Forget the Doughnut. Meet the Wedge.

Mar 11 JDN 2458189

I just finished reading Kate Raworth’s book Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist; Raworth also has a whole website dedicated to the concept of the Doughnut as a way of rethinking economics.

The book is very easy to read, and manages to be open to a wide audience with only basic economics knowledge without feeling patronizing or condescending. Most of the core ideas are fundamentally sound, though Raworth has a way of making it sound like she is being revolutionary even when most mainstream economists already agree with the core ideas.

For example, she makes it sound like it is some sort of dogma among neoclassical economists that GDP growth must continue at the same pace forever. As I discussed in an earlier post, the idea that growth will slow down is not radical in economics—it is basically taken for granted in the standard neoclassical growth models.

Even the core concept of the Doughnut isn’t all that radical. It’s based on the recognition that economic development is necessary to end poverty, but resources are not unlimited. Then combine that with two key assumptions: GDP growth requires growth in energy consumption, and growth in energy consumption requires increased carbon emissions. Then, the goal should be to stay within a certain range: We want to be high enough to not have poverty, but low enough to not exceed our carbon budget.

Why a doughnut? That’s… actually a really good question. The concept Raworth presents is a fundamentally one-dimensional object; there’s no reason for it to be doughnut-shaped. She could just as well have drawn it on a single continuum, with poverty at one end, unsustainability at the other end, and a sweet spot in the middle. The doughnut shape adds some visual appeal, but no real information.

But the fundamental assumptions that GDP requires energy and energy requires carbon emissions are simply false—especially the second one. Always keep one thing in mind whenever you’re reading something by environmentalists telling you we need to reduce economic output to save the Earth: Nuclear power does not produce carbon emissions.

This is how the environmentalist movement has shot itself—and the world—in the foot for the last 50 years. They continually refuse to admit that nuclear power is the best hope we have for achieving both economic development and ecological sustainability. They have let their political biases cloud their judgment on what is actually best for humanity’s future.

I will give Raworth some credit for not buying into the pipe dream that we can somehow transition rapidly to an entirely solar and wind-based power grid—renewables only produce 6% of world energy (the most they ever have), while nuclear produces 10%. And nuclear power certainly has its downsides, particularly in its high cost of construction. It may in fact be the case that we need to reduce economic output somewhat, particularly in the very richest countries, and if so, we need to find a way to do that without causing social and political collapse.

The Dougnut is a one-dimensional object glorified by a two-dimensional diagram.

So let me present you with an actual two-dimensional object, which I call the Wedge.

On this graph, the orange dots plot actual GDP per capita (at purchasing power parity) on the X axis against actual CO2 emissions per capita on the Y-axis. The green horizonal line is a CO2 emission target of 3 tonnes per person per year based on reports from the International Panel on Climate Change.


As you can see, most countries are above the green line. That’s bad. We need the whole world below that green line. The countries that are below the line are largely poor countries, with a handful of middle-income countries mixed in.

But it’s the blue diagonal line that really makes this graph significant, what makes it the Wedge. That line uses Switzerland’s level of efficiency to estimate a frontier of what’s possible. Switzerland’s ratio of GDP to CO2 is the best in the world, among countries where the data actually looks reliable. A handful of other countries do better in the data, but for some (Macau) it’s obviously due to poor counting of indirect emissions and for others (Rwanda, Chad, Burundi) we just don’t have good data at all. I think Switzerland’s efficiency level of $12,000 per ton of CO2 is about as good as can be reasonably expected for most countries over the long run.

Our goal should be to move as far right on the graph as we can (toward higher levels of economic development), but always staying inside this Wedge: Above the green line, our CO2 emissions are too high. Below the blue line may not be technologically feasible (though of course it’s worth a try). We want to aim for the point of the wedge, where GDP is as high as possible but emissions are still below safe targets.

Zooming in on the graph gives a better view of the Wedge.


The point of the Wedge is about $38,000 per person per year. This is not as rich as the US, but it’s definitely within the range of highly-developed countries. This is about the same standard of living as Italy, Spain, or South Korea. In fact, all three of these countries exceed their targets; the closest I was able to find to a country actually hitting the point of the wedge was Latvia, at $27,300 and 3.5 tonnes per person per year. Uruguay also does quite well at $22,400 and 2.2 tonnes per person per year.

Some countries are within the Wedge; a few, like Uruguay, quite close to the point, and many, like Colombia and Bangladesh, that are below and to the left. For these countries, a “stay the course” policy is the way to go: If they keep up what they are doing, they can continue to experience economic growth without exceeding their emission targets.


But the most important thing about the graph is not actually the Wedge itself: It’s all the countries outside the Wedge, and where they are outside the Wedge.

