The Environment, Capitalism, Technology

0:00:03 – Hi, everyone, welcome to the A6NZ podcast.
0:00:05 I’m Sonal, and I’m excited to do another one
0:00:07 of our co-hosted episodes with Mark Andreessen,
0:00:11 who joins me in interviewing MIT economist Andrew McAfee,
0:00:14 who we’ve actually had on the podcast a couple of years ago
0:00:17 on a great episode with his co-author Eric Brynjolfsen
0:00:19 on their book, “Machine Platform Crowd.”
0:00:22 But Andy’s new book takes a very different turn
0:00:24 from that previous series of books and focus
0:00:27 on the theme of bits to focusing on atoms,
0:00:30 the physical world, basically the environment.
0:00:33 It’s called “More from Less,” the surprising story
0:00:36 of how we learn to prosper using fewer resources
0:00:37 and what happens next.
0:00:39 And I think it’s a really important book
0:00:42 contributing to the important dialogue we’re having right now
0:00:43 on taking care of our planet
0:00:45 and also of taking care of human progress,
0:00:47 especially because these two don’t have to be
0:00:50 a zero-sum game of the two in conflict with each other.
0:00:52 So what does it take to go from that narrative
0:00:54 of extraction and destruction
0:00:56 to one of protection and progress?
0:00:58 So in this episode, we cover everything
0:01:01 from what capitalism’s role is in all this,
0:01:03 including what it is and isn’t,
0:01:06 to the global environment, including China and India.
0:01:08 And throughout, we discuss the technology
0:01:12 from energy use and types of energy to dematerialization.
0:01:14 And surprisingly, the idea of that
0:01:16 well before software was even invented,
0:01:17 stay tuned for that bit.
0:01:20 But we quickly begin with the technology
0:01:23 and effects of the Industrial Revolution.
0:01:24 – The industrial era kicked off
0:01:27 the Industrial Revolution and the James Watch steam engine
0:01:28 and all those other technologies
0:01:32 was this period of amazing human growth,
0:01:34 the growth of our economies, growth of our prosperity,
0:01:36 growth of our population.
0:01:39 And that was great in a sense,
0:01:41 but it really did feel like there was a trade-off
0:01:44 between improving the human condition
0:01:45 and improving the state of the world.
0:01:48 And in the industrial era, if you looked at the evidence,
0:01:49 you could make a pretty strong case
0:01:51 that we were increasing our growth
0:01:54 at the expense of the planet that we all lived on.
0:01:56 We took more resources from the earth every year.
0:01:57 We chopped down more trees.
0:01:59 We cleared more cropland.
0:02:01 We took more fossil fuels out of the earth.
0:02:03 We polluted more.
0:02:04 We either domesticated animals
0:02:06 or drove them to the brink of extinction.
0:02:10 And the reason I decided to write more from less
0:02:12 is I don’t think that’s true anymore.
0:02:15 The evidence supports the idea that in the richest countries,
0:02:17 and I’ve got the best data for America,
0:02:19 that that trade-off between the human condition
0:02:20 and the state of the world
0:02:22 is actually in the rear view mirror.
0:02:25 Because in almost all the ways that we could care about,
0:02:27 improving the human condition,
0:02:29 we’re taking fewer resources from our planet.
0:02:30 We’re polluting it less.
0:02:32 Some of the animals that we pushed to the brink
0:02:33 are coming back.
0:02:35 I didn’t hear that story being told.
0:02:37 And so hence the book.
0:02:39 – So one thought that struck me
0:02:41 in looking at the example of the Industrial Revolution,
0:02:44 which everyone points to is a greatest story of progress.
0:02:45 Do you point out that it ended slavery
0:02:47 but increased child labor?
0:02:49 – There were some pretty nightmarish situations
0:02:51 early in the industrial period.
0:02:53 There really were factories full of kids
0:02:56 under the age of 10 working 14 hour days.
0:02:58 And some of these kids weren’t even sent there
0:03:00 by their parents, they were orphans.
0:03:02 And this was what we decided to do.
0:03:04 I consider that a moral mistake
0:03:07 and different than what kids were doing on farms before.
0:03:09 But in most rich countries,
0:03:12 slavery ended early in the industrial era.
0:03:15 Child labor ended before the 20th century,
0:03:17 but we didn’t start dealing with pollution
0:03:20 and species that we pushed to the brink of extinction
0:03:22 until much, much later than that.
0:03:24 So we kind of looked after ourselves first
0:03:26 and then the rest of the planet afterward.
0:03:29 – So Andy, I wanna probe the conflation of capitalism
0:03:31 and extraction of resources
0:03:34 when it doesn’t actually have to necessarily be that way.
0:03:36 But one stat in particular that struck me on that front
0:03:39 is that research emerged showing that the US GDP
0:03:42 was closely intertwined with energy consumption.
0:03:43 You talk about this in your book.
0:03:46 Clearly there’s something about more energy consumption
0:03:49 tied with the success of an economy.
0:03:52 If you draw a graph of the US economy,
0:03:55 the real GDP of the US from 1800 to 1970,
0:03:57 and then you add one more line to that graph,
0:04:00 which is total energy consumption per year
0:04:03 from 1800 to 1970, those lines are really hard to tell apart.
0:04:06 They sit right on top of each other.
0:04:09 And there’s this whole stream of research
0:04:11 that turned into an assumption
0:04:14 that if you told me what your energy use per capita was,
0:04:16 I would tell you what your GDP per capita was
0:04:19 or the state of advancement of your society.
0:04:23 And we almost use those two things as proxies for each other.
0:04:25 One of the super weird things
0:04:28 is that that relationship has completely broken down
0:04:29 in the United States, where again,
0:04:31 I know the evidence really well,
0:04:35 total US energy consumption has been basically flat
0:04:37 since at least the end of the Great Recession
0:04:39 and maybe even before that started.
0:04:41 Now, in the old fashioned way of looking at things,
0:04:43 you say, “Oh my God, there was this massive recession.”
0:04:45 Absolutely not, it grew like crazy,
0:04:49 but we’ve divorced energy use from growing the economy.
0:04:50 And one of the broad points I make in the book
0:04:52 is that story is very broad.
0:04:56 We’ve divorced most other kinds of using up atoms,
0:04:58 using materials from our prosperity growth.
0:05:02 And that relationship is not unique to America.
0:05:04 It exists elsewhere and it will spread
0:05:07 as we spread capitalism and technology.
0:05:09 One of the things that I had fun with in the book
0:05:11 was trying to defuse tension
0:05:13 because there are a lot of audiences
0:05:14 where if you say capitalism,
0:05:16 they start throwing rotten tomatoes at you.
0:05:19 They just can’t hear the word, it’s so triggering.
0:05:21 So one thing I try to do is say like,
0:05:23 “What do I mean by capitalism?”
0:05:26 And I don’t mean cronyism, I don’t mean corporatism,
0:05:29 I don’t mean regulatory capture or financialization.
0:05:30 These are all real things.
0:05:33 These are all perversions of actual capitalism.
0:05:36 – Yeah, I hate that capitalism gets a bad rap.
0:05:39 And while we may argue for a better form of capitalism,
0:05:41 can you just break it down and sort of tease apart
0:05:43 the myth from the facts when it comes to
0:05:45 like what is capitalism?
0:05:46 I think sometimes people are using different labels
0:05:48 for different things, quite honestly.
0:05:51 – Yeah, and let’s be clear on what we’re cheerleading about.
0:05:55 Capitalism is the best way the earth has ever come up with
0:05:58 to get goods and services into the hands of people.
0:06:00 Now that’s a really important thing for a society to do
0:06:03 if you don’t want your people to starve or die of exposure.
0:06:04 And when I talk about that,
0:06:06 I mean a few pretty specific things.
