Lucretius Corvo: What will happen when [the power gauges] reach the maximum? Corellus: As my tutors on Mars would say, Captain, the Omnissiah acts mysteriously. The ways of the Motive Force may be understood, from positive to negative and on through the circuit. That which guides it may not. Lucretius Corvo: You do not know. Corellus: No. That is what they generally meant when they said that. Dialogue between Lucretius Corvo and Techmarine Correlus of the Ultramarines. – Guy Haley, Pharos
The other week, I had the pleasure of delivering the keynote speech to the Just Transition Partnership’s Reclaiming Our Energy conference where I gave a (not completely impartial, but at least honest) appraisal of the Scottish Government’s draft energy statement. As of the time of writing, the recording of the full conference isn’t yet online (I’ll link to it here when it is) however I included the audio of my presentation in this week’s Policy Podcast.
Who won the energy crisis? The obvious answer is “not us”. The bank accounts of the oil barons are absolutely glowing right now with all of the major corporations publishing their 2022 profit figures this week. Many of them are showing record levels of profit while folk are freezing in their houses despite this being one of the mildest winters in UK history. Shell announced profits of $40 billion, BP made $28 billion, Norwegian state-owned Equinor made $79 billion and Exxon – who infamously predicted with “shocking accuracy” the climate change impact of their operations almost 50 years ago but covered up the data and kept on going – made $56 billion.
A large chunk of these profits will go towards share buybacks – where the company reduces the amount of shares in the company out there in the wild and therefore increases the value and the voting power of remaining holders – but much of it will go out in dividends. You paid more than you ever have to keep your house colder than it’s ever been but all that did was make someone else richer.
In December 2019, our oil boiler exploded. This was rather inconvenient as it was the week before Christmas, we had only moved into the house a couple of months prior and my parents-in-law were over visiting to see the new place for the first time. It was also bitterly cold and our only sources of heat were a hot water bottle, two hyperactive kittens and an old electric heater the previous owner had left forgotten in the shed – plugging it in was effective but sent the meter spinning so quickly that I’m pretty sure I could have rigged up a dynamo and used it to keep the water bottle warm. It was doubly annoying in that one of the first things we did when we moved in was to get the boiler serviced and that turned up no obvious problems.
Britain is heading into one of the worst winters of a generation. The rising cost of living combined with multiple crises from energy, food supplies and general government incompetence mean that we’re facing price rises, empty shelves and potentially the highest rents and mortgage burdens ever seen in this country (headline interest rates /might/ not quite reach the peaks of the early 90s but house prices are so much higher now than then and wages haven’t increased by nearly as much so a greater proportion of our wage will end up being devoured by our bank and/or landlord). Folk trying to buy a house over the winter, who are trying to renew a mortgage reaching the end of its fixed rate or who are renting from a landlord trying to do one of the above are particularly vulnerable to price shocks that could equal or exceed the energy crisis.
“When you have no real power, go public — really public. The public is where the real power is.” – Elizabeth Warren
The nature of Scotland’s devolved settlement is that the country is simultaneously less powerful than many would like but more powerful than many would give it credit. The reserved powers list in Schedule 5 of the Scotland Act are quite clear and the Scottish Government can and has been taken to court when it has attempted to overreach its powers. However the areas of devolved powers are broad and cross-cutting enough that it is often possible to effect change in defiance of Westminster simply by looking for the cracks and loopholes within those reserved and devolved powers.
We have also seen the pandemic reveal that some powers (such as the power to close or restrict borders) which were previously assumed to be reserved have, in fact, been substantially devolved. Until the pandemic struck it would have been considered unthinkable that the Scottish Government could effectively order the closure of the Anglo-Scottish border – and yet, for a time, it was (that the closure wasn’t particularly well policed and enforced is another matter entirely).
Scotland pushed against reserved Westminster policy many times – mostly significantly by using powers over planning permission to effectively block nuclear power and onshore fracking in Scotland. A larger challenge looms in the form of offshore oil and gas, but I believe that the Scottish Government could go further that it current does in terms of opposing oil extraction around Scotland despite the powers to do so being largely reserved.
“Distinctions must be kept in mind between quantity and quality of growth, between costs and returns, and between the short and long run. Goals for more growth should specify more growth of what and for what.” – Simon Kuznets, developer of the measurement of GDP on the limitations of the statistic.
