Why a Great Reset Based on Green Energy Isn’t Possible

It seems like a reset of an economy should work like a reset of your computer: Turn it off and turn it back on again; most problems should be fixed. However, it doesn’t really work that way. Let’s look at a few of the misunderstandings that lead people to believe that the world economy can move to a Green Energy future.

[1] The economy isn’t really like a computer that can be switched on and off; it is more comparable to a human body that is dead, once it is switched off.

A computer is something that is made by humans. There is a beginning and an end to the process of making it. The computer works because energy in the form of electrical current flows through it. We can turn the electricity off and back on again. Somehow, almost like magic, software issues are resolved, and the system works better after the reset than before.

Even though the economy looks like something made by humans, it really is extremely different. In physics terms, it is a “dissipative structure.” It is able to “grow” only because of energy consumption, such as oil to power trucks and electricity to power machines.

The system is self-organizing in the sense that new businesses are formed based on the resources available and the apparent market for products made using these resources. Old businesses disappear when their products are no longer needed. Customers make decisions regarding what to buy based on their incomes, the amount of debt available to them, and the choice of goods available in the marketplace.

There are many other dissipative structures. Hurricanes and tornadoes are dissipative structures. So are stars. Plants and animals are dissipative structures. Ecosystems of all kinds are dissipative structures. All of these things grow for a time and eventually collapse. If their energy source is taken away, they fail quite quickly. The energy source for humans is food of various types; for plants it is generally sunlight.

Thinking that we can switch the economy off and on again comes close to assuming that we can resurrect human beings after they die. Perhaps this is possible in a religious sense. But assuming that we can do this with an economy requires a huge leap of faith.

[2] Economic growth has a definite pattern to it, rather than simply increasing without limit. 

Many people have developed models reflecting the fact that economic growth seems to come in waves or cycles. Ray Dalio shows a chart describing his view of the economic cycle in a preview to his upcoming book, The Changing World Order. Figure 1 is Dalio’s chart, with some annotations I have added in blue….[   ]

What do you think?

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