0:06:08 First is that private companies are responsible primarily
0:06:10 for producing those goods and services.
0:06:12 That’s not the government, it’s not individual,
0:06:14 or craftsmen or artisans or anything.
0:06:19 Number two, they use prices that are not centrally set
0:06:22 or controlled and prices convey a huge amount of information
0:06:24 about abundance and scarcity
0:06:26 and where you should allocate your attention.
0:06:28 So we really need prices to be floating around
0:06:29 in an economy.
0:06:32 We need your property rights and your contracts
0:06:36 to be respected by a working court system
0:06:38 that believes in protecting those things
0:06:40 so that if you’re an upstart, if you have a good idea,
0:06:43 either the government or some big powerful company
0:06:46 or some billionaire can’t just come and take it from you
0:06:49 without compensating you and without your agreement
0:06:50 on that stuff.
0:06:52 One of the most important phrases for capitalism
0:06:53 is voluntary exchange.
0:06:55 You can’t force me to sign a contract,
0:06:56 you can’t make me buy a product
0:06:58 or forbid me from buying a product,
0:07:01 you can’t stop me from moving to another state.
0:07:03 So you just have this, it’s free flowing,
0:07:06 but there are these hard and fast constraints
0:07:08 and rules about it.
0:07:10 If you get those things right,
0:07:14 the goods and services will become abundant to people.
0:07:16 One of the things I loved writing the book
0:07:21 was that Adam Smith nailed all of these topics in 1776.
0:07:23 And yet here we are almost 250 years later
0:07:26 and we’re arguing about things that he kind of put to rest
0:07:27 a long time ago.
0:07:30 He said you need actual competition,
0:07:34 not cronyism for the benefits of capitalism to a crew.
0:07:35 Amen to that.
0:07:36 – He actually went further.
0:07:36 He actually called business people
0:07:38 the enemies of capitalism.
0:07:41 He’s got that famous quote that men of trade
0:07:44 seldom meet together even for merriment,
0:07:47 except it winds up in a conspiracy against the public.
0:07:48 – Yeah, he basically argued,
0:07:49 it’s like what modern libertarians actually argue,
0:07:51 which is basically to the extent that business people
0:07:53 like start to get involved in political policy,
0:07:55 they try to rig the political system in their favor.
0:07:56 And then that trips the line
0:07:58 between so-called capitalism and corporatism.
0:08:01 And then politically, that’s sort of the distinction
0:08:04 between being pro-business and being pro-market.
0:08:06 – Or being pro-incumbent and pro-market.
0:08:07 – Right, exactly.
0:08:08 What you want is you want to be pro-market.
0:08:10 This is what we run into in our business,
0:08:11 ’cause we launched these new companies
0:08:13 that don’t have any political power whatsoever.
0:08:14 And they go into these industries
0:08:16 that in some cases are heavily dominated by incumbents.
0:08:18 And invariably what you find is an intertwining
0:08:20 of the incumbents with the regulatory system,
0:08:23 often under the color of consumer protection,
0:08:24 that it actually turns out what’s happened
0:08:25 is the incumbents have rigged the system.
0:08:28 They’ve rigged the politics for their own preservation.
0:08:30 And the hypocrisy gets exposed in the form of like,
0:08:32 you just have a product that’s just obviously better.
0:08:35 And then the captured regulatory state
0:08:36 comes to try to shut it down and protect incumbents.
0:08:39 – Well, my favorite one of that was for a while,
0:08:41 I think France or Paris had the requirement
0:08:43 that a limo had to go back to its home station
0:08:46 for 15 minutes before picking up another customer.
0:08:49 Why on earth would that be?
0:08:50 – That’s right.
0:08:51 Well, this is always the absurdity of,
0:08:53 would you really rather like stand out in the rain
0:08:55 with your arm up, seriously, right?
0:08:58 And by the way, would you really rather have a system
0:08:59 in which the driver is able to like eyeball you
0:09:01 in the street and decide to not give you a ride?
0:09:03 – I was about to say because what people don’t talk about
0:09:05 is the disproportionate impact on people
0:09:06 who don’t look like there’s someone
0:09:08 who you want to give a ride to
0:09:10 and now you can get a ride anywhere by anybody.
0:09:11 – Yeah, exactly.
0:09:13 But then there’s this risk that you become the thing
0:09:16 that you hate, which is always a danger.
0:09:18 – We also need to acknowledge there are problems
0:09:20 that capitalism itself doesn’t solve.
0:09:22 People getting left behind,
0:09:24 inequality of some kinds of opportunity,
0:09:28 the lack of a safety net, pollution, species loss,
0:09:31 absolutely, these are well understood,
0:09:34 sometimes called failures, market failures,
0:09:36 and we need to be thoughtful about those things.
0:09:38 But again, Adam Smith, I don’t think he talked about
0:09:40 species loss and extinctions,
0:09:43 but he got these things right in 1776.
0:09:45 And it kind of frustrates me that there’s still
0:09:47 this big Marxist hangover going on
0:09:51 where people willfully or ignorantly misunderstand
0:09:53 this economic system that we have.
0:09:56 – So in the 20th century, were capitalist systems
0:09:59 or communist systems worse for the environment?
0:10:00 – Oh my God, there’s no comparison.
0:10:03 I think the single saddest and most tragic story
0:10:05 that I learned when I was researching the book
0:10:07 is about the Soviet whaling industry.
0:10:10 The Soviets signed up for all the treaties
0:10:12 to sharply limit the whale hunts.
0:10:15 And then they ignored the treaties that they signed,
0:10:16 which is bad enough.
0:10:18 And they killed about 200,000 additional whales
0:10:21 over the decades before they finally stopped.
0:10:24 The crazy part of the story is why they killed
0:10:26 200,000 additional whales.
0:10:28 And the answer is for no good reason at all,
0:10:31 they didn’t eat the meat, they didn’t need the blubber
0:10:33 ’cause they were already self-sufficient in oil.
0:10:35 The only reason they did it was because they had
0:10:37 Stalinist five-year plans for growth
0:10:41 in the fisheries industry and whales weigh a lot.
0:10:42 And if you kill lots of whales,
0:10:45 you grow your fisheries industry.
0:10:47 There’s this heartbreaking story about the guy
0:10:50 that was in charge of the fisheries industry.
0:10:53 And he was such a pro at executing
0:10:54 Stalinist five-year plans,
0:10:56 he was named a hero of the Soviet Union.
0:10:59 And one of the Soviet scientists went to him at some point
0:11:01 and said, “We have to stop this.
0:11:04 There will be no more whales for our children to see.”
0:11:07 And his reply was, “Our descendants will not be the ones
0:11:09 to fire me from my job.”
0:11:10 – Dan.
0:11:11 – So, you know, we can talk, the capitalist systems,
0:11:16 we made pollution mistakes, yes, and we corrected them.
0:11:19 What closed communist systems did was keep making mistakes
0:11:22 under cover of darkness for no good reason.
0:11:24 – I mean, this is very relevant to current events, right?
0:11:26 One of the things that is very common
0:11:27 in the United States right now
0:11:29 is the theory that capitalism is responsible
0:11:30 for environmental degradation.
0:11:33 And unless we convert to a socialist system immediately,
0:11:36 like the environment is doomed.
0:11:40 And therefore, the very clear assumption in the statement
0:11:42 is the shifting to a socialist command and control system
0:11:44 will lead to better environmental outcomes.
0:11:45 That’s a very common theme right now.
0:11:47 Like how do you address that in present times?
0:11:49 – Yeah, and it’s a tiny bit hidden, right?
0:11:51 Because the people who make that argument,
0:11:53 I hear them railing against capitalism
0:11:55 and saying we need to take better care of the planet
0:11:56 via some alternative.
0:11:57 And then they get kind of vague
0:11:59 about what that alternative is.