There’s a measurement of technological advancement in science and science fiction circles known as the Kardashev Scale. It measures how advanced a civilisation is by how much energy it consumes or is able to harness using its technology.
A Type 1 civilisation is able to use the same amount of energy as falls on their home planet from their home star. For Earth-Sol, this is a power consumption of about 7×1017 Watts.
A Type 2 civilisation is able to harness the entire energy output of its home star – either by colonising many star systems or by fully enclosing their home star by energy gathering technology like a Dyson Sphere. For our star, this is about 4×1026 Watts or about 500 million times the energy consumption of a Type 1 civilisation.
Finally, a Type 3 civilisation has the technology to harness the entire energy output of a galaxy – a feat rarely reached in even the most ambitiously scoped sci-fi but see Stephen Baxter’s Xeelee Sequence for beings which are capable of at least this and more. This level of tech involves the consumption of about 4×1037 Watts or about 100 billion times the power used by a Type 2 civilisation.
And where does our wee planet sit in all of this? Carl Sagan extrapolated from these points to create a more comprehensive mathematical formula for calculating a given civilisation’s Kardashev number. He also estimated in 1973 that humans generated an average of 8 Terawatts of power which gave us a Kardashev Number of about 0.70. As of 2015, our energy generation has increased to an average of about 19 TW which makes us now a Type 0.73 civilisation. Extrapolating out linearly, we should hit Type 1 around the year 2325.
Imagine that the only thing that the scientific community really cared about was our progress up this scale. All of science was bent towards our expanding our power generation and consumption base. And all that politicians cared about was their “Kardashev Growth per year”. It wouldn’t matter if your discipline was physics, chemistry, biology or whatever. Anything that grew the Kardashev number was funded. What would we be missing if that was all we cared about?
(For my academic friends who want to draw parallels with the current obsession with citation number and impact factors…you’re not wrong, but…next time.)
It’s worth noting that whilst total global power generation has increased by a factor of 2.4 since 1973, global population has only increased by a factor of about 1.8. The “global average human” today is using about 33% more power than the “global average human” of 1973. This is due to a massive reduction in global poverty and an unbelievable expansion of buying power and access to technology around the globe.
Of course, there are limits to this kind of measurement. Technology doesn’t just get more powerful and more widespread as it develops, it also gets more efficient. The fitness band I’m wearing right now weighs less than 100g but has orders of magnitude more computing power and uses orders of magnitude less electrical power than my first desktop PC from the mid-1990s – never mind the room-sized behemoths of the early days of computing in the 1950s and ’60s.
We also must think about the environmental impact of our technology – another major difference between 1973 and now is the exponential expansion of renewable energy technology at the expense of fossil fuels.
So obviously, rendering a civilisation’s level of technological development down into a single number and then measuring the growth of that number might be interesting and may be useful as a very broad comparator but it probably doesn’t tell anything useful about the shape of that society or what’s going on inside it.
So why do we expect the same from other renderings such as Gross Domestic Product?
This measure – essentially the sum value of all economic activity within a country in a year – was developed in its modern form in the 1930s and has since become the gold standard of national statistics. Huge swathes of statistics are measured either in relation to it (think of “national debt as a % of GDP”) or as a derivative of it (GDP growth” or “GDP per capita”, for instance).
But even at its inception, the creator of it noted the limitations. A measure of the growth of GDP says very little about how that growth has occurred or who has benefited from it.
I was able to discuss some of these issues when I visited the Scottish Parliament’s Economy, Jobs and Fair Work Committee earlier this week as well as in an article in CommonSpace yesterday.
The Scottish Government has, to its credit, tried to improve some of the measurements it uses via program like the National Planning Framework. One of these is the idea of “inclusive growth” which explicitly states that measures should be taken to ensure that when economic growth occurs, it should not simply accumulate with the top few percent.
It’s a laudable goal but I still have my reservations in that the metric is still pinned onto the concept of “growth”. Just as a growing economy may accumulate wealth in the top, it’s possible that a recession could increase inequality too. Imagine a drop in the economy that causes mass unemployment, reduction in working hours, an increase in casual, part time and “gig” labour whilst at the same time the wealthiest are bailed out by the state. You know…a bit like what happened in 2008.
Just as it’s possible to try to ensure inclusive growth, it should also be possible to ensure inclusive de-growth when recessions come and inclusive stasis when economies are themselves static. The government would be well advised to focus as much on inclusivity as it does on growth, maybe more so.
