Economists use production functions to express the mathematical relationship between physical inputs and the total quantity of output produced. A commonly used one is the Cobb-Douglas production function which has the form Y = AK αLβ, where Y is total output, A is total factor productivity (TFP), K is capital, and L is labor. Output elasticities with respect to capital and labor are constant and given by α and β, respectively.(See Note 1 for a bit of history.)
I learned a lot of stuff in grad school that I never got around to using but I still recall after all these years. I have been pondering production from another angle, another type of production function. I don’t have a functional form for it but it doesn’t really matter for my purposes here. The factors of production are technology, energy and material: Y = f(T, E, M).
In functional notation, it says that production is a function (unspecified) of technology, energy and matter. Each of those three factors are essential and to some extent they are substitutable. Technology can make energy and matter more productive, meaning you can produce more output with less energy and less matter.
Material or matter is free. It is free because no human effort went into its creation. Nature provides matter for free. It’s there for the taking, found on or close to the surface of the earth. But you may have to work to get that free stuff. That’s where energy comes into the picture.
You have to dig that stuff out of the earth. Then there’s transportation of that stuff to where you use it. But before that raw stuff is transformed into useful things, there are innumerable steps. The transformation of stuff into useful stuff is a long and complicated process, every step of which involves energy and technology.
It’s energy all the way down.
Story time. A famous physicist, the story goes, was holding forth in a public lecture of how the solar system works because of gravity and space-time, and Einstein’s theory of relativity, and all sorts of fancy physics. At question-answer time, a little old lady in the audience says to the lecturer, “Young man, you have explained your theory well. But let me tell you something. The earth actually rests on the back of a turtle. That’s what keeps it up, not your nonsensical made-up theory of gravity.”
The lecturer (I imagine him to be Richard Feynman) attempts to humor the little old lady and replies, “On what does that turtle rest on that carries the earth on its back?” The lady replies, “It rests on an even larger turtle’s back.”
The lecturer replies, “So on what does that larger turtle rest on?” The lady says, “Young man. It rests on an even bigger turtle. You should realize that it’s turtles all the way down.” (See note 2 for a bit more on the cosmic turtle thesis.)
My primary thesis is that it’s energy all the way down. A few important implications immediately follow. The more energy we have access to, and the more energy we use, the more stuff we have for whatever we want to have. The more technology we have, the more energy we have. Therefore the supply of energy keeps going up. Therefore we produce more output. Therefore we are better off if we consider having more stuff better than having less stuff.
We have more stuff now as compared to any time before is because we have cheaper energy. We have cheaper energy today than any time before is because we have better technology than we had before. What’s technology? The simplest definition of technology is “how to do something.” In other words, technology is knowledge.
Where does knowledge come from? From people. Therefore, the more people imply more knowledge, therefore more technology. Knowledge is what economists call a “public good” as opposed to a private good. This is an important distinction that matters critically. It is why the present world is better than the world of any time in the past. We have more technology today than our ancestors had.
So far about 100 billion anatomically modern humans have lived so far, and around 8 billion humans are alive today. We have a large stock of accumulated knowledge. That means a lot of more knowledge, and therefore a lot more technology than our ancestors had access to.
Another feature of technology (which is knowledge of how to do something, or “know how”) is that the flow or the rate of increase of technology is a positive function of the stock of technology. The rate of increase of knowledge in the modern world is higher today than ever before is because there is a greater stock of knowledge today than ever before.
The more you have, the faster you can have more.
The more technology you have, the faster is the increase in the stock of technology. Since technology is knowledge of how to get more energy (among other things), energy will be cheaper. The advance of civilization is the story of how humans have figured out cheaper energy.
If energy fundamentally determines the cost of useful stuff, the more affordable energy becomes, the cheaper useful stuff will become. Therefore, the future world will be unimaginably better.
The world will be materially more prosperous than ever before. Therefore, people will be more spiritually more advanced than ever before. That’s what’s it’s all about. Human spiritual development depends on ever cheaper energy. That’s why the fear and dread of climate change and CO2 is pernicious nonsense.
I am running out of steam in this post. But before I end, let me state my major point. Energy is what determines the cost of everything. Cost of energy has been dropping monotonically. Therefore more stuff is available to more people. Therefore any policy that increases the cost of energy will lead to less stuff for people. Therefore climate-change hysteria driven policy is anti-human and supremely immoral. It’s the equivalent of condemning humans to needless suffering if not killing billions of humans.
I am against stupidity.
Time for music, don’t you think?
My thesis advisor and I would occasionally go to movies in Berkeley. Here’s a song that I heard in an Almodovar movie I saw with her: Talk to Her (Spanish title Hable Con Ella). The singer Caetano Veloso is featured in the movie. I loved the song Cucurrucucu Paloma immediately. Being a sentimental kind of guy, I teared up. Here it is. Veloso’s rending is awesome. Listen.
Be well, do good work and keep in touch.
NOTES
[1] The popularity of the Cobb-Douglas function stems from its analytical tractability and elegant mathematical properties. British economist Philip Wicksteed worked on production functions in the late 19th century. Swedish economist Knut Wicksell (1851–1926) was the first to propose the specific mathematical structure which is now called the Cobb-Douglas production function. Paul Douglas was an economist at the University of Chicago, who later served as a US Senator. Charles Cobb was a mathematician at Amherst College. They collaborated to develop this functional form in 1928.
[2] “Turtles All the Way Down”: The myth became a famous metaphor in epistemology and cosmology regarding infinite regress and foundational truths. Recorded in philosophical anecdotes by William James, Stephen Hawking, and Bertrand Russell, a skeptic once challenged a scientist by asserting that the Earth sits on the back of a giant turtle. When asked what the turtle stands on, the traditional reply was another turtle, leading to the famous declaration: “It’s turtles all the way down!”
In Vedic and Puranic cosmology, the cosmic tortoise (Kurma or Akupāra) acts as the stable base supporting the universe. In the famous narrative of the Samudra Manthan (the Churning of the Ocean of Milk), Lord Vishnu assumes the form of Kurma, the giant turtle, placing Mount Mandara upon his shell to act as a pivot for the churning rod. In other related cosmological depictions, Earth rests upon four massive elephants (Mahapadma, Apta, Giri, and Karisha), which in turn stand upon the shell of the cosmic tortoise swimming in an infinite cosmic ocean. See my post Shivo’ham Soham for more.
Atanu Dey : Life is a Random Draw 
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