0:12:02 But I think they’re all either dodging the fact
0:12:05 or low balling that they want central planning.
0:12:07 They want a command and control economy.
0:12:08 And let’s call that what it is.
0:12:11 It’s something between socialism and communism.
0:12:13 And the thing that we need to keep in mind
0:12:18 is that the capitalists, the free societies of the West
0:12:21 were the ones that dealt with their pollution problem
0:12:23 earliest and best.
0:12:24 And what I consider the great triumph
0:12:26 of the environmentalist movement
0:12:28 that kicked off around Earth Day
0:12:31 was that we, the people demanded that we stop having
0:12:34 polluted air and dirty water and things like that.
0:12:37 And we got it via things like the Clean Water Act,
0:12:39 the Clean Air Act, the Marine Mammal Protection Act.
0:12:42 These were landmark pieces of legislation.
0:12:44 The single most important thing that happened
0:12:46 after the legislation was passed
0:12:50 was we got clever about how to reduce pollution levels.
0:12:51 The story of cap and trade
0:12:54 for reducing particulate emissions from power plants
0:12:58 and reducing sulfur dioxide is such a fantastic story
0:13:00 because we put together this coalition
0:13:04 of environmentalists and conservative economists
0:13:08 and we put in place a market system for trading pollution,
0:13:10 which sounds weird and bad,
0:13:13 except that it has cratered our levels
0:13:15 of SO2 and other particulate pollution
0:13:16 and done it for about one-fifth
0:13:18 of the originally estimated cost.
0:13:21 It was just this extremely efficient thing to do.
0:13:23 So the notion that capitalist systems
0:13:26 have no way of dealing with increasing pollution
0:13:28 is just dead flat wrong.
0:13:30 – When I was reading the book,
0:13:32 one thing that struck me was,
0:13:34 do you think that with developing countries today,
0:13:36 like India, China, I mean,
0:13:37 one would argue they’re more developed
0:13:38 than fully developing.
0:13:39 However, you define it,
0:13:42 that they even have to go through an extractive phase first
0:13:46 in their first phase of figuring out how to use their resources.
0:13:47 Like I guess my question is,
0:13:50 why couldn’t they leapfrog this extractive phase
0:13:53 and just go right to a more practical phase
0:13:56 when it comes to the acceleration of technology?
0:13:58 Do you think that extractive phase has to happen?
0:14:00 – It’s pretty clear to me that America and the UK
0:14:02 and I think most other super rich countries
0:14:04 are past peak stuff.
0:14:06 If you weighed our economy year after year,
0:14:09 it would weigh less year after year.
0:14:12 India and China and Bangladesh are not yet at peak stuff,
0:14:14 but they will get to that point
0:14:18 much early in their GDP per capita trajectory
0:14:20 because Nigeria is not gonna lay
0:14:23 an extensive copper telephone network across the country.
0:14:26 They’re not gonna build as many coal plants per capita
0:14:29 as we did because that’s just economically inefficient to do.
0:14:31 I’ll be surprised if the Chinese
0:14:33 have as many private cars per capita
0:14:35 as we did earlier in our history
0:14:36 because it’s really impractical
0:14:40 to have that heavy expensive asset sit idle 95% of the time.
0:14:42 So I do think that this technologically
0:14:45 very sophisticated economy is going to get countries
0:14:47 through this resource transition
0:14:50 much earlier than we went through it.
0:14:51 – So one of the things that’s so striking,
0:14:53 carbon emissions right in the US are falling.
0:14:55 And you tell me they’re starting to fall
0:14:56 in certain parts of Europe as well.
0:14:58 – Yeah, the EU in general
0:15:00 has been on a shallow downward trend.
0:15:02 – Yeah, there’s lots of advances being made
0:15:04 in energy efficient technologies of all kinds.
0:15:06 So I wouldn’t imagine like this will continue.
0:15:08 Let’s take the strong advocates for dramatic action
0:15:10 at their word that we’re gonna run into real trouble globally.
0:15:13 How do you not progress from there to believing
0:15:15 we have to take a very different approach
0:15:16 from a foreign policy standpoint,
0:15:18 in particular towards China and India,
0:15:21 potentially up to and including a course of actions.
0:15:23 Just because if you look at the graph
0:15:24 of global emissions growth,
0:15:26 it’s very clearly to like gigantic examples.
0:15:29 – So we’re going to invade them
0:15:31 to make them reduce their carbon emissions.
0:15:34 Like I don’t see how that plays out.
0:15:36 Let me give you a couple of softer ways
0:15:38 ’cause I think there are a couple of important ones.
0:15:40 One is they gave the Nobel Prize
0:15:42 to Bill Nordhaus last year
0:15:45 for his work about how to deal with global warming
0:15:47 and the notion of a carbon dividend.
0:15:49 When Nordhaus proposed his carbon tax,
0:15:52 and I like the phrase carbon dividend better
0:15:54 because it’s not a tax where the government keeps the money,
0:15:56 you pass through the government directly to people
0:15:58 and give them a carbon dividend,
0:16:01 hopefully skewed a little bit toward lower income people.
0:16:03 As part of that, you also do what’s called
0:16:04 a border adjustment,
0:16:06 where you look at all the imports into the country
0:16:09 and if they come from high carbon sources,
0:16:11 you tax them just like you would
0:16:13 if they were made in this country
0:16:14 with high carbon sources.
0:16:17 I think that’s really strong incentive
0:16:19 for our main trading partners,
0:16:21 and China’s probably exhibit A here,
0:16:24 to start literally cleaning up their act in this regard.
0:16:28 The other thing is, we have one source of power,
0:16:30 we have one way to generate power
0:16:33 that is scalable, clean,
0:16:36 somewhat economical and not intermittent.
0:16:37 And it’s called nuclear.
0:16:40 And there are a couple of countries like France and Sweden
0:16:41 that have cheap electricity
0:16:43 and the cleanest power in Europe.
0:16:45 And we’re running away from it in the rest of the world.
0:16:47 I find this completely perverse,
0:16:50 why not put together an international coalition?
0:16:54 And along with that, an international patent bank
0:16:55 so that it’s cheaper to produce
0:16:58 the new generation of nuclear reactor.
0:17:00 I’m pretty sure that will get the cost down
0:17:02 to the point where it becomes an economic no-brainer,
0:17:04 even for low-income countries
0:17:08 to start transitioning into a clean energy environment.
0:17:09 I would do both of those things
0:17:12 way before I would try to coerce other countries
0:17:15 into changing their energy profile
0:17:18 or doing it in a way that would slow down their growth
0:17:19 or impoverish their people.
0:17:21 – So I’m glad you brought up nuclear.
0:17:22 I was gonna ask you that.
0:17:26 So many groups just flatly rule out nuclear as an option.
0:17:27 So what’s going on there?
0:17:30 And what’s the way through that?
0:17:32 – I honestly don’t know the answer.
0:17:35 Why are they so stridently anti-nuclear?
0:17:37 There’s probably a bundle of things going on.
0:17:39 One is because of everything
0:17:41 from Hiroshima and Nagasaki to Godzilla
0:17:44 to Three Mile Island and Fukushima and Chernobyl.
0:17:46 I mean, I just finished watching
0:17:48 their Chernobyl mini-series on HBO.
0:17:51 So I have this kind of visceral ick reaction
0:17:55 to the idea of super widespread nuclear power,
0:17:57 but I think our homework is always
0:17:59 not to trust that initial ick
0:18:00 and to go look at the evidence.
0:18:02 And when you actually look at the evidence
0:18:04 and look at the issues,
0:18:05 I don’t know how you come away
0:18:08 and you can accept a nuclear advocate.
0:18:10 And we worry about things like nuclear waste.
0:18:12 And we should worry about nuclear waste,
0:18:14 but we don’t then say, well,
0:18:17 how much harm is caused by the pollution
0:18:19 from other kinds of power generation.
