

Does Economics Violate the Laws of Physics? - brkumar
http://www.scientificamerican.com/article.cfm?id=does-economics-violate-th

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gintas
"Why should economics be a social science, because it's about stuff?" Yeah,
right. For example, and I build "stuff" (from something like "bit substance",
I take it?) for a living...

Economics is not related much to physics. On the contrary, it's pretty much
metaphysics as its quant is money, which is socially constructed.

It is fallacious to assume that economic growth will lead to growth in energy
use. Quality, not only quantity generates value. In other words, if a baker
keeps baking better-tasting bread, and a piano maker keeps making better-
sounding pianos, the economy will grow. Improving quality does not necessarily
need extra energy.

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ryanwaggoner
_In other words, if a baker keeps baking better-tasting bread, and a piano
maker keeps making better-sounding pianos, the economy will grow._

This is true, but only to a point. Market saturation also plays a role, plus
the theoretical and practical limits to quality in both of those cases. Costs
do not scale linearly with quality increases. There is a limit to the quality
differences people can differentiate, so at some point people will stop paying
for better bread and pianos because a) they better versions are too expensive,
and/or b) they can't tell the difference between that and what they already
have.

How many people do you know who wish they had a piano but they can't find one
that's of high enough quality?

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anigbrowl
Quite so. Here's an article about a long-running strike that recently ended at
an american factory specializing in trumpets, which has been unable to compete
with those made in China: [http://www.sfgate.com/cgi-
bin/article.cgi?f=/c/a/2009/10/25/...](http://www.sfgate.com/cgi-
bin/article.cgi?f=/c/a/2009/10/25/BUNO1A7BM4.DTL)

I have no doubt that years of experience can lead to a superior instrument,
but the market for such a device is limited to the few musicians who are able
to play at a superior level. you can also see this closer to our home in the
commodification of computer hardware; the resolution ability audio technology
(as used in soundcards) passed beyond the threshold of human hearing ability
some time ago, so competition has shifted towards features, design and
branding.

I do agree with the article's suggestion that economics should adjust to the
idea of energy as the fundamental quantum of value, but given the general
public's poor understanding of economics it might be argued that there's
insufficient demand to drive such innovation in the shot term.

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crc32
The whole point of economics is studying the allocation of scarce resources.
_Individual_ economists might not believe in peak oil, but to expand this idea
to say that neoclassical or chicago school economic models ignore the physical
constraints of the universe is hyperbole at best.

Of course I doubt many economic models take the life expectancy of the sun
into account; but to say that neo-classical models can't account for running
out of oil is frankly ridiculous. As oil gets more expensive other means of
energy production (nuclear, solar) become more attractive, and/or the cost of
energy goes up. Never mind including technological progress as an "input" into
your model.

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buugs
This isn't violating any laws of physics instead it is economists not taking
into account well economics... companies vested in energy aren't going to say
that they aren't going to have energy in the future, same goes for oil and car
producers and it actually ends up trickling down.

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bengebre
Reminds me of Albert Barlett's Arithmetic, Population and Energy talk:

<http://www.youtube.com/watch?v=9znsuCphHUU>

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koops
The community of hackers seems to be in as much denial about impending energy
shortages as classical economists. A shame, because hackers are good at
finding novel solutions.

~~~
jamesbritt
"The community of hackers seems to be in as much denial about impending energy
shortages as classical economists. "

On what do you base this claim?

~~~
koops
Take Startup School. Did you hear anybody mention anything about scarcity?

