanders).

So we find ourselves at a crossroads, unsure of whether our impressive economic growth can continue, and equally unsure of whether our lavish lifestyle lives but on borrowed time (and resources).

For writer Ramez Naam, though, we do have reason to be optimistic, and in his new book The Infinite Resource: The Power of Ideas on a Finite Planet Naam lays out the reasons for his optimism. To begin with, Naam argues that the natural resources on our planet are far from running out. He assures us that there is enough water and arable land on the earth’s surface, minerals in the earth’s crust, and energy from the sun to feed the demands of the planet’s plateauing population for time out of mind (especially when we reuse and recycle these resources, which is what we are increasingly doing).

The problem, at present, is our relative inefficiency in accessing these resources. Even here, though, Naam argues, there is room for optimism. For our saving grace is our ability to innovate. It is our ability to innovate, Naam maintains, that is responsible for virtually all of our progress and economic growth to this point. It has brought us everything from the first stone tools and the ability to harness fire, to phones that fit in our pockets and allow us to access a world of information and all the world’s people. Along the way (and more to the point), our ability to innovate has allowed us to access an ever greater percentage of the earth’s resources (while at the same time decreasing the relative amount of resources that each of uses to achieve an increasingly affluent lifestyle).

And the really wonderful thing about our ability to innovate is that, unlike natural resources, it does not shrink over time. Rather, it only expands. This is because innovation is built on ideas, and ideas themselves only grow and multiply. Ideas can even be shared without ever being diluted. Instead, the sharing of ideas often generates even more ideas. The power of ideas—and the innovation that goes along with it—truly is an infinite resource.

Now, wherever there has been an incentive to innovate, innovation has come, and this helps explain why the market economy has been the single biggest spur to innovation ever invented. The market economy harnesses innovation by way of tying useful inventions to economic gain, thus exploiting self-interest for the benefit of all. Up until recently, a relatively small proportion of the world lived under a market economy. Not coincidentally, these were also the most inventive and affluent parts of the world. In the past 40 years, though, an ever increasing portion of the world has switched over to a more market-oriented economy, and this has greatly accelerated both economic growth and the speed of innovation. For Naam, this trend bodes very well for the future.

Now, as powerful as the market system is, Naam does concede that it has one fatal flaw. And this is that it does not put an accurate price on the degradation of communal goods, such as the environment. The end result is that the environment is not cared for as well as it might be (this phenomenon is known as ‘The Tragedy of the Commons’). Nevertheless, a market economy can be tweaked to ensure that a price is put on environmental degradation. Indeed, this has happened before, and it has helped put an end to several environmental crises (including, recently, both acid rain and the ozone-hole threat).

For Naam, this approach is also the best way to deal with the greatest environmental threat we now face: global warming. Specifically, Naam argues we ought to put a price on carbon dioxide (and return the tax proceeds to the people). This would not only help ensure against global warming, but also hasten the inevitable transition to the use of solar power and clean fuels to meet our energy needs.

With the right approach and policies, Naam argues, we can live in a world of plenty for all (and one that is clean to boot).

*To check out the book at Amazon.com, or purchase it, please click here: The Infinite Resource: The Power of Ideas on a Finite Planet

What follows is a full executive summary of The Infinite Resource: The Power of Ideas on a Finite Planet by Ramez Naam


1. How Good We Have It, and How Far We’ve Come

The material well-being that we have achieved in the modern industrialized world is truly staggering. As Naam puts it, “we live in a period of health, wealth, and freedom never before seen” (loc. 148). What’s more, though the gains that have been made have been felt much more acutely in the developed world than in the developing world, the improvements now, more than ever, are being felt across the board (loc. 440). Nevertheless, immersed in this world as we are, it is easy to forget just how good we have it these days. In order to better appreciate just how far we’ve come, some historical context is in order. Let us begin, where Naam begins, with life expectancy.

a. Life Expectancy

Life expectancy may seem like a fairly crude place start, given that it is the quality of life that matters, much more so than the quantity. However, as Naam rightly points out, life expectancy is connected to many factors that may more rightly be thought of as being qualitative in nature. As the author explains, “life expectancy depends on good nutrition, access to health care, lower infectious disease rates, clean water, sanitation, and security from war and other types of violence. It correlates with educational levels, with living space per person, with access to electricity, and with living in a democracy. When we see life expectancy rise, almost invariably those other measures are headed in the right direction too” (loc. 447).

And life expectancy is, overwhelmingly, headed in the right direction. The numbers are as follows: “since 1950, life expectancy around the world has risen by more than twenty years. An average child born into the world in 1950 could expect to live forty-seven years. A child born today, averaged across all the regions of the world, can expect to live sixty-eight years, and a child born in the developed world can expect to live nearly eighty years. While life expectancy in the United States has risen substantially—around twelve years since 1950—it’s risen roughly twice as fast in still-developing nations. In 1950, the life expectancy gap between developed and still-developing countries was twenty-five years. Today it’s down to thirteen years, and still shrinking” (loc. 451).

b. Infant Mortality and Health

The increase in life expectancy across the world has several causes. Two of the most important ones include the decrease in infant mortality, and the fact that we are simply living healthier lives, with less disease, and better health care. Beginning with infant mortality, as Naam explains, “in 1850, around 30 percent of all children born around the world died by their fifth birthday. In 1950, the worldwide rate was down to less than 14 percent… And by 2010, the worldwide rate had fallen by a further factor of 3, to around 4 percent” (loc. 463).

When it comes to diseases, many of these have been conquered, and those that have not are striking later in life, and are less fatal when they do strike. For example, “infectious disease, once responsible for two thirds of deaths everywhere in the world, today accounts for just 18 percent of deaths in rich countries, and around half in developing nations. Cancer death rates in the United States have dropped 20 percent in the last twenty years. Death rates for stroke have dropped nearly a third in that time, while death rates for cardiovascular diseases have dropped by a whopping 64 percent since 1963. Other rich nations have seen similar results… Debilitating diseases are not only rarer and less lethal, they strike later in life. Nobel Prize winner Robert Fogel has found that over the course of the twentieth century, the average age of a person’s first incidence of heart disease was delayed by nine years, cancers by eight years, and respiratory diseases by eleven years” (loc. 480).

c. Conveniences and Comforts: From Poverty Reduction to Clean Water and Electricity

Our lives are not only longer and healthier these days, but we also enjoy far more material comforts and conveniences than ever before—and also benefit from far more opportunities. Let us begin with poverty. Extreme poverty, we know, has largely been eradicated in the developed world. However, even the developing world has made great strides in this respect in the recent past. As Naam explains, “in 1970, more than a third of the developing world lived on less than $1 per day. Today, adjusting for inflation, that number has shrunk by a factor of 7, down to 5 percent” (loc. 492).

And even outside of extreme poverty, poverty in general has dropped significantly over the past half-century. As the author notes, “no matter what measure of poverty we look at around the world, the incidence of it has shrunk over the past few decades. In 1970 almost half of the planet lived on less than $1,000 a year. Today that’s down to less than one-fifth” (loc. 492). And as much of the world has pulled itself up out of poverty, so too has hunger and malnourishment decreased significantly (loc. 492-510).

In addition, as poverty has decreased, so too has access to basic necessities (such as clean water), and basic conveniences (such as electricity), increased. As Naam explains, “in 1970, 77 percent of the world had access to clean water. In 2010 that number reached 87 percent. In 1970, only an appallingly low one in four residents of the developing world had access to electricity. Today that number is 70 percent” (loc. 483).

d. Opportunities: From Education to Communications

As more of the world’s people are being pulled up out of poverty, they are also being afforded more opportunities than ever before. Let us begin with that most important of opportunities, education. As the author explains, when it comes to education and literacy, “around the world, both are increasing. In 1970, only 63 percent of the adults in the world could read and write at a basic level. By 2010, that number had risen by a third to 84 percent, and is still rising… schooling has gone hand in hand with this. In 1950, the average child in sub-Saharan Africa received less than one year of formal education. By 1980, that had more than doubled, to two years of formal education. Today the average amount of schooling in that poorest part of the world has doubled again, to four years. Asia and Latin America have progressed as well, going from around five years of schooling for the average child in 1980 to eight years today” (loc. 491).