0:18:22 Worldwide, there are clearly hundreds of thousands
0:18:26 of deaths a year from people breathing coal dust
0:18:28 and people breathing the emissions from coal plants.
0:18:30 So the death toll, it’s not even close.
0:18:32 And this is backed up by very good research
0:18:34 published in The Lancet and elsewhere.
0:18:36 There’s a nice article in Our World and Data
0:18:39 about relative safety levels and death rates
0:18:40 from different kinds of power.
0:18:43 You walk away from that nuclear’s biggest cheerleader.
0:18:45 So I don’t quite know why the reaction
0:18:48 is so strident and visceral and negative.
0:18:51 All I can say, it is not based on evidence.
0:18:54 And I’m starting to see a coalition forming
0:18:56 that pushes back against that to say,
0:19:00 we’re getting this deeply wrong on an important issue.
0:19:02 – So, okay, so you were talking about cap and trade.
0:19:05 What made that so successful compared to other attempts?
0:19:07 Obviously, there’s a market-based mechanism,
0:19:08 but give me more details.
0:19:13 – Cap and trade, the basic idea is make pollution expensive,
0:19:15 attach a cost to it.
0:19:17 In other words, put it inside the market.
0:19:19 Pollution doesn’t naturally have a price.
0:19:21 And when that’s the case,
0:19:23 no matter what the press release says,
0:19:24 businesses have a strong incentive
0:19:25 to go pollute if it’s free.
0:19:28 Okay, put a price on it.
0:19:31 And then here’s the brilliance of cap and trade.
0:19:34 Allow companies to buy and sell that pollution
0:19:37 or more specifically that right to pollute with each other.
0:19:41 So if I’m super dirty and I can’t clean up quickly,
0:19:43 I gotta buy the right to pollute,
0:19:44 but I’m willing to buy that right
0:19:47 if it’s cheaper than the cost of me cleaning myself up.
0:19:50 Somebody will sell me that right and make some cash
0:19:52 because they’re already really clean
0:19:54 and they don’t need that right.
0:19:56 So this was a line of economics research
0:19:58 that got started with legendary
0:20:00 Nobel Prize winning economist Ronald Coase
0:20:04 and descendants of his ideas got put into practice
0:20:06 early in the Reagan administration
0:20:09 with the help of like the Environmental Defense Fund.
0:20:11 So this beautiful alliance forum to say,
0:20:13 hey, let’s try this market-based thing
0:20:15 for dealing with pollution.
0:20:16 They overcame whatever reluctance
0:20:20 was there from the incumbents again and they did it.
0:20:22 And then the research is pretty clear
0:20:24 that we can just look at what happened
0:20:26 to a particular admission from these kinds of plants.
0:20:30 America’s skies are just 90 plus percent cleaner
0:20:33 than they were when that legislation was passed.
0:20:36 And the cost of doing it is a fraction
0:20:38 of the original estimate of that.
0:20:41 So there’s a reason for these kinds of crazy fans of markets
0:20:42 for getting things done.
0:20:45 They work and when you can put things like pollution
0:20:47 in a market and you do this with cap and trade
0:20:50 and carbon dividends and things like that,
0:20:53 these are the most efficient ways
0:20:55 to deal with the problem.
0:20:57 – Don’t China and India have to sign up for the same thing?
0:20:59 – One of the problems with carbon
0:21:01 is that the harms from it are not local
0:21:03 and they’re not immediate.
0:21:07 So maybe the fast growing high carbon countries right now
0:21:10 will choose to ignore it for a while longer.
0:21:12 We have a couple of mechanisms to get them to not do that.
0:21:15 And like I said, if you do a border adjustment
0:21:17 for the high carbon products that we import,
0:21:20 that’s a really strong incentive to do things better.
0:21:23 If we can make it cheaper for them to be green.
0:21:25 And personally, I think nuclear
0:21:28 and a patent bank or cheap technologies around nuclear
0:21:30 is the path to do that.
0:21:34 We clearly have to help the currently low income world
0:21:36 get rich on a lower carbon trajectory
0:21:38 than they’re on right now.
0:21:39 That’s different than saying
0:21:42 that they can’t use more energy year after year.
0:21:44 I’m not gonna deny them that right to prosperity.
0:21:45 – Exactly.
0:21:47 – But we really want them to get cleaner quicker.
0:21:50 I think we have tools to do that.
0:21:52 And I don’t think that the Chinese and the Indians
0:21:54 are indifferent to the longer-term health of the planet.
0:21:56 I really don’t believe that.
0:21:58 – I mean, they’re living with it in a physical way.
0:22:00 Everyone there is facing it and experiencing it
0:22:01 in a very real way.
0:22:03 And we had this podcast a few years ago
0:22:05 with Evan Osnos at the New Yorker.
0:22:06 We were talking about China.
0:22:09 One of my favorite things that he talked about
0:22:12 is how because of the growth of the middle class in China,
0:22:14 that there is now a huge cohort of people
0:22:16 demanding a better environment
0:22:18 precisely because of the market dynamic.
0:22:21 No, not just that, getting a better environment.
0:22:22 So I found this great research
0:22:24 that I put in more from less.
0:22:26 A very good economist looked at what happened
0:22:28 when China finally got serious about urban air pollution.
0:22:30 And the reason they got serious about it
0:22:32 was people were leaving the cities
0:22:35 even if they didn’t have government permission to do it.
0:22:37 People were leaving because their kids
0:22:39 were just clearly getting sick
0:22:41 and gonna have stunted lives.
0:22:44 So China took action and they brought down
0:22:46 their country-wide particulate pollution
0:22:49 by 30% in four years.
0:22:50 And they did it what these draconian means,
0:22:54 but they did it and they took us in the United States
0:22:57 12 years to get that same 30% reduction.
0:22:59 So even one of the points I make in the book
0:23:01 is democracies are probably more receptive
0:23:02 to the will of their people,
0:23:05 but there are interesting exceptions in both directions.
0:23:08 And China was clearly receptive to the will of its people
0:23:11 not to choke off their children with pollution.
0:23:12 – Right, right.
0:23:13 I read a ton of Chinese sci-fi
0:23:14 and it’s literally the recurring theme
0:23:16 is basically about the end of the world
0:23:17 and like environment.
0:23:18 But Andy, I was-
0:23:18 – Is that right?
0:23:19 That’s cool.
0:23:20 – Yeah, it’s a really big theme.
0:23:21 You have to read a lot of different Chinese science fiction
0:23:22 authors to see this,
0:23:24 but that’s basically my genre this year.
0:23:26 One thing I wanna ask you,
0:23:28 I understand from the market dynamics point of view
0:23:32 why cap and trade was such a successful idea and example
0:23:33 and it’s been proven out,
0:23:36 but why couldn’t a government have simply mandated?
0:23:38 Like we will just simply put a limit on this.
0:23:40 Draconian measures like China did.
0:23:43 Why would that not be as effective?
0:23:44 – Sometimes we did.
0:23:46 That’s how we actually brought down CFC emissions
0:23:47 so drastically.
0:23:52 We just mandated that they be reduced by X% over time
0:23:54 until they got down to close to zero.
0:23:57 The reason that worked is that there’s a relatively small
0:23:58 number of industries,
0:24:00 a relatively small number of companies
0:24:01 and a relatively small number of products
0:24:04 that used chlorofluorocarbons.
0:24:05 And to be a little bit more cynical,
0:24:09 the other reason that ban worked was somebody eventually
0:24:11 whispered to the incumbent companies,
0:24:12 the CFCs you’re making out right now,
0:24:13 they’re off patent.
0:24:16 The new generation of coolants and propellants and whatnot,
0:24:17 those can be under patent.
0:24:19 This can be a big revenue source for you.
