Thread by @ProfSteveKeen

@KaiGehring1 @TOClimates @MaxCRoser Sorry Kai. I’m just beyond frustrated by the tendency of economists to ignore the impossibility of production without energy, and their ignorance of just how close we are to exhausting the planet’s stocks of vital inputs to production. To flesh out why: /1

@KaiGehring1 @TOClimates @MaxCRoser (A) Energy. The Cobb Douglas Production Function dominates economic modelling now: L&K in, Y out; no role for energy. When it's included (eg Engström & Gars 2016) it's a 3rd factor in the CDPF with an exponent based on income shares of 0.03. That means, for example, that /2

@KaiGehring1 @TOClimates @MaxCRoser an 85% fall in energy input would cause a 5% fall in output: no big deal.
But "labor without energy is a corpse; capital without energy is a sculpture" econpapers.repec.org/article/eeeeco…. So the correct form is not Y=F(K,L,E) but Y=F(K(E)*L(E)). /3

@KaiGehring1 @TOClimates @MaxCRoser Feed that into a CDPF & you ~ get Y=(K^E)^alpha * L^(1-alpha) & a 44% fall in output for an 85% fall in energy input. And if you follow Mankiw's wise scholar.harvard.edu/files/mankiw/f… then alpha=0.8 and you get a 78% fall in output. This is serious but ignored by Neoclassicals /4

@KaiGehring1 @TOClimates @MaxCRoser Why choose an 85% fall in energy input? Because <15% of energy is supplied by non-CO2 generating sources. If catastrophic climate effect strike & policy shifts to zero carbon now, output will collapse. Neoclassicals will be the last to see this coming /5

@KaiGehring1 @TOClimates @MaxCRoser The fetish for substitutability in Neoclassical theory (which was implicit in your tweet) has led economists to ignore that there are no substitutes for some inputs--eg, phosphorus--and it's on the endangered list of elements. See tupa.gtk.fi/raportti/arkis… for an overview /6

@KaiGehring1 @TOClimates @MaxCRoser Economists have trivialised the dangers of climate change & tipping points with appallingly bad empirics tandfonline.com/doi/full/10.10…. It's too late for the price system alone to stop us passing catastrophic tipping points.

Hence my frustrated reaction to your tweet.