Moving beyond basic opportunities, more advanced opportunities (such as access to telephones and the internet) are also spreading in leaps and bounds. Beginning with telephony, as Naam explains, “in 1997, only 18 percent of people in the developed world had a mobile phone, and less than 10 percent of people in the developing world had a phone of any sort, mobile or land line. By 2009, mobile phones had surged past their older, established landline phone cousins to reach more than 70 percent of people in the developing world, and nearly everyone in the developed nations” (loc. 510).

When it comes to the internet, the numbers are not as impressive, but are rising quickly. Indeed, while virtually no one had access to the internet in the early 1990’s, virtually everyone in the developed world has access to it now—and across the planet a full 2 billion people, or 1/3 of humanity, has online access (loc. 510). The internet is a particularly important technology in terms of opportunities, because, as Naam explains, “with internet access come opportunities to learn, to gain useful information relevant to one’s life, communicate with others anywhere in the world, and to make one’s voice heard. Neither Internet nor cell phone access is a panacea, but both give people new options in life” (loc. 514).

2. How We Got Here

a. The Great Divide: The Developed World and the Developing World

As is clear, progress in each of the areas mentioned above is being made both in the developed and the developing world. And, in fact, in relative terms, more progress is being made right now in the latter than in the former. But, of course, this is largely because the developed world has had such a head start when it comes to material wealth. Which forces us to ask: just how and why did this happen?

For Naam, the great divide between the developed and the developing world may be attributed to the head start that the former has had when it comes to the adoption of the market economy, and the free flow of ideas. Both of these factors, Naam argues, have led to the impressive rate of innovation that has held sway in the developed world over the past half-millennium or so—which in turn has led to accelerated progress and economic growth. The point becomes clear when we look at the history of innovation and economic growth over the past 500 years or so, and investigate just why it occurred where it did (and why it did not occur elsewhere).

b. The Beginnings of the Market Economy: 14th Century Europe

A convenient place to begin our story is in the 13th century. At this time, China was the richest, most advanced and most populated country on the planet. As Naam explains, “if you’d toured the planet in the early thirteenth century, China might have seemed the civilization most likely to drive technological progress for the next several hundred years. Late Song Dynasty China was a wealthy, sophisticated place. The Chinese had invented paper, wood block printing and gunpowder. They were the first to use paper currency. They were hundreds of years ahead of Europeans in the working of iron. China had a population of more than 100 million, compared to Europe’s 50 or 60 million. The two largest cities in China, Kaifeng and Hangzhou, were both teeming metropolises with populations in excess of a million people. They were cities the likes of which had not been seen in Europe since the fall of Rome” (loc. 168).

As advanced and wealthy as China was at the time, though, this is not where the boom in innovation began. Rather, it began in Europe, which, interestingly, was a relative backwater by comparison with China. Indeed, just prior to the boom in Europe, and ever since the fall of the Roman Empire, the continent had degenerated into a manorial system wherein warlords ruled over pockets of land worked by serfs. The warlords fought back and forth to increase the size of their particular pocket of land, while the serfs worked the land to support their respective warlord, and were themselves tied to the land. As Naam explains, “the bulk of the European economy, such as it was, rested on the backs of serf farmers tied to manorial lands. While coin existed, most transactions were built on barter. Europe’s largest city, Paris, at 200,000 people was smaller than a single suburb of Kaifeng” (loc. 176).

It was amidst this situation that a grave tragedy befell Europe in the 14th century: the Black Plague. As Naam explains, “the Black Death of the mid-1300’s had decimated the population” (loc. 271).

Out of this tragedy, though, a propitious set of circumstances arose. Specifically, the number of serfs available to work the manorial lands suddenly dropped, and this meant that the value of their labor abruptly sky-rocketed. The end result was that the serfs were able to negotiate more favorable terms with the land-holders (though not without some resistance on the part of the nobility) (loc. 275).

In England, for instance, the serfs earned new rights. As Naam explains, “commoners would no longer be serfs, bound to the land. They would have the rights to negotiate their wages, to buy or rent land, and to settle where they chose. By the end of the century, serfs had become tenant-farmers, leasing or buying their land with currency rather than labor, and selling the food they grew for a profit” (loc. 281).

The chance to earn a profit from their labor shifted the mind-set of the commoners in a deep and fundamental way. For they now had a direct self-interest in increasing their productivity. Indeed, rather than their bounty being taken away by the local lord, it could now be used to increase their wealth no end. And what do you know, production soared! (loc. 285).

The rise in productivity made possible by the newly-invigorated farmers allowed an increasing proportion of the population to turn to endeavors other than farming—meaning they could work at crafts and industry (loc. 285). Craftsmen and industry workers themselves earned a profit from their economic activity, and so they too were motivated to increase their productivity (loc. 285).

Now, there are two ways to increase one’s productivity. One is to work harder, and the other is to work smarter—with the help of technology, say. So there was an incentive not only for the farmers and craftsmen to work harder, but to invent new ways to increase their productivity. And this they did.

And over and above this, the motivation to innovate was eventually given a great boost by the administrative innovation of awarding a patent to an inventor for his or her idea(s). Here’s Naam to explain: “the brilliance of the market is that it rewards workers for producing things that others value. That was soon extended to reward innovators for producing ideas that others value. In 1449, the world’s first patent was issued to John Utyman, a Venetian glassmaker, for his process of creating colored glass. Uyman was granted a twenty-year monopoly on the technique in England, in exchange for which he was required to teach his technique to apprentices, guaranteeing that the knowledge would spread” (loc. 288).

Patents provide a strong incentive for people to take the time and effort to produce a new invention, of course, because a patent ensures that a successful invention will earn the inventor a fortune. Thus, as we might expect, patents unleashed an explosion of new inventions. As Naam notes, “with more profit to be made, more of the educated class turned their efforts to innovation. The inventors of the first several steam engines, the incandescent light bulb, the mechanical loom, the cotton gin, and the automobile were all motivated, at least in part, by the availability of patents” (loc. 292).

c. The Scientific Revolution & The Printing Press

i. The Scientific Revolution

In addition to the inauguration of a market economy, there were a couple of other factors at play in Europe at the time that helped spur the wave of innovation. And one of the most important of these was the scientific revolution. As the author explains, “Francis Bacon, in 1620, proposed the idea that any scientific theory must be testable by experiments, that those experiments should be reproducible by other scientists, and that experiments could disprove theories… Bacon’s notion was revolutionary at the time. It ushered in an age of empirical science” (loc. 298).

The new scientific knowledge that flowed out of this empirical approach was a major boon to the inventors of the day. And not only that, but the approach itself influenced many of the inventors to take a more rigorous and experiential approach to their craft, which also helped them in their cause.

ii. The Printing Press

The final piece of the puzzle was one of the most important of all. And this was the invention of the printing press. The printing press allowed new ideas to spread faster and further than they ever had before (loc. 243). And this was particularly important for innovation, because new inventions are very often the result of combining one or more old ideas (with the occasional addition of a new one). As ideas spread more quickly and further, then, inventors were given more fodder to work with. As Naam explains, “the invention most symbolic of the Renaissance, Johannes Gutenberg’s moveable type printing press, captured no additional energy, grew no additional crops, and cured no diseases. But it did something more important—it accelerated the spread of ideas. It intensified the web of connections between minds. In so doing, it amped up the Darwinian process of idea evolution, accelerated the process of innovation, and thus, indirectly, it increased our access to energy, increased our ability to grow food, and accelerated the development of medicine, science, and all the other domains of human knowledge that have enhanced our lives” (loc. 243).

So, European innovation benefitted from both the scientific revolution and the printing press. However, it should not be forgotten that it was really the newly established market economy that gave everyday people the incentive to work hard and develop new technologies that drove the phenomenon of vastly accelerated innovation.

Eventually, the perfect storm of innovation-spurring factors would produce the steam engine, which would send production (and economic growth) into the stratosphere. Before we continue with this story, though, it is worth examining why China did not come along for the ride.

3. Why China (and Other Countries) Fell Behind

a. Why China Fell Behind

As mentioned above, in the 13th century China was the richest and most powerful political entity on the planet (loc. 320-23), while Europe paled in comparison. Still, “from that point onward, Europe steadily gained, while China fell behind. Chinese economic development and technological innovation continued, but at a pace little different from the previous thousand years. In Europe, by contrast, the rate of progress dramatically increased, going ever faster each passing century” (loc. 176). What explains why Europe went on to become the locus of innovation for the next half-millennium, and not China?