0:24:23 And so they finally got industry on their side.
0:24:24 Fiat can work.
0:24:27 For example, it is just flat illegal
0:24:29 to dump waste at sea in America.
0:24:30 We just did that via Fiat.
0:24:31 We didn’t put a price on it.
0:24:34 You cannot hunt animals in national parks.
0:24:38 You cannot hunt deer or duck outside their seasons.
0:24:40 So sometimes you wanna do things by Fiat,
0:24:43 but I kind of think if you can put it
0:24:46 in a market mechanism, and it’s appropriate to do that,
0:24:48 I think you’ll get better solutions quicker.
0:24:49 Maybe that’s not right,
0:24:51 but I’ve got this deep faith in markets.
0:24:54 Once you put things in them and price them
0:24:57 to deal with that price in a very fast way.
0:25:01 If you change a business’s cost structure quickly,
0:25:03 man, businesses will run from that increased cost,
0:25:05 like gazelle run when they smell a lion.
0:25:07 It’s just amazing how quickly it’ll happen.
0:25:10 – I will tease or torture Andy a little bit
0:25:11 in that as you’re probably well aware,
0:25:13 support for market-based systems
0:25:14 like cap and trade have collapsed.
0:25:16 – One of the points that I bring up in the book
0:25:19 is that sometimes the crazy side of the argument wins.
0:25:22 And I think the crazy is winning on nuclear these days.
0:25:24 I think the crazy is winning on GMOs.
0:25:27 I think the crazy is winning on vaccines
0:25:29 in way too many communities.
0:25:30 So as much as I love evidence
0:25:32 and trying to think through things,
0:25:34 we better be very good communicators about our solutions
0:25:36 ’cause the crazy can win.
0:25:37 – Can we quickly talk on GMOs
0:25:39 and the myths and misconceptions around GMOs?
0:25:41 And why did you think it was important
0:25:42 to talk about GMOs in your book?
0:25:44 – The reason I thought GMOs were important
0:25:47 to include in this book is they are great ways
0:25:48 to help us tread more lightly on the planet.
0:25:50 The crop yields will go up.
0:25:52 You can grow them in different places.
0:25:55 If climate, as climate change happens,
0:25:57 you’re gonna need plants that are hardier,
0:25:59 can survive heat waves and droughts and things like that.
0:26:02 The GMO toolkit is our best toolkit
0:26:03 for accomplishing those things right now.
0:26:07 And yet it’s stridently opposed by governments
0:26:09 and all kinds of groups around the world.
0:26:11 And even the EU itself,
0:26:13 in addition to the National Academies of Science
0:26:15 and just about every country that you can think of,
0:26:18 has reviewed the evidence and they’ve all come down
0:26:22 and said there is no evidence that GMO crops
0:26:25 are less safe for the environment or for humanity
0:26:27 than conventional techniques.
0:26:28 We can get past the point of saying,
0:26:29 well, it remains to be seen.
0:26:31 No, we need to go do these things.
0:26:35 And the reason I get exercised about this
0:26:37 is when I look at things like golden rice,
0:26:39 which is this strain of rice
0:26:43 that has beta carotene injected into it via GMO techniques.
0:26:46 So that you provide vitamin, is it A?
0:26:48 It’s a vitamin A deficiency.
0:26:52 Happens to babies who are weaned on rice gruel.
0:26:54 And it leads to blindness.
0:26:57 And that deficiency is responsible
0:27:00 for about a million deaths a year around the world.
0:27:04 Great, your anti-GMO, honestly, that volume of deaths,
0:27:05 that’s on you.
0:27:07 – So you discussed in the book,
0:27:09 the very famous at the time, I guess in the 70s and 80s,
0:27:11 a very famous debate between two at the time,
0:27:14 very accomplished people, Julian Simon and Paul Ehrlich.
0:27:16 And it’s largely been forgotten,
0:27:17 but it’s a highly relevant debate
0:27:19 and maybe even more relevant today than it was at the time.
0:27:20 And maybe you could describe their debate
0:27:21 in the famous bet.
0:27:24 – Yeah, my favorite bet of all time was the bet
0:27:26 between these two guys, Julian Simon,
0:27:29 pushed back against the dominant narrative
0:27:31 around the time of Earth Day,
0:27:34 which was that growth will come to a bad end,
0:27:37 that we cannot keep this headlong, uncontrolled,
0:27:40 market-based growth for a bunch of reasons,
0:27:43 primary of which was, they’ll become too many of us,
0:27:45 the Earth will not be able to feed everybody,
0:27:48 and we’re gonna crash into a massive famine.
0:27:52 And the prime exponent of that view was Paul Ehrlich,
0:27:53 who still is at Stanford,
0:27:55 and wrote a book called “The Population Bomb”
0:27:58 where he essentially said, look, nothing we can do
0:28:00 will prevent hundreds of millions of people
0:28:01 from starving in the years ahead.
0:28:04 But if we do things like force population control
0:28:06 and we take control of the means of production,
0:28:08 we might be able to stave off
0:28:11 the worst things that could happen.
0:28:12 And one of the things I learned
0:28:14 was that Simon agreed with that
0:28:16 and wrote things about population control.
0:28:17 Then he switched his view
0:28:20 in this wonderful instance of intellectual honesty
0:28:22 and humility, and he said, wait a minute,
0:28:27 we keep on not seeing famines happen, resource crises.
0:28:28 We just don’t see these things.
0:28:29 Instead, the evidence shows
0:28:31 that most things are getting better.
0:28:33 And he got laughed out of a lot of rooms
0:28:37 and Ehrlich kept on putting out this gloom and doom,
0:28:39 stripping the planet narrative,
0:28:41 and finally Simon challenged him to a bet.
0:28:45 And Simon said, pick any time period of at least a year
0:28:48 and pick any bundle of resources that you want.
0:28:49 And at the end of the time period,
0:28:52 if the resources are more expensive in real terms
0:28:53 than they are now,
0:28:56 which kind of means they’re more scarce than they are now,
0:28:57 I’ll pay you the difference.
0:28:59 If they’re cheaper, you pay me the difference.
0:29:01 I think this probably appeared
0:29:02 like a sucker’s bet to Ehrlich.
0:29:07 He picked five resources, Tungsten 10, Chromium Copper,
0:29:09 and I forget the fifth one.
0:29:10 And he said, all right,
0:29:12 let’s put a 10-year period on the bet.
0:29:14 By 1990, the real prices
0:29:16 of all five of those things had fallen.
0:29:17 The price of the total portfolio
0:29:19 had declined by more than half,
0:29:21 and Ehrlich mailed Simon a check
0:29:23 to acknowledge that he’d lost the bet.
0:29:24 I didn’t talk about it very much.
0:29:27 He didn’t attach any kind of note to that check.
0:29:30 So I love that episode so much.
0:29:32 And I’m trying to do round two of that.
0:29:33 I’m using the Long Bets website,
0:29:35 which is part of the Long Now Foundation,
0:29:36 started by Stuart Brand and others,
0:29:38 and I’m offering bets.
0:29:41 I’m saying, for example, that no matter what,
0:29:43 I’m saying that resources are gonna become more affordable.
0:29:45 I’m agreeing with Simon on that,
0:29:46 but I don’t stop there.
0:29:48 I say, in 10 years from now,
0:29:51 I bet we’re gonna use less total energy, not per capita,
0:29:54 but total energy America-wide in 10 years
0:29:57 after a decade of continued economic growth.
0:30:00 That’s how confident I am in the one-two punch
0:30:03 of capitalism and tech progress
0:30:05 to take costs out of the system
0:30:07 and energy and resources cost money.
0:30:09 That’s just my reasoning.
0:30:11 If you think I’m wrong, step on up.