There are some countries, like Sweden, France, and Switzerland, that are close to the blue line but still outside the Wedge because they are too far to the right. These are countries for whom “degrowth” policies might actually make sense: They are being as efficient in their use of resources as may be technologically feasible, but are simply producing too much output. They need to find a way to scale back their economies without causing social and political collapse. My suggestion, for what it’s worth, is progressive taxation. In addition to carbon taxes (which are a no-brainer), make income taxes so high that they start actually reducing GDP, and do so without fear, since that’s part of the point; then redistribute all the income as evenly as possible so that lower total income comes with much lower inequality and the eradication of poverty. Most of the country will then be no worse off than they were, so social and political unrest seems unlikely. Call it “socialism” if you like, but I’m not suggesting collectivization of industry or the uprising of the proletariat; I just want everyone to adopt the income tax rates the US had in the 1950s.

But most countries are not even close to the blue line; they are well above it. In all these countries, the goal should not be to reduce economic output, but to increase the carbon efficiency of that output. Increased efficiency has no downside (other than the transition cost to implement it): It makes you better off ecologically without making you worse off economically. Bahrain has about the same GDP per capita as Sweden but produces over five times the per-capita carbon emissions. Simply by copying Sweden they could reduce their emissions by almost 19 tonnes per person per year, which is more than the per-capita output of the US (and we’re hardly models of efficiency)—at absolutely no cost in GDP.

Then there are countries like Mongolia, which produces only $12,500 in GDP but 14.5 tonnes of CO2 per person per year. Mongolia is far above and to the left of the point of the Wedge, meaning that they could both increase their GDP and decrease their emissions by adopting the model of more efficient countries. Telling these countries that “degrowth” is the answer is beyond perverse—cut Mongolia’s GDP by 2/3 and you would throw them into poverty without even bringing carbon emissions down to target.

We don’t need to overthrow capitalism or even give up on GDP growth in general. We need to focus on carbon, carbon, carbon: All economic policy from this point forward should be made with CO2 reduction in mind. If that means reducing GDP, we may have to accept that; but often it won’t. Switching to nuclear power and public transit would dramatically reduce emissions but need have no harmful effect on economic output—in fact, the large investment required could pull a country out of recession.

Don’t worry about the Doughnut. Aim for the point of the Wedge.

Daylight Savings Time is pointless and harmful

Nov 12, JDN 2458069

As I write this, Daylight Savings Time has just ended.

Sleep deprivation costs the developed world about 2% of GDP—on the order of $1 trillion per year. The US alone loses enough productivity from sleep deprivation that recovering this loss would give us enough additional income to end world hunger.

So, naturally, we have a ritual every year where we systematically impose an hour of sleep deprivation on the entire population for six months. This makes sense somehow.
The start of Daylight Savings Time each year is associated with a spike in workplace injuries, heart attacks, and suicide.

Nor does the “extra” hour of sleep we get in the fall compensate; in fact, it comes with its own downsides. Pedestrian fatalities spike immediately after the end of Daylight Savings Time; the rate of assault also rises at the end of DST, though it does also seem to fall when DST starts.

Daylight Savings Time was created to save energy. It does do that… technically. The total energy savings for the United States due to DST amounts to about 0.3% of our total electricity consumption. In some cases it can even increase energy use, though it does seem to smooth out electricity consumption over the day in a way that is useful for solar and wind power.

But this is a trivially small amount of energy savings, and there are far better ways to achieve it.

Simply due to new technologies and better policies, manufacturing in the US has reduced its energy costs per dollar of output by over 4% in the last few years. Simply getting all US states to use energy as efficiently as it is used in New York or California (not much climate similarity between those two states, but hmm… something about politics comes to mind…) would cut our energy consumption by about 30%.

The total amount of energy saved by DST is comparable to the amount of electricity now produced by small-scale residential photovoltaics—so simply doubling residential solar power production (which we’ve been doing every few years lately) would yield the same benefits as DST without the downsides. If we really got serious about solar power and adopted the policies necessary to get a per-capita solar power production comparable to Germany (not a very sunny place, mind you—Sacramento gets over twice the hours of sun per year that Berlin does), we would increase our solar power production by a factor of 10—five times the benefits of DST, none of the downsides.

Alternatively we could follow France’s model and get serious about nuclear fission. France produces over three hundred times as much energy from nuclear power as the US saves via Daylight Savings Time. Not coincidentally, France produces half as much CO2 per dollar of GDP as the United States.

Why would we persist in such a ridiculous policy, with such terrible downsides and almost no upside? To a first approximation, all human behavior is social norms.

What are the limits to growth?

JDN 2456941 PDT 12:25.

Paul Krugman recently wrote a column about the “limits to growth” community, and as usual, it’s good stuff; his example of how steamships substituted more ships for less fuel is quite compelling. But there’s a much stronger argument to made against “limits to growth”, and I thought I’d make it here.