For Naam, the most important difference between China and Europe was that power was far more centralized in the former than it was in the latter, and the central authorities in China had far more control over the economy than they did in Europe—mainly through their running of state-run monopolies on certain industries. What this meant is that there was far less opportunity for private players in China to earn a profit through innovation. As the author explains, “Europe’s decentralized system, with competition of ideas at the local, national, and international levels, encouraged innovation. China’s highly centralized model encouraged homogeneity. Chinese state control went far further. The state had monopolies on all sorts of staples: salt, iron, tea, and alcohol, among them. There was no viable way for a private individual to launch a venture in any of those or many other areas and hope for profit. If, indeed, a new business was formed that proved profitable, the state would often nationalize it… Chinese Imperial monopolies were so stringent that when Song Yingxing, one of the greatest scholars of China in the 1600s, produced his encyclopedia The Exploitation of the Works of Nature, almost all copies of it were burned. Why? Because the encyclopedia gave detailed drawings and explanations of metalwork, salt-making, and coin-casting, all of which were monopolies the empire kept for itself. Ancient China was, in other words, a tremendously top-down culture. No government has absolute control. The emperor didn’t dictate every aspect of life in China. Innovation did occur. But that rate of innovation was suppressed by the centralization of control and power that China’s culture and empire created” (loc. 385).

And not only did Chinese policies discourage new innovations from within, they also discouraged new innovations and ideas from coming in from without. Indeed, for much of its history, Chinese authorities had imposed a policy of haijin, or ‘sea ban,’ which “prohibited most trade and restricted foreigners from entering the country, on fear of beheading” (loc. 399). This policy was imposed out of the belief that “China, in its great resources, needed nothing from the outside ‘barbarian’ world” (loc. 396).

China may well have been self-sufficient, but the barring of foreigners and foreign trade effectively cut off the country from an enormous amount of goods, innovations, and ideas that would have greatly increased its wealth—in addition to contributing to its technological progress. And while the Chinese authorities may have scoffed at these benefits, their relative lack of technological progress would end up costing them greatly when they finally went to war with the West in the great Opium wars of the 19th century. As Naam explains, “when the two cultures would clash during the Opium Wars of the 1800s, the much more numerous Chinese forces fighting on their home soil would find themselves routinely routed by smaller but better-armed European forces fielding fearsome steamships that could sail against the wind and tides, and advanced muskets that could shoot farther and faster than those the defenders used. The Chinese, who used coal to forge steel centuries before the Europeans, who’d invented gunpowder itself, who’d been the technological superiors of Europeans for nearly a thousand years, found themselves on the losing side of a technological battle” (loc. 182).

b. Why Other Countries Fell Behind

Of course, China was not the only place at the time wherein centralized authorities cut off their people from outside ideas and products. Japan had a similar xenophobic policy. As the author explains, “in the 1630s, the Tokugawa shogun Iemitsu created the policy of sakoku, prohibiting Japanese to leave their nation and foreigners to enter it, under pain of death. Decades later, all Western books were burned. The isolation of Japan would last, with brief respites, until 1854” (loc. 412).

The extremely powerful Ottoman Empire, too, instituted a policy of isolationism. As Naam explains, “the Sultans of the Ottoman Empire feared the explosive and decentralizing power of the printing press. Thus, while they allowed Greeks and Jews to set up printing presses to produce works in other languages, starting in 1483, the Ottomans prohibited printing in Arabic (the alphabet that Turkish was written in at the time), on pain of death” (loc. 419).

As with China, these isolationist policies only hurt their respective countries in terms of innovation and progress. As the author explains, “the results for both societies were as disastrous as for China. While well-being, education, and military might all soared in Western Europe, the Ottomans and Japanese were left behind. It wasn’t until the nineteenth century that both cultures—along with the Chinese, would scramble to attempt to modernize” (loc. 419).

The message, to this point, is clear: market economies—wherein individuals are rewarded for their hard work and innovations; where there is a free flow of ideas and products; and where individuals compete for the attention (and dollars) of the consumer—are a recipe for spurring innovation (and wealth). By contrast, centralized control of the economy, and limits on the free flow of ideas only stifles innovation and progress (and wealth).

4. From the Industrial Revolution to the Present

a. The Industrial Revolution

As mentioned above, the accelerated rate of innovation in Europe had, by the 19th century, led it to the doorstep of the first steam engines. And with these came the onset of the industrial revolution. The industrial revolution pushed production to heights never before seen. And the end result of this surge in production (as well as the additional innovations that have come in the 20th century) has ultimately been the material well-being that we enjoy today.

Thankfully, the fruits of the industrial revolution, and the innovation boom of the past 500 years (and especially the past 100 years), have not been confined to the areas of the world that had a head start when it comes to the market economy and the open flow of ideas. Indeed, as mentioned in the opening section, the developing world has also increasingly partaken in this bounty over the past century, and particularly in the past 40 years or so (loc. 617).

There are 2 main reasons for this. One is that many of the innovations that originated in the developed world have, over time, simply filtered out to the developing world (loc. 426). And two, and even more significantly, is that many parts of the developing world have recently adopted a more open, market-oriented economy.

b. The Spread of the Market Economy

The global movement toward market economics took a major step forward beginning in the late 1970s in China, due largely to the efforts of Deng Xiaoping, who took over the country in 1978 (loc. 3341). As Naam explains, “Deng Xiaoping’s first actions after being restored to the leadership of China were remarkable departures from China’s Communist past… In 1978, he opened China to foreign corporations, purchasing aircraft from Boeing and allowing Coca Cola to begin selling its products in the country. In 1979 he began to unravel the system of communal farming in China. He lowered minimum quotas on Chinese farmers, gave them more control over what was planted, and allowed them to keep whatever profits they could garner from selling any production above and beyond their quota. In the next few years he would open China to foreign investments, create incentives for local managers based on the success of their state-run operations, and allow private businesses to operate for the first time since the Communists had taken over the country in 1949” (loc. 3348).

The next major step in market-oriented reform came subsequent to the fall of the USSR in 1991. Indeed, the collapse of this communist federation has since seen its member countries increasingly adopt market-oriented principles (loc. 3352).

(Incidentally, if there were ever a case study to demonstrate the superiority of a market-oriented economy over a state-run economy, the example of the cold war [that pitted the U.S. against the USSR] would surely be it. As Naam notes, “the USSR and the United States started out at the end of WWII as well-matched rivals. Indeed, the USSR had larger stockpiles of coal and iron, two and a half times the land area, a 20 percent larger population, more college graduates, more scientists, more engineers, and vastly more oil than the United States. By most measures, the USSR had the upper hand… Yet in the forty-five years that followed, the two diverged significantly in the health of their people, in their rates of innovation, and in the growth of their economies. By 1990, when the USSR collapsed, it was nearly bankrupt. Its economy was on-quarter the size of the United States’ economy” [loc.  3373]. Comparisons of East and West Germany, and North and South Korea aren’t far behind in demonstrating the superiority of a market economy [loc. 3373-84].)

Next in the economic-reform movement came India. As the author explains, “in 1991, a nearly bankrupt India, in a move of desperation, dramatically loosened economic controls, allowed foreign companies in, and embraced capitalism” (loc. 3352).

These three examples alone represent a massive shift in global economic policy. In a mere 13 years, from 1978 to 1991, “more than a third of humanity would go from living in a state-run economy to living in a market-driven economy” (loc. 3355). And the reform movement did not end there. Soon large parts of Central America joined in as well (loc. 438).

The reforms, as we know, have led to massive growth in the economies of the countries that have taken part. And as the economies of these countries have grown, they have increasingly been able to afford the innovations that have cropped up over the past 150 years and more. In addition, as the economic reforms have taken shape, the people of these countries have increasingly been able to contribute with innovations of their own, thus adding to the stock of new technology.


5. Resource Depletion

As we know, though, the results of all of this progress, economic growth and wealth have not been strictly positive. Two of the greatest negative impacts have been the depletion of the earth’s resources and the degradation of the environment—mainly in the form of pollution, and now climate change. Let us begin with resource depletion.

a. Peak Oil

When it comes to resource depletion, the one resource that is discussed first and foremost nowadays is fossil fuels—and particularly oil. Fossil fuels (and especially oil) power our modern, industrial world. As Naam explains, “the primary energy source of our civilization is fossil fuel. And among the fossil fuels, the most vital is oil. We consume more than 80 million barrels of it each and every day. Oil fuels our cars. Oil fuels the trucks, planes, and ships that transport food, raw materials, and goods around the world. Oil is used to make the plastics that fill our homes and offices and the synthetic fibers that we wear on our bodies. Oil fuels the farm equipment that plants and harvests the grains that feed us and that feed the livestock that we depend on. Oil fuels the mining equipment that extracts the ores containing the steel, aluminum, and other metals and minerals that our industrial society consumes” (loc. 672).