0:30:14 With Long Bets, you both put the money up front,
0:30:16 you designate a charity that will get it at the end,
0:30:17 and we’ll see what happens.
0:30:19 – So there’s two historical figures in the book
0:30:20 who are heroes of mine.
0:30:22 – Julian Simon and- – And Bucky Fuller.
0:30:23 He came up with this idea, I think,
0:30:25 and I think you say it was 1927.
0:30:26 – Yeah, the ’20s.
0:30:28 – Yeah, maybe just explain his idea,
0:30:30 ’cause that was a remarkable insight
0:30:33 at a time when there was probably no actual
0:30:36 logical foundation to expect what he was saying.
0:30:40 – So Fuller was this crazy polymath,
0:30:45 and he popularized, for example, the geodesic dome.
0:30:47 That’s kind of what he’s best known for today, I think,
0:30:50 which is the structure that can bear a great deal of weight
0:30:54 and very heavy loads while weighing very, very little.
0:30:57 And Fuller thought that we would see more and more examples.
0:30:59 There were plenty of opportunities to do that kind of thing
0:31:01 all around the economy.
0:31:05 And I found this crazy book that he wrote in the ’20s,
0:31:07 and he said, “Look, I did a bunch of calculations.”
0:31:09 And he said, “I thought it might be possible
0:31:11 to satisfy all of our wants and needs,
0:31:14 essentially while using less stuff,
0:31:15 while using fewer materials.”
0:31:18 And he called the process ephemeralization,
0:31:20 making things more ephemeral.
0:31:22 That’s a real mouthful to say.
0:31:25 So we use the phrase dematerialization more often now,
0:31:28 but Fuller was the guy who said,
0:31:32 “Gang, we can do this in the 1920s,” which is crazy.
0:31:34 – That’s so crazy, that’s pre-software.
0:31:35 – Oh, here at the economy in those days,
0:31:39 it was what Joel McKeer calls the Wheaton-Steel economy.
0:31:40 That was during the era where GDP
0:31:41 versus became an economic metric,
0:31:42 and it was literally like tonnage.
0:31:43 It was like, how much–
0:31:44 – Yeah, we were weighing things around.
0:31:46 – You weigh your output, right, in tons.
0:31:49 – Yeah, and then we started counting dollars instead,
0:31:50 and that was a huge innovation.
0:31:53 So the fact that Fuller came up with that that early
0:31:57 was just this weird intellectual shooting star.
0:31:59 – So if I recall correctly,
0:32:00 and maybe I’ve made this up in my own head,
0:32:03 but I think that one of the lines he used was,
0:32:05 ephemeralization is the process of making,
0:32:07 making more and more with less and less.
0:32:09 But then he added a line, he said,
0:32:12 “Until eventually we are making everything with nothing.”
0:32:14 – I think he did go that far.
0:32:16 He also said in 1927,
0:32:20 he said it’s the number one economic surprise of world man.
0:32:24 And so here we are, you know, 90 years later,
0:32:26 and it’s still surprising to people.
0:32:28 – So one thing that just blew my mind,
0:32:30 ’cause I had not actually read that or known that,
0:32:32 how could he come up with that in 1920?
0:32:34 This is before software even existed.
0:32:35 Like what would give him,
0:32:38 ’cause I understand now, Mark, in 2009,
0:32:40 when you wrote “Software is Eating the World,”
0:32:42 like I could see someone making that now.
0:32:45 What gave him the hutzpah to say that in 1920?
0:32:46 Like that’s insane.
0:32:47 – I have no earthly idea,
0:32:49 and I don’t think we would have got
0:32:51 to this resource turning point.
0:32:54 I don’t think we would have achieved absolute dematerialization
0:32:57 without the digital world, without the computer.
0:32:59 I think what software is giving us back the world,
0:33:02 because it’s letting us slim, swap, optimize,
0:33:05 and evaporate our resource use.
0:33:08 And I don’t know how we would have got there in a world
0:33:10 where we’re still using slide rules and file cabinets.
0:33:11 Maybe we would have,
0:33:13 but in my multiverse,
0:33:15 we don’t get there in the universes
0:33:17 that don’t have the digital revolution.
0:33:19 A lot of people, when they talk about dematerialization,
0:33:20 they talk about it very literally,
0:33:22 like you’re replacing an object,
0:33:23 a hard object with something,
0:33:24 it’s software counterpart,
0:33:25 but we just make it clear.
0:33:27 It’s actually even deeper than that,
0:33:28 ’cause when you do think about ride sharing
0:33:30 and all this entire economies
0:33:31 that are growing off the mobile phone,
0:33:33 that is what enables the end of ownership.
0:33:35 When you think about the fact that today,
0:33:38 kitchens can be delivering food to you,
0:33:40 that is a thing that changes the shape of cities, et cetera.
0:33:42 I think a lot of times when people talk about dematerialization,
0:33:45 they take it very literally as like the one-on-one replacement
0:33:47 of something physical with something digital,
0:33:48 and it’s actually bigger than that.
0:33:51 It’s like a whole services economy reshaping things.
0:33:53 I talk about these four different vectors
0:33:55 for dematerialization.
0:33:58 Trimming out how much aluminum is in an aluminum can,
0:33:59 that’s slimming it down.
0:34:01 Swapping out one resource for another,
0:34:03 that’s when rare earths get expensive,
0:34:05 we walk away from them.
0:34:09 Optimizing, using the load factor for airlines
0:34:13 has increased from the mid-50s percent to 80% now.
0:34:14 You’re just making better use
0:34:17 of these resource-intensive assets that you have,
0:34:20 and then evaporate, replace it by nothing at all.
0:34:23 The smartphone has made me not print out maps
0:34:25 or print out film anymore.
0:34:27 We have these different vectors
0:34:28 for dematerialization to happen,
0:34:30 and the point that I make in the book
0:34:32 is they’re happening in obvious ways and subtle ways,
0:34:34 and big ways and small ways,
0:34:36 and the foreground and the background in every industry,
0:34:39 simply because stuff costs money,
0:34:41 competition makes you wanna save money,
0:34:42 and the digital toolkit offers you
0:34:44 these great opportunities to do that.
0:34:46 I think the story is just that simple,
0:34:49 and if that’s true, it’s not about to end.
0:34:50 – So if you take full-estought
0:34:52 and your thought to their logical extremes,
0:34:55 how close can you get ultimately some day
0:34:57 to making everything with nothing?
0:35:01 Like if we’re sitting here 50, 100, 200 years from now,
0:35:02 like what are the prospects for being able
0:35:04 to take physical inputs out,
0:35:07 either 99.99% reduced or taken out entirely
0:35:09 from many of the things we’ll be consuming?
0:35:12 – That depends on how many of us there are
0:35:17 primarily, I think, but I think we can go a lot farther
0:35:19 down the dematerialization curve than we are right now.
0:35:21 It’s not crazy at all to imagine that,
0:35:25 let’s say in 2100, that we’re primarily an urban species.
0:35:27 We live in these densely populated cities
0:35:32 that are a lot closer to Singapore than Delhi, for example.
0:35:35 We’re growing a lot of our food
0:35:39 in very vertical, energy-intensive environments.
0:35:41 When we need to build a new building,
0:35:43 we’re just recycling the steel and the metal
0:35:46 that we used for the previous generation of buildings.
0:35:48 We’re already doing that a lot right now.
0:35:51 And grow our textiles in weird vats
0:35:54 with Petri dishes of bacteria or something.
0:35:57 That’s no longer crazy to think about.
0:35:59 Will we be getting our protein from living animals
0:36:04 or from scaled-up Petri dishes in 2100?
0:36:05 – Lab-grown meat, yeah.
0:36:06 – And who knows about staple crops
0:36:08 if we’ll need cropland for that.
0:36:11 But I’m for damn sure that we’re gonna need
0:36:13 a much, much smaller acreage of cropland
0:36:17 for all of humanity in 2100 than we do right now.