To be fair, there was at least some logic to using GDP as our measure of economic development. For many years, wage growth was pretty firmly linked to economic growth. If the company you worked for did well, you did well. But two great shifts have happened in the past 40 years. The first came in 1979 with the rise of neoliberalism. The economic programs enacted by Thatcher and others were coupled with a decoupling of wages and growth such that the latter started to pull away from the former. The gutting of the unions and the reduction of collective bargaining was perhaps chief among those reforms.
The second decoupling came in the wake of the 2008 Financial Crisis. This time it came in “productivity” – the amount of GDP generated by a given hour’s labour. It’s a complex topic but part of this has come from the rise of the “gig economy” where folk have – often through somewhat convoluted means – become “self-employed” and have lost access to even individual bargaining. With no commitment at all to the company that they “service” (rather than work for), it’s no surprise that innovation and investment have declined. Not that it’s the fault of those workers. With no commitment to them, the company needn’t care beyond short term profit extraction and share price either.
Another possible reason for the decoupling of productivity and wages (as well as the stagnation of productivity overall) is the rise of certain sectors of the economy that don’t quite fit with older measures such as “added value” and suchlike. I’m talking here about jobs like personal care. It could be possible to “increase productivity” in personal care but if that means “service more clients per shift” then what you’re asking carers to do is cut visiting times from 30 minutes down to 15 minutes down to 10 minutes…
So maybe we don’t want “productive” care. I’d prefer effective care. And maybe jobs like care don’t produce huge feedback multipliers in the economy but there are other ways that such care could be considered “valuable”. Especially to the person receiving that care.
So, just as the Kardashev Scale is for technology, GDP should only be dubiously taken as the be-all-and-end-all of economic development. Politicians really should start taking note of what’s going on underneath that headline number. It’s a harder story to tell, true, but economies are far too complex for the “simple” story to be sufficient.
And if it turns out we’re simply not measuring enough to answer our questions, well…that’s a story for another day.
“GDP is increasingly a poor measure of prosperity. It is not even a reliable gauge of production” – The Economist
There’s a bit of a story happening around Scotland’s oil trade since Wings Over Scotland highlighted an otherwise completely unreported change in the way the UK measures how much oil it trades with the world and where in the UK it comes from.
The story stems from the way that the UK calculates its balance of trade with the rest of the world and specifically how it then decides which region of the UK is responsible for that trade. To do this, the UK is split into 12 regions based on the Government Office Regions of England plus Scotland, Wales and Northern Ireland. (These boundaries are also used by Eurostat for their NUTS 1 statistics)
There’s another “region” of the UK not displayed on the map. Not all trade can be firmly allocated to a single region and not all trade can be allocated to a region at all. This is the “Unknown Regions” of the UK. Most prominent amongst this kind of trade, at least within Scottish political circles, is trade generated by offshore activities.
There are many different ways one could approach this allocation – the methodology – and the way you do it can result in very different results. Now, if you’re the UK and are looking at UK stats these figures don’t really matter so much but they do become very relevant if you’re looking at one part of the UK and what its economy might look like if it decided to, say, discuss holding a vote for independence. Suddenly, even UK government departments start getting very interested in Scottish trade.
The particular story here concerns a change in the trade methodology around offshore oil in Scotland waters. Particularly, oil which is exported out of the UK directly from the rigs without it ever touching the UK land boundaries. Previously, much of this oil has been allocated to the Unknown Region but the change now meant that it would be allocated to Scotland. This has led to an increase in the recorded value of Scottish minerals exports for 2015 from £588 million to £6,825 million. Quite a substantial jump and one which has spread around social media. Time for a wee breakdown of what it means and take the chance to clear up a few misunderstandings I’ve seen along the way.
(This is a complex topic, after all)
The headline figures are that in Q1 2017, Scotland’s economy grew by 0.8% which is up substantially on the -0.2% contraction seen in Q4 2016. This positive growth also means that the two successive quarters of negative growth which define a technical recession were not met.
The UK’s GDP growth over Q1 2017 was 0.2% though in my last blog post I put substantial attention onto the point that we should treat such comparisons with a great deal of care given the large regional inequalities within the UK. I’d very much like to see the GDP of the UK broken down across its regions (especially London) before commenting too much on it.
And before we all start patting ourselves on the back at avoiding our “predicted” recession, it’s worth actually diving into the numbers and seeing what they do and do not tell us about the Scottish economy.