In short, we depend very heavily on oil. There’s just one problem: there’s only so much of it here on earth, and we’re running out. Indeed, as the author puts it, “peak oil is real” (loc. 689). The majority of the most significant oil fields on the planet are even now producing less oil than they once did. As the author explains, “worldwide, of 50,000 total oil fields, a mere 500—1 percent of those fields—account for 60 percent of total world oil production. And out of a sample of 331 of those fields, 261 of them—79 percent—are in decline” (loc. 734).

What’s more, we use up more oil each year than what we find in new sources—and have been doing so since the mid 1980s (loc. 753): “in 2009, for instance, the oil industry discovered somewhere between 12 and 18 billion barrels of oil in new fields. The New York Times proclaimed that the oil industry was on a ‘hot streak’ of discoveries. Yet in the same year, the industry pumped 31 billion barrels of oil out of the ground. 2010 was the best year for oil discoveries since the 1980s, but even so, the oil discoveries of 28 billion barrels were notably short of the 33.4 billion barrels the world used” (loc. 757). And this despite the fact that we spend more on oil exploration now than we ever have. Indeed, “in 2011, the oil industry spent an estimated $490 billion on exploration. Yet the industry still pumped more oil out of the ground than it discovered in new fields” (loc. 710).

We haven’t reached peak oil just yet, as the amount we produce is still increasing; but the total amount by which oil production is increasing is slowing year by year (loc. 748). As Naam explains, “the slowdown of production suggests we may be approaching the peak [geologist M. King] Hubbert predicted” (loc. 748). It is possible that more oil may yet be found, but the prospect of our finding enough to keep up with demand appears slim (loc. 751).

The reality of peak oil is no longer an issue that is touted only by fringe elements. Indeed, the foremost authorities on energy recognize its imminence. As Naam explains, “the International Energy Agency’s (IEA) 2009 report didn’t mention peak oil as a top level issue at all. The 2010 report gives it a full section. Fatih Birol the chief economist of the IEA (effectively the chief energy economist in the world) told the British newspaper the Independent that the IEA now sees the peak of worldwide oil supplies—from all sources, including unconventional oil such as tar sands—occurring by 2020” (loc. 827).

There are other fossil fuels aside from oil, of course. We also have coal and natural gas; and as Naam notes “coal can be converted into a liquid fuel. And vehicles can be converted to run on natural gas rather than gasoline” (loc. 806). Still, neither of these is expected to be able to make up for declining oil supplies (loc. 809-17).

The bottom line: we’re running out of fossil fuels.

b. Resource Shortages: Water, Food and Materials

i. Peak Water, Et. Al.

Fossil fuels are not the only resource that we’re running out of. Take water, for example. No resource is more important to us than freshwater. As Naam explains, “water is life. Agriculture depends upon it. Nearly 70 percent of the water humanity uses is for irrigation. Growing food for an average human diet requires an estimated 320 gallons of water a day” (loc. 986). Unfortunately, we are using up our freshwater at an unsustainable rate, and supplies of it, too, are shrinking. As the author explains, “the rate at which we consume water—particularly for agriculture—exceeds the rate at which we can capture it from rain or via sustainable withdrawals from rivers. To feed our planet, we’ve turned to more extreme methods, draining some rivers dry, and pumping water out of aquifers that will take thousands of years—if not longer—to refill once we’re done with them” (loc. 970).

And these aquifers, too, are being depleted. Virtually every major aquifer on the planet is being drained faster than it is being replenished. To take just a few examples, “the Indus River Valley Aquifer under India’s breadbasket is being drained at a rate of twenty cubic kilometers—a cube 1.7 miles a side—every year. Water tables in Gujarat province are falling by as much as twenty feet a year. The giant North China Plain Aquifer, which provides irrigation for fields that feed hundreds of millions, has been found to drop as much as ten feet in a single year. A World Bank report cautions that in some places in northern China, wells have to be drilled nearly half a mile deep to find freshwater” (loc. 974). And the draining of aquifers is happening in the developed world too (loc. 962).

Oil and freshwater are not the only resources that we are at risk of running out of. As Naam explains, “concerns have [also] been raised about potassium (an input into synthetic fertilizer), rare earth elements such as neodymium and tantalum (used in many electronics, among other places), uranium, helium, and of course coal and natural gas” (loc. 917).

ii. Food and Commodities Shortages

Apart from peak supplies, we’re also confronting issues of resource shortages (a related, but not entirely equivalent phenomenon—as we shall see below). As an indication of this, all we need look at is the price of commodities. We shall begin with food, as this is our most important commodity. As Naam notes, “by spring of 2008, basic food ingredients (wheat, corn, rice, milk, meat, sugar, and oil) were nearly 80 percent more expensive than in 2004. Prices dropped almost back to normal by the end of 2008, only to start rising again in 2009. By the summer of 2012, worldwide food prices were two to three times as high as they’d been in 2004” (loc. 877).

While this hike in food costs may have been barely noticed in the developed world, it hit the developing world hard. As an indication of this, consider that “after forty years in decline, the fraction of people without enough to eat rose for the first time in decades, by more than 100 million people (loc. 881).

Food is not the only commodity that is increasing in price. Indeed, the price spikes here run across the board.  As the author explains, “after more than a century of everything getting cheaper… [everything] from oil to food to building materials and industrial ores, are getting more expensive. The IMF lists dozens of other commodities that have all seen their prices rise precipitously over the last decade: Lamb, ground nuts, nickel, hard logs, soft logs, olive oil, sawn wood, tin, tea, wool, zinc. From 1992 through 2003, the IMFs composite index of forty-nine world commodities averaged a price of 57. From the beginning of 2005 through the middle of 2011, it averaged a price of 139. The IMFs index of prices of metals, raw agricultural products, and all industrial materials have similarly risen” (loc. 900).

By contrast with oil and water, virtually none of the commodities mentioned above are anywhere near peaking. Indeed, the supply of many of these commodities is rising faster than ever (loc. 906), and yet the demand is growing so fast that it is simply outstripping the increased supply (hence the price rises) (loc. 910).

Why is demand rising so fast? The population is rising, of course. However, population increase alone does not explain the phenomenon. Rather, as Naam explains, much of it has to do with our increasing affluence (and especially the increasing affluence of the developing world): “the driving force behind rising commodity prices has been surging demand created by new wealth. As the world is getting richer, as market economics lift the wealth of China and India and other parts of the developing world, the demand for metals, wood, food, and everything else is rising. Since the middle of the last decade, demand for commodities of all sorts has outstripped supply” (loc. 910).

6. Climate Change

In addition to resource depletion, we are also confronting issues of environmental degradation—most often as the result of pollution. And one of our most serious environmental issues is climate change. Let us quickly run through the facts.

Global temperatures are on the rise. This has been confirmed by each of the 3 major temperature-measurement projects on the planet (NASA, The U.S. National Oceanic and Atmospheric Administration, and Britain’s Met Office [loc. 1125]). As Naam explains, “each of those three totally independent records has found that the planet has warmed around 2.5 degrees Fahrenheit since the 1850s, and that warming has accelerated recently” (loc. 1125).

Global warming is leading to the melting of glaciers, polar ice and permafrost (loc. 1064-84), and this is causing sea-levels to rise. As the author explains, “sea levels around the world have risen seven inches in the last century, and their rate of rise has doubled in the last ten years” (loc. 1092).

The planet’s climate is changing in other ways as well. For one, rainfall patterns are shifting such that we are experiencing far more torrential downfalls on the one hand, and far more droughts on the other (loc. 1292-1316). Both of these effects are the result of rising global temperatures. As Naam explains, “for every degree Celsius that the planet warms, the atmosphere can absorb 7 percent more moisture. That 7 percent isn’t uniform, though. The greater moisture capacity of the air means that water can be sucked out of one area and deposited in another. Moisture becomes more concentrated in a few times and places, leading to droughts in one area or one season, followed by torrential rains in another” (loc. 1292). Both of these effects are terrible for overall global food production (loc. 1359), and also contribute to deforestation (loc. 1385-89).