0:36:18 So I don’t know.
0:36:19 I don’t have a good way to guesstimate
0:36:21 where those lower floors are.
0:36:23 They’re a lot lower than they are right now.
0:36:26 And I really think that, let’s take 2100 as the year,
0:36:28 we’ll be this species that occupies
0:36:31 a very small physical footprint on the planet
0:36:32 without depriving ourselves.
0:36:35 And then we go into nature kind of because it’s cool
0:36:37 and because we want to,
0:36:39 as opposed to because we need to strip it
0:36:41 to satisfy our growth.
0:36:42 – I have a question about R&D,
0:36:43 the role of research and development
0:36:45 and kind of delivering on the dream that you’re talking about.
0:36:46 ‘Cause obviously everything you’re talking about
0:36:48 is sort of dependent on future development
0:36:51 of advanced technology and creation of new knowledge.
0:36:54 The last like 20 years, I would say there’s been
0:36:56 basically like two dramatic events
0:37:00 in energy-related R&D in the US.
0:37:02 And one is this incredibly positive outcome
0:37:06 with respect to fracking and liquid natural gas.
0:37:09 There’s been all kinds of positives to come out of that.
0:37:10 And even in the energy industry,
0:37:11 like a lot of experts were shocked
0:37:13 on how well that stuff has worked.
0:37:14 The curves are amazing
0:37:15 ’cause it’s like energy production in the US,
0:37:16 falling, falling, falling, falling, falling.
0:37:18 And then all of a sudden it just like takes off
0:37:19 like a rocket ship, right?
0:37:20 When like nobody was expecting it.
0:37:22 – To the surprise of everybody.
0:37:24 – Yeah, so that was the good news surprise.
0:37:26 The bad news surprise was Silicon Valley
0:37:30 embarked on a very big push to do so-called clean tech,
0:37:33 green tech, particularly between 2010, 2012.
0:37:36 It was a huge push and there were a lot of extremely smart
0:37:37 and accomplished people here in the Valley
0:37:39 who thought that this was the new frontier
0:37:41 for American technology, for venture capital.
0:37:44 And with obvious, both huge potential positive benefits
0:37:46 for the world, but also a huge opportunity
0:37:47 to build new businesses.
0:37:49 And I think there were hundreds and hundreds,
0:37:50 possibly even thousands of companies
0:37:52 and a very large amount of money and effort.
0:37:54 And a lot of people put a lot of work into this
0:37:55 that the results were extremely disappointing
0:37:57 on a number of fronts.
0:37:59 I mean, there were maybe a few isolated cases of 6/7.
0:38:01 One might say we got Tesla and SpaceX out of that, right?
0:38:03 In which case, fair enough.
0:38:04 But even beyond that,
0:38:06 companies had a much harder time developing
0:38:08 and/or commercializing those technologies
0:38:09 or just ended up in dire straits
0:38:10 that people didn’t expect.
0:38:13 So I’m very curious of your assessment of what went wrong
0:38:15 in the Silicon Valley clean tech, green tech adventure
0:38:18 and what should we learn from that?
0:38:20 You know, both as an industry and as a world,
0:38:22 like how might we, if we’re gonna try that kind of thing
0:38:24 again, like if we’re gonna try to double down on R&D here,
0:38:26 like what lessons should we learn from that
0:38:27 in terms of how to do it better?
0:38:29 – I only know it from a great distance.
0:38:32 Here’s a super naive way to look at it.
0:38:34 If we think about solar,
0:38:36 solar has become dominated by China primarily
0:38:38 because it’s a flavor of manufacturing
0:38:41 that they were already pretty good at,
0:38:43 and it’s just a scale economies game.
0:38:45 And they’re quite good at scaling up huge factories
0:38:47 and turning out whether it’s a liquid crystal display
0:38:50 or a photovoltaic panel.
0:38:53 So I think that’s just very, very tough competition.
0:38:57 The other thing that I do believe about solar and wind
0:39:00 is that they have a place in the energy portfolio,
0:39:03 absolutely, but Germany’s experience
0:39:05 with trying to become much more reliant on renewables
0:39:08 has not gone very well at all for a couple reasons,
0:39:12 a deep one of which is it’s dark sometimes
0:39:14 and it’s not windy a lot of times.
0:39:17 We have this very serious problem of intermittency
0:39:19 with those renewables.
0:39:21 So they have to be backstopped with something.
0:39:23 And if you turn off your nuclear stations,
0:39:25 if you decommission them like Germany is doing,
0:39:27 you get backstopped in their case
0:39:30 with some very dirty cold powered plants.
0:39:32 So they’ve kind of got the worst of both worlds.
0:39:34 Their electricity prices are really high
0:39:37 and their carbon emissions per unit of energy are really high.
0:39:40 You look next door at France, which is very nuclear
0:39:42 and you see neither of those two problems happening.
0:39:45 So I think at the individual competition level,
0:39:48 going up against China in a scale game is really, really tough.
0:39:49 And I think there are some policy mistakes
0:39:52 that can make that situation worse.
0:39:54 Does that play at all with your experience?
0:39:55 – I think those are definitely big components.
0:39:58 You may know this, the sort of appendix
0:39:59 to that whole saga was, yeah.
0:40:02 So there was a huge push for solar panels,
0:40:03 including some very advanced.
0:40:05 We actually have here in the conference room,
0:40:07 we actually have an old cylinder solar panel
0:40:08 that I keep around just ’cause it’s such a great story.
0:40:10 It’s a cylindrical solar panel, right?
0:40:11 That would have the huge advantage
0:40:12 that it could basically follow the sun.
0:40:13 – Checking.
0:40:14 – It could track the sun.
0:40:15 The only problem with it was it ended up
0:40:17 being a four X worse value proposition,
0:40:19 price performance value proposition,
0:40:21 the conventional solar panels all in.
0:40:22 That was one of the trainwrecks out here
0:40:23 that actually took down the whole
0:40:25 US government DOE program to fund clean tech.
0:40:27 But the kicker on the whole solar thing is okay.
0:40:29 As you said, it became a mass manufacturing game.
0:40:31 And so it kind of became like memory chips in the 80s.
0:40:33 It lent itself to the Chinese ecosystem,
0:40:36 which is sort of is able to do mass manufacturing at scale.
0:40:37 – Quickly and well.
0:40:38 – Right, right, exactly, right, exactly.
0:40:40 And so the Chinese have been able to undercut
0:40:42 a lot of their American competitors.
0:40:46 The kicker to that is the pro environment administration
0:40:48 then reacted to that by putting tariffs
0:40:49 on imports of Chinese solar panels.
0:40:51 Therefore, making it cost ineffective
0:40:52 for Americans to deploy solar panels
0:40:54 that otherwise would have been much cheaper.
0:40:57 – So tariffs are, with the possible exception
0:40:59 of a border adjustment tariff,
0:41:01 because we got to bring down carbon, right?
0:41:04 Tariffs are just econ 101 bad idea.
0:41:06 – Well, it went beyond though, just the specific mechanism.
0:41:07 It was more an expression of values
0:41:09 in the part of the United States government,
0:41:10 which is in theory, we care about the environment
0:41:12 in practice, like we’re more worried about
0:41:13 like other things.
0:41:14 And so we’ll trade off the environment.
0:41:16 – So, you know, the mantra is all should be
0:41:19 let markets work to develop the goods and services
0:41:20 and let free trade happen.
0:41:24 And that’s where prosperity will come from and innovation.
0:41:25 – For me, I wasn’t the thick of that
0:41:28 ’cause we were at the heart of this whole clean tech movement
0:41:29 when I was at park.
0:41:31 We had a huge investment in photovoltaics.
0:41:33 I was my first big white paper.