The basic idea, most famously propounded by Jay Forrester but still with many proponents today (and actually owing quite a bit to Thomas Malthus), is this: There’s only so much stuff in the world. If we keep adding more people and trying to give people higher standards of living, we’re going to exhaust all the stuff, and then we’ll be in big trouble.

This argument seems intuitively reasonable, but turns out to be economically naïve. It can take several specific forms, from the basically reasonable to the utterly ridiculous. On the former end is “peak oil”, the point at which we reach a maximum rate of oil extraction. We’re actually past that point in most places, and it won’t be long before the whole world crosses that line. So yes, we really are running out of oil, and we need to transition to other fuels as quickly as possible. On the latter end is the original Mathusian argument (we now have much more food per person worldwide than they did in Malthus’s time—that’s why ending world hunger is a realistic option now), and, sadly, the argument Mark Buchanan made a few days ago. No, you don’t always need more energy to produce more economic output—as Krugman’s example cleverly demonstrates. You can use other methods to improve your energy efficiency, and that doesn’t necessarily require new technology.

Here’s the part that Krugman missed: Even if we need more energy, there’s plenty of room at the top. The total amount of sunlight that hits the Earth is about 1.3 kW/m^2, and the Earth has a surface area of about 500 million km^2, which is 5e14 m^2. That means that if we could somehow capture all the sunlight that hits the Earth, we’d have 6.5e17 W, which is 5.7e18 kilowatt-hours per year. Total world energy consumption is about 140,000 terawatt-hours per year, which is 1.4e14 kilowatt-hours per year. That means we could increase energy consumption by a factor of one thousand just using Earth-based solar power (Covering the oceans with synthetic algae? A fleet of high-altitude balloons covered in high-efficiency solar panels?). That’s not including fission power, which is already economically efficient, or fusion power, which has passed break-even and may soon become economically feasible as well. Fusion power is only limited by the size of your reactor and your quantity of deuterium, and deuterium is found in ocean water (about 33 milligrams per liter), not to mention permeating all of outer space. If we can figure out how to fuse ordinary hydrogen, well now our fuel is literally the most abundant substance in the universe.

And what if we move beyond the Earth? What if we somehow captured not just the solar energy that hits the Earth, but the totality of solar energy that the Sun itself releases? That figure is about 1e31 joules per day, which is 1e27 kilowatt-hours per day, or seven trillion times as much energy as we currently consume. It is literally enough to annihilate entire planets, which the Sun would certainly do if you put a planet near enough to it. A theoretical construct to capture all this energy is called a Dyson Sphere, and the ability to construct one officially makes you a Type 2 Kardashev Civilization. (We currently stand at about Type 0.7. Building that worldwide solar network would raise us to Type 1.)

Can we actually capture all that energy with our current technology? Of course not. Indeed, we probably won’t have that technology for centuries if not millennia. But if your claim—as Mark Buchanan’s was—is about fundamental physical limits, then you should be talking about Dyson Spheres. If you’re not, then we are really talking about practical economic limits.

Are there practical economic limits to growth? Of course there are; indeed, they are what actually constrains growth in the real world. That’s why the US can’t grow above 2% and China won’t be growing at 7% much longer. (I am rather disturbed by the fact that many of the Chinese nationals I know don’t appreciate this; they seem to believe the propaganda that this rapid growth is something fundamentally better about the Chinese system, rather than the simple economic fact that it’s easier to grow rapidly when you are starting very small. I had a conversation with a man the other day who honestly seemed to think that Macau could sustain its 12% annual GDP growth—driven by gambling, no less! Zero real productivity!—into the indefinite future. Don’t get me wrong, I’m thrilled that China is growing so fast and lifting so many people out of poverty. But no remotely credible economist believes they can sustain this growth forever. The best-case scenario is to follow the pattern of Korea, rising from Third World to First World status in a few generations. Korea grew astonishingly fast from about 1950 to 1990, but now that they’ve made it, their growth rate is only 3%.)

There is also a reasonable argument to be made about the economic tradeoffs involved in fighting climate change and natural resource depletion. While the people of Brazil may like to have more firewood and space for farming, the fact is the rest of need that Amazon in order to breathe. While any given fisherman may be rational in the amount of fish he catches, worldwide we are running out of fish. And while we Americans may love our low gas prices (and become furious when they rise even slightly), the fact is, our oil subsidies are costing hundreds of billions of dollars and endangering millions of lives.

We may in fact have to bear some short-term cost in economic output in order to ensure long-term environmental sustainability (though to return to Krugman, that cost may be a lot less than many people think!). Economic growth does slow down as you reach high standards of living, and it may even continue to slow down as technology begins to reach diminishing returns (though this is much harder to forecast). So yes, in that sense there are limits to growth. But the really fundamental limits aren’t something we have to worry about for at least a thousand years. Right now, it’s just a question of good economic policy.