In addition, our oceans are growing warmer and more acidic, and this is threatening the ocean’s wildlife even over and above the manner in which it is already being threatened by over-fishing (loc.1396-1429).

All of the effects mentioned above are being caused, at least in part, by a build up of carbon dioxide in the earth’s atmosphere and oceans (loc. 1091-1110, 1393). And much of this build-up of carbon dioxide has to do with our industrial activities (loc. 1191-95). Specifically, we spew about 30 billion tons of CO2 into the atmosphere each year (loc. 1116, 1193).

Now, climate change is already having a negative impact on the earth’s environment in a way that threatens the resources that we rely on to survive and thrive. What’s more, as the planet continues to warm as it is now doing, this impact will only worsen. But that’s not the worst of it. The worst of it is that there is a very real possibility that once this warming progresses to a certain point it will trigger events that will greatly accelerate the warming.

This is because an enormous amount of long-dead vegetation is currently frozen in the permafrost both on the earth’s surface and beneath the oceans (loc. 1463, 1475, 1494). This permafrost is already beginning to thaw (loc. 1483, 1498). And if and when the thawing reaches a certain point, the vegetation will begin to decompose, releasing carbon dioxide and/or methane gas into the atmosphere (loc. 1463-67). Given the enormous amount of decomposing plant material in the permafrost, the amount of carbon dioxide and/or methane gas that would be released would also be enormous, thus leading to vastly accelerated global warming (loc. 1487). As Naam explains, “if all of the Siberian tundra thawed, the release could have ten times the effect of all human activity to date. In the first twenty years the heating effect could be a whopping thirty times that of all human activity to date. And Siberia has only a third of the world’s frozen tundra. Summing up deposits in Alaska, Canada, Siberia, and other arctic regions, researchers now estimate frozen arctic regions contain 1.5 trillion tons of carbon, twice as much carbon as the world’s atmosphere” (loc. 1475). And that’s not even touching the methane that is currently trapped in the permafrost beneath the oceans. There, there’s an additional 6.4 trillion tons of methane! (loc. 1494). Not good indeed.

7. The End of Growth?

So, what is the end game in all of this? Admittedly, things do not look good. And several observers have forecasted the worst. That is, that our current way of doing things simply isn’t sustainable. Which means sooner or later we’re going to experience a crash. In the 1970’s a group of notable scientists, led by the biologist Paul Ehrlich, came up with a formula to describe our situation. It runs as follows: I = P x A x T (loc. 1621): Impact on the environment (I), equals population (P), times affluence (A), times technology (T). In other words, as population, technology and affluence all increase, so too does our impact on the environment. And the negative environmental impact that these factors have is not just linear, but exponential, as each factor is a multiplier of the others, and not just an add-on.

If this equation is true we’re in trouble, because population, affluence, and technology are certainly all increasing. As Naam explains, “we are already at an ecological footprint (our impact) of 1.5 planet Earths. Yet our population, already at an all-time high, is set to rise by at least another 2 billion people in the next few decades. The average affluence of people around the world is at an all-time high, and looks set to soar as billions in China, India, and the rest of the developing world surge toward Western levels of prosperity. Our technology is more powerful than ever, and if anything, appears to be advancing more quickly than ever” (loc. 1628).

The long short of it is that if Ehrlich and company are correct, then either growth as we know it must end, or our planet must give way (loc. 1632).

Looking back in time, we find that we would not be the first civilization to run ourselves into the ground through unsustainable resource use. Take the Mayan civilization, for example. The evidence is that the Mayan civilization collapsed in the tenth century AD due to soil erosion caused by extensive deforestation (loc. 659-62). And the same thing happened to a civilization that lived on Easter Island in the 16th century (loc. 1032).

So, are we headed the way of the Mayans, and the Easter Islanders?


For Naam, the answer is no. Or, at least, there are certain differences between our civilization and those of the past that have succumbed to resource depletion, such that we at least have reason to be optimistic.

8. A Plateauing Population

The first reason to be optimistic has to do with global population. It is true that the world’s population is still growing, but it is also the case that the rate at which population is increasing is slowing (loc. 4863), and all signs indicate that our numbers will plateau in the middle of this century—at between 9 and 10 billion people—and from this point probably begin to decline (loc. 4775, 4876). Indeed, the population of most developed countries has already plateaued, and in many cases is declining. To take just a few examples (keeping in mind that population decreases when women average less than 2.1 children over the course of a lifetime), “in Brazil, two generations ago, the average woman had 6 children over the course of her lifetime. Now, the average woman in Brazil has just 1.8 children over her lifetime… European women now have around 1.5 children on average over the course of their lifetimes. Russian women are similar. South Korean women have only 1.3 children, on average, over the course of their lives. Around the world as a whole, the average number of children a woman will have in her lifetime has dropped in half over the last fifty-odd years, from 4.9 children per woman in 1960 to 2.5 children per woman around the world in 2011” (loc. 4863).

The reason population is declining in the developed world, and is increasing ever more slowly across the board, is simple. As Naam explains, “everywhere that incomes rise, that education rises, and that women gain more opportunity outside of the home, fertility rates drop” (loc. 4859). In the developed world, progress in these areas has already resulted in a declining population, and in the developing world the trend is in the same direction.

Still, 10 billion people is a significant number of mouths to feed. Will the planet’s resources really be able to sustain such numbers? Again, there is reason to be optimistic.

9. Advancing Technology = Increased Efficiency

To begin with, it is important to know that increasing affluence and technology do not necessarily lead to more use of resources (as the IPAT equation would have us believe). In fact, the evidence indicates that as technology becomes more sophisticated, our use of resources becomes more efficient, such that we end up using less resources per capita, despite growing wealthier (loc. 1997-2005, 4874).

a. Oil

Take oil, for example: “in 1972, the average American consumed more than thirty barrels of oil per year. In 2002, with oil at a historically low price of $30 a barrel and both the U.S. and global economies roaring, oil consumption was down to less than 25 barrels per person per year… the International Energy Agency projects that in 2030 the average American will consume only 17 barrels of oil per year, just over half the amount consumed in the early 1970’s” (loc. 4881).

And the United States is not the only country wherein this trend has taken hold. Indeed, the trend holds across the developed world.  As the author explains, “France, Germany, Great Britain, and the OECD as a whole have all seen their consumption of oil per capita drop by anywhere from 30 to 40 percent since the peaks of the 1970s” (loc. 4881). Nor has wealth decreased in the OECD countries over this time period. Quite the opposite is the case, in fact (loc. 4885).

b. Water

Or take water. Here, too, per capita consumption has decreased over the years in the developed world. As Naam explains, “water use per person has dropped as well, thanks largely to the increases in the efficiency of water use in farming. According to the U.S. Geological Society, water use per person in the United States, for all uses, peaked at just shy of 2,000 gallons per person per day in 1975 and steadily declined to around 1,400 gallons per person per day in 2005, a level not seen since the 1950s, and a decline of about 1.2 percent per year” (loc. 4903). Again, the decrease in water use per person per year does not hold just in the U.S. Rather, it is being witnessed worldwide (loc. 2068-75).

c. Land-Use & Food Production

Or take land-use. The amount of land it takes to feed one person has decreased dramatically just over the past half-century. As an indication of this, consider that “to feed the number of mouths on the planet today at the yields we knew in the 1960s, we would have to cut down roughly half the remaining forests of the world” (loc. 2022). On an even grander timeline, watch what happens when we compare the efficiency with which we are able to extract food from the environment today to how much we were able to extract as hunter-gathers: “as hunter-gatherers, it took an average of almost three thousand acres to feed one person. Today it takes around a third of an acre. That roughly 10,000 fold increase in the amount of solar energy we capture per acre has come from a steady stream of innovations” (loc. 1916; see also 2007).

