What do salmon dinners, SUVs, and subprime mortgages have in common? They all depend on cheap oil, at least according to the book jacket of Jeff Rubin’s bestselling new book, Why Your World is About to Get a Whole Lot Smaller.
Rubin is a former chief economist for CIBC World Markets, and a recent convert to the economics of peak oil—the supposed point at which global oil production reaches its maximum level, after which it enters a long, slow decline. The result, Rubin argues, will be a world where demand increasingly outstrips supply—and the end of the entire global economic order.
But, surprising coming from a guy whose last job was predicting where the world economy is headed, all this talk of peak oil is old news. The peaknik movement has already moved on from its obsession with oil and—like the peacenik movement of yore—split into a multitude of factions, each warning of the impending catastrophic consequences of one form of peakonomics or another.
And so in addition to the peak oilers, we now find people banging on about peak fish (the point at which the amount of food we can pull from the sea goes into decline), peak soil (same thing except for agriculture), peak water (an impending water shortage) and peak carbon (which has something to do with global warming). A former Cisco employee named Jaswant Jain has identified something he calls peak debt, the point at which the ability of consumers to access credit will run out, with a corollary called peak dollars, the supposed limit of the government’s ability to print money.
And recently, in a slightly different vein, educational policy folks have warned about peak enrolment, after which university enrolment will go into terminal decline, presumably leaving the groves of academe looking like an abandoned set from a new Mad Max sequel.
These arguments can be seductive. Resources, after all, are finite, and it stands to reason that at some point we’ll drill all the oil, and fish out the oceans. But there is hope, whether or not the peakniks like it.
At its essence peakonomic thought rejects the foundational economic principle of our civilization, that over the long term, increased productivity leads to ever-higher levels of prosperity, social stability, and well-being. Instead, peakniks suggest output will soon crest in any number of sectors, followed by an extended or permanent period of decline. The assumption is all historical trends in production and consumption inevitably continue along their current path, with no hope for innovation, no leaps in technological progress or improvements in institutional design.
But why should we buy this assumption? It is weirdly ahistorical to think we’re not going to get massive innovation in each of those sectors. Over the past 100 years, life in the developed world got steadily better by almost any conceivable measure. Life expectancy rose while infant mortality dropped; the air quality of our cities improved, food got cheaper and more nutritious, and the workplace became safer as wages steadily climbed. There is no reason to think this sort of across-the-board progress cannot be sustained. From global warming to food production to the current economic crisis, the odds are we’re going to figure things out.
Peak oil may just be a much-needed first stop toward progress. As President Obama’s new energy secretary, Steven Chu, has argued, most of our energy technology is 19th-century technology. Compared with other areas of innovation—computers, biotech, information technology—energy saw a period of almost total stagnation in the 20th century. The simple reason is, there’s so much energy in oil that nothing else could compete. Oil’s ridiculously low price-to-energy ratio was also a barrier to technological innovation, so high prices should eventually lead to a better solution. To put it another way, the Stone Age didn’t end because they reached “peak rocks.”
But that’s historical amnesia for you. Peakniks are driven not just by pessimism about the economy or the environment, but a deeper distrust of the entire modern project. Call them doomers, dystopians, or neo-Malthusians, but they are at heart “declinists.” And what motivates declinism is an abiding distaste for the modern world—the urban alienation, the individualism, the shallow entertainments and mindless consumerism. For declinists, peakonomics is not a threat but a hope: once the collapse happens we’ll be thrown back into a low-impact hyper-local subsistence economy—precisely the sort of lifestyle most declinists think we should be adopting regardless.
The doomers may be right. Thanks to peak oil, our world may get a whole lot smaller, and certainly, the best-case scenario, of more local economies that will repatriate lost jobs and revitalize neighbourhoods, doesn’t sound so bad. But what about the prospect of more people chasing ever-fewer resources, leading to civil strife, population dislocation, even war? Even if it doesn’t come to that, there is no reason to think our lives will get a whole lot better. Much about the good old days was truly awful, which is why people spent a great amount of effort trying to make things better. They called it progress—perhaps the one old-fashioned idea worth preserving.