0:41:35 My question is, why can’t it just be just a timing thing
0:41:36 like everything else?
0:41:39 Like it was just too early, the wrong time.
0:41:41 The ecosystem wasn’t built out for balance
0:41:44 of system components and services and everything else.
0:41:46 The subsidy models were wrong.
0:41:48 ‘Cause I actually hope that we can get some R&D
0:41:50 to the future with clean tech.
0:41:53 – We are getting cost declines with solar and wind.
0:41:54 The price of the installed price
0:41:56 and then the price per unit of energy
0:41:58 once they’re installed is going down
0:42:00 at a really attractive rate.
0:42:02 So it’s not that we’re failing with these things.
0:42:04 What I was trying to point out earlier
0:42:06 is there are just some basic problems
0:42:07 with that style of energy,
0:42:10 especially because we’re not getting the battery revolution
0:42:13 and the battery nerds that I talked to say,
0:42:15 look, there’s an energy density limit here.
0:42:17 So you’re pushing up against some physics.
0:42:19 And it’s not that we can’t do anything about it
0:42:21 or that we should stop research.
0:42:23 Of course we should continue that going,
0:42:25 but you gotta backstop it with something.
0:42:26 – With some portfolio, right.
0:42:29 – And if that’s something, in my view,
0:42:31 should also be clean, it should be nuclear.
0:42:33 And then let’s let the battle rage
0:42:36 for which is the cake and which is the icing.
0:42:38 I kind of think nuclear is gonna be the cake
0:42:41 and we’ll have a little solar and wind icing
0:42:42 if we get it right.
0:42:43 But maybe I’ll be wrong about that.
0:42:47 Well, I just don’t want us to keep putting huge amounts
0:42:49 of carbon in the air to generate electricity.
0:42:50 We don’t need to do that.
0:42:52 – So this is where, I don’t think environmentalism
0:42:53 for the most part is actually about the environment.
0:42:54 I think it’s about something else.
0:42:55 And the reason I say that is because,
0:42:56 exactly Andrew’s point,
0:42:57 I think we actually have the answers.
0:42:58 I think we have the answers.
0:42:59 And I think they’re nuclear,
0:43:01 which is just like in practice
0:43:02 and incredibly safe technology
0:43:03 contrary to what everybody believes.
0:43:04 – Plus one to that.
0:43:05 – And then I think, look,
0:43:06 it goes back to the tariff thing.
0:43:07 Like let the Chinese build solar panels,
0:43:09 let them ride the manufacturing cost curve down
0:43:10 and like buy their solar panels.
0:43:11 – Plus one to that.
0:43:12 – Right.
0:43:13 And we do have two magic technologies.
0:43:15 Like we have the box that generates power
0:43:16 by splitting the atom.
0:43:19 And we have the sheet that converts sunlight for free.
0:43:21 And both of those are like incredibly modern
0:43:23 production techniques for nuclear and solar.
0:43:26 Like would just be like spectacular what you could do.
0:43:29 If you engineered new nuclear plants today from scratch,
0:43:30 like properly with the technologies,
0:43:33 most of the functional nuclear plants in the West today
0:43:35 are like on average there.
0:43:37 Is it, are there any younger than like 30 or 40 years old?
0:43:39 Is the average just got to be over that?
0:43:40 – I think that’s right.
0:43:42 I don’t know when the last new one we built was,
0:43:43 but it’s been a while.
0:43:45 – And so if we took current technology and did that,
0:43:46 there are some really amazing ideas
0:43:47 of things that we can do.
0:43:48 I don’t think this has anything to do with the environment.
0:43:50 – Well, what I find hopeful though,
0:43:52 about what you just said is that we have the answers
0:43:54 and that’s really important.
0:43:56 And so a lot of these things come down to market
0:43:59 and other dynamics, regulatory, politics, all of that.
0:44:01 So it’s not a technological limit,
0:44:02 which I find very helpful.
0:44:06 – It’s also not a policy mystery anymore.
0:44:08 We have these essentially magic technologies
0:44:10 where we should be stepping on the accelerator
0:44:11 with them super hard.
0:44:14 If we really wanted to clean up the planet
0:44:17 and stop polluting it with greenhouse gases.
0:44:21 If we wanted a policy toolkit to reduce carbon, we have it.
0:44:23 It’s worked for other kinds of pollution in the past.
0:44:25 Carbon is not mysterious.
0:44:28 It’s just comparatively politically difficult.
0:44:30 Now, I think some parts of the world
0:44:34 will be more clearheaded than others.
0:44:36 And I hope somebody else will show us the way
0:44:37 and their evidence is gonna become
0:44:39 unignorable at some point.
0:44:40 – I also just wanna make one pitch
0:44:43 for the iPhone moment in clean tech,
0:44:46 which I know people think can be very much of a long shot.
0:44:47 But I think a lot of technology waves
0:44:49 do have their major iPhone moment
0:44:52 where there is a technological tip
0:44:53 that then drives everyone else
0:44:56 to make cheaper versions of that thing later on
0:44:59 once there is this desire and demand and pull and draw
0:45:01 to have the thing.
0:45:02 And I actually have to say one thing
0:45:04 that I did find promising about Tesla
0:45:07 and their move into solar for the home
0:45:10 and battery is sort of this back door, this Trojan horse
0:45:11 that the car is a Trojan horse
0:45:13 to actually powering your home.
0:45:15 That is a very powerful idea.
0:45:17 And over time, who knows where that can go, but.
0:45:17 – I will say one thing
0:45:20 that’s from a consumer psychology standpoint.
0:45:22 Elon making electric cars sexy.
0:45:23 – Yeah, that changed the game.
0:45:24 – That’s a big deal.
0:45:27 – It was way better than Leonardo DiCaprio driving a Prius
0:45:28 which is what I drive.
0:45:30 – That is an absolutely a big deal.
0:45:32 And Sonal, to what you said,
0:45:34 I’m thrilled that there are people willing
0:45:37 to make some pretty risky bets on things.
0:45:39 On the technology and the innovation front,
0:45:41 I agree with Mark, we have some magic bullets.
0:45:43 We also need, I’m gonna mix my metaphors.
0:45:46 We need lots of other shots on goal, right?
0:45:49 And the innovation and the entrepreneurship ecosystem
0:45:53 are a way for us to get more shots on goal, hallelujah.
0:45:54 – Yeah, and I’ll just say one last thing on that.
0:45:56 One of the things that I find really fascinating
0:45:58 is that there is this phase with a lot of technologies
0:46:02 where there is that very down moment where things go down.
0:46:03 It seems like it’s dead.
0:46:05 And in fact, the thing is being built out
0:46:08 under the very surface and you don’t realize that’s happening.
0:46:10 And so to me, the death of the clean tech boom
0:46:13 is actually promising because Mark, you alluded to this,
0:46:16 but it did fund, Elon Musk rode those subsidies
0:46:18 to fund Tesla in the early days.
0:46:20 And so who knows what can happen next.
0:46:23 – And I still think there’s a big place for government R&D.
0:46:27 Again, more shots on goal, more attention to this,
0:46:29 crazy ideas.
0:46:32 And the reason Paul Romer won the Nobel Prize last year
0:46:35 was he said economies grow on ideas.
0:46:37 Human capital is the gating factor
0:46:39 for increasing our growth and prosperity.
0:46:42 Let’s get more human capital out there.
0:46:43 Well, Andy, thank you so much
0:46:45 for joining the A6NZ podcast.
0:46:48 Your new book out October 8th.
0:46:50 More from less, the surprising story
0:46:52 of how we learn to prosper using fewer resources
0:46:53 and what happens next.
0:46:55 Thank you for joining the A6NZ podcast.
0:46:56 – Sonal and Mark, thank you for having me.
0:46:58 This has been a blast.
0:46:58 – Thanks, Andy.