And our increasing efficiency when it comes to land-use and food production shows no signs of letting up. As Naam explains, “even now, innovations in labs point the way to potential grain yields that are double today’s yields, to crops that can survive droughts or floods, to crops that are more efficient in their use of fertilizer and water, and more… How far could these trends go? There’s no practical limit in sight. Today the average yields in rich countries like the United States, Canada, Europe, Japan, and Australia are around twice the overall average of the world. Lifting yields in the rest of the world to developed-world levels would, by itself, double the amount of food production, meeting or exceeding the demand expected in 2050. The additional energy required to do so, in fertilizer, fuel, equipment, and so on, would be around 3 percent of the world’s total. If we can address energy concerns, we can lift yields” (loc. 2031) (our energy concerns will, in fact, be ‘addressed’ below).

d. Water Desalination

O.k., let us give ourselves the benefit of the doubt in terms of our ability to innovate our way out of our food-shortage dilemma. What about our freshwater woes? Can we really increase our water-use efficiency to the point where we would avoid running out of current sources? Perhaps not (though we should certainly not rule this out as a possibility [loc. 2661]). But more and more it’s looking like we just won’t need to.  And the reason why, once again, has to do with new technology. This time the technology is water desalination (removing the salt from brine).

Desalination, it is true, has been around for a long time. But recent innovations have made it more efficient than ever. As Naam explains, “instead of boiling water, modern desalination plants push water through advanced membranes that filter out salt, other minerals, and even bacteria. The result is that we’ve reduced the amount of energy it takes to desalinate a gallon of water by a factor of 9 since 1970” (loc. 2646).

The recent improvements in water desalination have even allowed the process to be scaled up to an industrial level at certain locations. As the author notes, “the Singapore-Tuas seawater desalination plant, for example, which is still only half as efficient as the best laboratory systems, provides 10 percent of Singapore’s water needs, at a price of $0.49 per cubic meter, which equates to one-fifth of a cent per gallon. Israel’s massive Ashkelon Sea Water Reverse Osmosis plant, the largest in the world, produces 84 million gallons a day, enough to provide water for 1.4 million people in southern Israel, at a similar price” (loc. 2653).

Current methods are still not cost-effective enough to make them viable everywhere. But as the technology improves, it will certainly become more widely used. One thing that would help turn the tide is if we had access to cheaper energy, and this is where we shall turn to next.

10. Resource Substitution

While food and water may be made plentiful through increased efficiency and better technology, there are certain resources where this simply won’t help. Fossil fuels are one such resource. No matter how efficient we get at using fossil fuels, and pulling them up out of the ground, we’re still going to run out. So how do we deal with this?

a. Case Study: Whale Oil in the 19th Century

First of all, it is important to understand that we have faced resource shortages before—on numerous occasions, in fact. Take whale oil, for example. Back in the 19th century, whaling was the 5th largest industry in America (loc. 2274). The reason whaling was so huge was because the blubber from whales (sperm whales, specifically) was used for lighting (loc. 2267). Indeed, whale oil was the number one choice for this purpose (loc. 2267). The demand for whale oil grew so large that sperm whales themselves became threatened (loc. 2281). With less and less whales around to harpoon, less whale oil was produced, and the price of whale oil went up (sound familiar?). As the author explains, “in 1820, whale oil sold for $200 a barrel (in 2003 prices). In the mid 1840s, prices rose sharply as demand increased…  At its peak in 1855, whale oil sold for a whopping $1,500 a barrel” (loc. 2293).

With the price of whale oil as high as it was, there was a clear opportunity for someone to come along with an alternative. Thus, “the high price of whale oil and the fortune to be made by anyone who could produce a replacement sent people around the world in search of a replacement” (loc. 2296). Eventually, someone did find a replacement. The year was 1846, and the man was a Canadian physician and geologist named Abraham Gesner. His discovery? Kerosene (loc. 2296). Soon, kerosene was being mass produced. And it could be mass produced very cheaply—59 cents a gallon cheap. And since this was much cheaper than whale oil, kerosene came to replace whale oil as the number one choice for illumination (loc. 2310).

Eventually, technological improvements and competition drove the price of kerosene even lower—to 7 cents a gallon (loc. 2307). Even at this very low price, though, there was still room for an even better and cheaper alternative to come along, and steal kerosene’s thunder. The innovation was electricity. As Naam explains, “kerosene’s day as the chief source of illumination wouldn’t last long. In 1876, Thomas Edison demonstrated the first incandescent light bulb, and by the early 1900s, electric lighting was spreading like wildfire” (loc. 2310).

In the case of whale oil, what happened is this: a resource that was very valuable to us began to dry up, sending its cost up. An incentive arose to discover or invent a substitute that could take its place. The incentive worked. A substitute was found that was cheaper, and did not face the same shortages. Eventually, it too was replaced by an even better and cheaper alternative. This story has been repeated time and time again over the past 150 years. It has been repeated with fertilizer (loc. 2318-57), rubber (loc. 2368), diamonds (loc. 2361) and many other commodities (loc. 2372). As Naam explains, “whenever the need has been great, or the financial rewards high, inventors have come calling. And innovation has allowed us to find substitutes for every resource that’s come into short supply in the past. The combined global brain of humanity, mediated by the institutions of science and the market, and by our ever-increasing ability to communicate with one another, is more than just Darwinian. It doesn’t just randomly combine ideas to get new ones and select for those that are useful. It anticipates problems and directs resources to solving them” (loc. 2382).

b. Oil Substitutes

i. Solar and Wind Energy

This process is unfolding as we speak when it comes to oil (the whale oil of our day). Principally in the form of solar and wind energy. Both solar and wind energy, like water desalination, have been around for a long time. And like water desalination, both are becoming more and more efficient. As Naam explains, “when Ronald Reagan took office in 1980, average retail electricity costs in the United States were around 5 cents a kilowatt hour (in today’s dollars). Electricity produced from wind power, on the other hand, cost around ten times more, at 50 cents a kilowatt hour. And electricity from solar power cost 30 times more, at around $1.50 per kilowatt hour. How the times have changed. Today, new wind power installations in good locations are producing electricity at a cost of 5 cents per kilowatt hour, competitive with the wholesale prices of coal and natural gas at the power plants… Solar prices have dropped as much since 1980, and are still dropping fast. Large-scale solar installations in the very sunniest areas are down into the ballpark of 10-15 cents per kilowatt hour, on the edge of being competitive with the retail price of electricity customers pay at their buildings and factories” (loc. 2872).

And the increasing efficiency of solar energy shows no signs of letting up. Indeed, at the current rate of progress, solar energy is expected to compete dollar for dollar with energy from fossil fuels in but a few years. As the author explains, “in 2011, General Electric announced that it intended to have solar photovoltaic systems at costs at or below current retail electricity prices (a point known as ‘grid-parity’) for sale by 2015” (loc. 2876).

Already, the decreasing price of solar energy (which is happening quicker than many believed) has spurred major energy companies to begin switching over. To take just one example, “Jim Rogers, CEO of Duke Energy, one of the largest utilities in the [United States], told me in early 2012 that his company was now aggressively installing solar, years ahead of schedule. ‘We’ve been able to deploy solar at prices we didn’t expect to see until 2018 or 2020’” (loc. 2884).

ii. Advanced Batteries

Of course, one of the major problems with solar and wind energy, is that they cannot be captured when the sun isn’t shining or the wind not blowing. This problem can be solved through the use of batteries that store the energy; but as of yet, the batteries that we have are not terribly efficient (loc. 2945). This, too, is changing though (loc. 2945). Indeed, battery technology is advancing even quicker than technology that captures energy (loc. 2948). As Naam explains, “between 1991 and 2005, the price of storing a watt-hour of electricity in a lithium-ion battery dropped by a factor of around 10, from $3.20 per watt hour to just over $0.30 per watt hour. In the same time frame, the amount of energy that could be stored in lithium-ion batteries of a give weight (their energy density) more than doubled, from under 90 watt hours per kilogram to more than 200 watt hours per kilogram” (loc. 2948).

In addition, there are new technologies in batteries that promise to quash our current lithium-ion batteries when it comes to both energy storage capacity and price. Indeed, new lithium-sulfur batteries are twice as efficient as lithium-ion ones (loc. 2966), and there are even better batteries on the horizon. The most promising of these are lithium-air batteries. As Naam explains, “lithium-air batteries could practically store as much as 4,000 watt hours per kilogram, sixteen times as much as the best battery on the market today, with a theoretical max as high as 12,000 watt hours per kilo, another three times higher. Such batteries would bring down the cost of storage along with the weight. They’d make it feasible for solar and wind power systems to cheaply store sufficient surplus power to get through nights, cloudy days, and periods without wind. They’d make it possible for electric cars to go for a thousand miles on a single charge” (loc. 2974).

iii. 3rd Generation Biofuels

Aside from improved batteries, new and improved alternative fuels are also on the horizon. It is true that the first generation of biofuels (in the form of corn ethanol) were a miserable failure (loc. 2995). However, the latest generation of biofuels represents a vast improvement over earlier ones. For one, the current generation of biofuels are being grown in algae, and so don’t use up any arable land (the way corn ethanol does). Second, today’s biofuels are produced far more efficiently than corn ethanol ever was. As Naam explains, “while corn ethanol produces just a tiny bit more energy than is put into it, estimates show that algae biofuels should be able to produce at least five times as much energy as goes into growing and refining them” (loc. 3041).

Algal biofuels are still too expensive to be economically viable; but this is changing quickly, as the technology improves. As Naam explains, “the Algae Biomass Organization, a group that represents the staggering 170 start-up companies and laboratories working on algae biofuels, believes that those fuels will be competitive with the current price of oil before the end of the decade. If the price of oil rises, that day will just come sooner” (loc. 3049).

And the next generation of biofuel is even more promising than the current one. This next generation of biofuel involves manipulating the genes of single-celled organisms to produce fuel that does not even need to be processed (the way current biofuels do). As Naam explains, “instead of periodically harvesting the organisms, processing them and refining the output, [the latest process, developed by the energy company] Joule, slowly siphons fuel out of the algae tanks and replaces it with water. That saves them the energy and time it takes to regrow the algae population” (loc. 3067).

So there are alternatives to the fossil fuels we now use to produce our energy. Alternatives that do not face the same shortages as fossil fuels, and that are also cleaner, and quickly becoming cost-competitive with fossil fuels.

11. Stretching Materials: Recycling (and More Resource Substitution)

a. Recycling

Very well, you may say, but what about materials? No matter how efficient we get at using various materials, and pulling them up out of the ground, we’re going to run out, aren’t we? Not necessarily. To begin with, it is important to understand just how much valuable mineral is in the earth’s crust. As Naam notes, “the total amount of all minerals in the Earth’s crust is astounding. At current extraction, it would take fourteen million years to deplete the Earth’s crust of iron, two million to deplete it of phosphorous, one million to deplete it of copper, four million to deplete it of tin, and billions of years to deplete it of titanium” (loc. 2777).

Of course, many of these minerals would take a considerable amount of digging to get to, but that’s o.k., because we’ll never need to. The fact is that the goods that we use (and the materials out of which they’re made) don’t just disappear once we’re finished using them. They still exist, and can be used again to make still other things. And, increasingly, we are recycling the materials that we use.  As Naam explains, “more than half the copper and aluminum used in the United States, and two-thirds of the lead, is produced from recycling rather than mining. More than half the paper used in the United States is produced from recycled paper or waste from other processes. Around 40 percent of the steel produced worldwide starts with recycled scrap steel rather than iron ore” (loc. 2786).

And all of this recycling is happening not because governments around the world are mandating it, but because recycling material is cheaper than mining it and processing it anew. As the author explains, “it takes less energy to reuse already processed materials than to mine and refine new ones” (loc. 2777). To take just a couple of examples, “recycling steel reduces the energy needed to make new steel by 60 percent. Recycling aluminum reduces energy needed by an incredible 95 percent” (loc. 2786).

What’s more, recycling is becoming more and more efficient as time goes by. It is becoming so efficient, in fact, that it will soon be cost-effective not just to recycle things that go directly to the recycling plant, but to mine things from our trash heaps for the purpose of recycling. As Naam explains, “retrieving… valuable materials from landfills hasn’t been economically feasible till now. Separating the useful materials from the non-useful ones has been too energy and labor intensive. In recent years, though, rising commodity prices have reignited interest, and innovations in processing technology have brought mining landfills to the brink of feasibility” (loc. 2697).

This is a very good thing, because there’s an awful lot of reusable material in our landfills. To take just a few examples, “a paper in 2004 estimated that the world’s landfills contained 225 million tons of refined copper, an amount that, if brought on the market, would allow the world’s copper mines to completely shut down for ten to fifteen years, and that would fetch a total market price of more than $2 trillion at 2011 prices. Another paper in 2006 estimated that in the United States alone, landfills contained 850 million tons of iron and steel, about ten times as much as the United States produces each year. Undoubtedly, since 2004 and 2006, both numbers have increased. In Britain, recycling experts estimate that the country’s landfills contain around $100 billion worth of discarded plastics that could be recycled or converted into oil or natural gas. Recent analysis in Japan has found that landfills in that country contain 300,000 tons of rare earths, as much as Japan consumes in a decade. Those landfills in Japan alone are estimated to contain three times more gold, silver, and indium than the world consumes in a year” (loc. 2692).

In short, when mining our landfills does become economically feasible, we stand to have an awful lot of new material on our hands.

b. New Materials

And in the midst of all this recycling, we’re also coming up with alternatives to many of the materials that we use—materials that are even better and more abundant than those that we are currently using. Lately, two of the most promising new materials are carbon nanotubes and graphene. As the author explains, both carbon nanotubes and graphene are “currently expensive and manufactured primarily in small sizes and batches, but production is improving rapidly every year. Both carbon nanotubes and graphene sheets are new recipes for matter with new and highly desirable qualities. They’ll allow us to build planes, cars, homes, furnishings, clothes, electronics, medical devices, and a plethora of other devices that are lighter, stronger, and more efficient than the ones we have now. And the primary physical ingredient of both is not some rare substance found only miles below the crust of the Earth. It’s carbon, the fourth most abundant element in our universe” (loc. 2234).

12. The Case for Optimism (and How We Can Help Spur Innovation)

a. The Case for Optimism

So, actually, we are not running out of resources. Current shortages are driving innovations that are allowing us to extract and use our resources more efficiently (and recycle them); and also come up with alternatives that do not face the same shortages. Essentially, what this means is that the IPAT equation is false. The reason the IPAT equation is false is because advancing technology does not add harm to the environment; rather, it tends to minimize this harm (loc. 2005).

And there is no reason to believe that innovation is slowing down, or that it must slow down in the future. Indeed, the exact opposite is more likely the case. There are many reasons for believing this. To begin with, the fact is that innovations are built on ideas, and ideas, unlike physical resources, only grow over time (loc. 1769).

Our body of knowledge is as big as it’s ever been; and actually, we’re in the midst of a knowledge explosion. This is thanks in large part to the Internet, which allows everyone who has access to it to access (and add to) an enormous and ever-growing body of information. As we have seen above, the number of people on the planet who have access to the Internet is growing in leaps and bounds, and as it continues to grow, the body of knowledge itself will only continue to grow (loc. 5284-91). This bodes very well for the future of innovation.

Not only is the raw material that feeds innovation growing, but the forces favoring innovation are as strong now as they’ve ever been. Indeed, the number of people living under a market economy is larger now than ever, and as we have seen, the market economy is the single biggest spur to innovation ever invented. For not only does the market economy provide a robust incentive to innovate, it also leads to more wealth, which allows more and more people to pull themselves up out of poverty and put themselves in a position where they can afford to start thinking about innovation (loc. 5080, 5115, 5567-77).

Even better, ideas can be shared with no harm to the sharer. In econo-speak, ideas are ‘non-zero-sum’. And this is a very good thing, for it means that we can all benefit when our shared knowledge grows. As Naam puts it, “ideas aren’t zero-sum. That means the world isn’t zero-sum. One person or nation’s gain doesn’t have to be another’s loss. By creating new ideas, we can enrich all of us on the planet, while impoverishing none” (loc. 1773).

In short, our body of knowledge is huge and growing; the number of people who are able to contribute to this body of knowledge is huge and growing; and the forces in favor of innovation are as strong now as ever. Things look bright for the future of innovation.

b. How We Can Help Spur Innovation

Still, the fact that the future looks bright for innovation is no reason to become complacent. For Naam, there are several things that we could and should do to ensure that the innovations keep coming. For one, we could afford to spend a lot more on research and development. The evidence shows that investment in research and development yields more value than it costs, and so long as this is the case it means that we should really be investing more (loc. 3213-23).

Second, more and more, innovations require training in science and engineering (loc. 3260, 3307). However, the number of students registered in science and engineering programs is actually decreasing (loc. 3307). What would help here is to make loans for training in science and engineering more accessible (meaning cheaper) than loans for other types of programs (so as to encourage young people to enter them) (loc. 3321-28).

Finally, modifications could also afford to be made when it comes to grade school. At the moment, public schools are all largely the same; there is no serious competition between them; and there are few incentives for good teachers—and it is virtually impossible to fire bad ones (loc. 3275-78). This is backwards. If we want a healthy school system (which would greatly help spur innovation), then all of this needs to change. Naam argues the following: “the core concepts we have to embrace are competition and experimentation. Parents and children should have a choice of schools. Schools should compete for those children, receiving funding for each child that attends, and no funding for children who don’t attend. Principals and teachers need to be given more leeway to experiment with different curricula, to choose their own textbooks and lesson plans, and their own ways of teaching. School administrators need to have the freedom to hire, fire, and reward teachers on the criteria that they decide—just as happens anywhere in the private sector” (loc. 3285). In short, funding for education should be public, but the schools themselves should be privatized (loc. 3285).


13. Addressing Pollution

O.k., so innovation may be able to save us from our resource woes, but what about pollution? Isn’t our advancing technology only leading to more and more pollution? Again, not necessarily. It was mentioned above that in the developed world the technology that we have developed has actually decreased the amount of many resources that we use on a per capita basis. And this has happened with many pollutants as well. Take carbon dioxide, for example. As Naam explains, “even including globalization, American CO2 emissions have been effectively flat, if not declining, for the last forty years. They’re still too high, and they need to be brought down, but it’s clear that economic growth—a near doubling of U.S. GDP per person since then—doesn’t necessarily depend on either more energy consumption or CO2 emissions per person” (loc. 4895) (we will return to the topic of carbon dioxide in a moment). The same is true with other pollutants as well, such as insecticides and herbicides (loc. 2079; see also 2558).

Still, while the market may naturally encourage increased efficiency (which tends to reduce pollution), it does not necessarily discourage pollution per se. The fact is that if a particular process happens to produce pollution, and that process is the cheapest way to meet a need, the market will favor that process (and the pollution that comes with it)—even though the pollution ends up hurting the environment (loc. 2548).

We all suffer when the environment is damaged, so shy doesn’t the market discourage this? Because the environment is a communal good, whereas savings and profits are enjoyed privately. As the author explains, “the more people the value of a common resource is spread across, the less incentive there is for each person to care for it, to protect it, to take pains not to damage it, or to work to improve it. That’s true of a field, a river, a budget, a public park, an ocean full of fish, a rainforest, or a planet’s atmosphere… If something is taken from your pocket, you feel it. It it’s the planet’s pocket, no one feels it directly” (loc. 3469/3477).

The favoring of privately-enjoyed profits and savings at the expense of a communal good, such as the environment, is known as the ‘Tragedy of the Commons.’ The term was coined by the ecologist Garrett Hardin in 1968, who “saw, perceptively, that common resources that were open to unlimited use and exploitation without cost would be degraded” (loc. 5156).

There is a solution to The Tragedy of the Commons, though. When it comes to a polluted environment, you simply need to put a price on the pollution. This ensures that it is in everyone’s direct self-interest to pollute less (loc. 5160). Specifically, putting a price on a pollutant not only encourages businesses to emit less of it, it encourages enterprising people and corporations to come up with an alternative that does not produce the pollutant at all. And it works. We have several recent examples of this (loc. 3669-77).

Let us mention 2 in particular: Sulfur dioxide (which causes acid rain) and chloro fluoro carbon’s (CFCs) (which deteriorate the ozone layer). In both cases, an environmental crisis of real significance was identified, and various governments took action to ensure that a price was placed on the offending pollutant—in the form of a cap and trade and/or tax policy (loc. 3571-90, 3650-). In both cases, alternatives were found that did not cause the problems, and the problems were solved (loc. 3605, 3659).

14. Addressing Climate Change

These days, another environmental crisis is on our radar—and that’s climate change. For Naam, this environmental crisis deserves our utmost attention (for reasons we have seen above).

a. The Carbon Tax (and Refund)

The author’s plan for the United States is as follows: Begin by way of taxing carbon, starting at $10 per ton of CO2, “that’s equivalent to ten cents per gallon of gasoline and roughly 0.7 cents per kilowatt hour of electricity (1 cent for coal, half a cent for natural gas)” (loc. 3739).

Do not implement the tax right away, though; instead, wait 5 years before implementing it (loc. 3739). The 5 year period gives businesses and individuals time to prepare for the changes, and to modify their behavior accordingly (loc. 3739).

Next, increase the tax every year until we’ve met our goal. Specifically, “every year that the United States is not on target for reaching an 80 percent reduction in CO2 emissions by 2050, raise the price by another $10 per ton. If the United States is on target, leave the price where it is. If the price gets to a ceiling of $100 per ton, or $1 per gallon of gasoline and 7 cents per kilowatt hour, stop. Adjust all these prices for inflation” (loc. 3743).

In order to ensure that American companies are not put at a disadvantage relative to companies that are based in countries without a similar carbon policy, implement the following 2 provisions: First, “put a tax on any imports from countries that don’t have a carbon price” (loc. 3747). And second, give a tax break to American companies on any exports that are going to these countries. As Naam explains, “those two steps keep U.S.-manufactured products on a level playing field with products manufactured in countries that don’t have a carbon price” (loc. 3750).

For Naam, all of the money raised from the carbon tax should be returned to individual tax-payers. The easiest way to do this is to impose a reduction on payroll and income taxes, “showing up as lower withholding in each paycheck, and more take-home pay” (loc. 3750). The reason this is necessary is because the carbon tax will inevitably lead to higher energy prices, which will fall on everyone’s backs (loc. 3699). This would slow economic growth (and make everyone’s life harder)—unless, that is, the higher price of energy is offset by an equivalent tax break (loc. 3713-17, 3763, 3780).

The main consequence of the carbon tax, Naam maintains, is that it will make renewable energy forms, such as solar and wind, more cost-competitive with fossil fuels—which will hasten the rate at which we switch over to these energy forms. As the author explains, “as renewable energy prices drop, and batteries become cheap enough for night-time storage, we’ll cross the point where it makes more sense to shut coal plants down than to keep operating them… Along the way, at every step, we’d be reaping benefits. We’d be slowing and eventually halting climate change. We’d be reducing the money we send to the Middle East and Russia for oil. We’d be insulating ourselves from the effects of sudden shocks to the price or supply of oil or coal that could cause recessions. We’d be reducing the price of nearly limitless energy through innovation and learning curve effects funded by the dollars we spent on renewables instead of on fossil fuels. And through that, we’d be setting ourselves up for cheap access to water, minerals, food, and everything else that bountiful cheap energy can help us get. At the other side of our transition to renewables, energy, and everything that depends on it will cost less than they do today” (loc. 3780; see also 3715).

The fact is that the price of renewable energy forms such as solar and wind are already dropping precipitously, while the price of dwindling fossil fuels is rising. Instituting a carbon tax would but hasten the transition from the latter to the former, and help us ensure ourselves against the dangers of climate change.

b. Additional Measures

Of course, even the carbon-tax measure may not slow the emission of carbon dioxide to the degree that we need to prevent the dangers of climate change. For this reason, Naam is also in favor of taking other measures to add to our insurance. For instance, the author argues that we should not turn our backs on such solutions as climate engineering (loc. 4280-83, 4372-76, 4407-11), and also embracing nuclear power (loc. 4269).

With regards to nuclear power, Naam argues that the full transition to renewable energy forms such as solar and wind may still be up to 15 to 20 years away, and that it would be good to have a clean energy source in the time being to help us bridge that gap (loc. 4037-43). Though legitimate concerns have been raised regarding nuclear power, the author argues that current generations of nuclear power are much safer than previous ones (loc. 4043, 4225-28); and that the dangers posed by nuclear power are in fact much less than those posed by the burning of fossil fuels (loc. 4065-79, 4090-4113).

15. Conclusion

The challenges we face are substantial. However, our ability to innovate is equal to the task. Just looking at some of the latest technologies, and those that are on the horizon, should give us some hope. But the real hope should come from an understanding of what drives innovation, and why innovation is only likely to accelerate in the world in which we live.

*To purchase the book from Amazon.com, please click here: The Infinite Resource: The Power of Ideas on a Finite Planet

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