May 18, 2011

In Virtual World, Demand for Resources to Fall

Jeremy Grantham's recapitulation of the case for a steadily tightening set of resource constraints, with demand for industrial commodities badly outstripping supply, has provoked skepticism among cornucopians. Usually the argument is that human ingenuity and efficiencies induced by the market will make the problem of resource constraint readily solvable. As a chart produced in Grantham's study indicates, commodities were in secular decline during the 20th century; only in the last decade has that downward momentum been reversed. Skeptics of the resource-constraint argument usually do not take issue with the assumption that demand will increase, but insist instead that supplies will be bountiful if the price signals are right. Taking issue with that stance is Rick Bookstaber, author of the prescient book on derivatives a few years back. Bookstaber accepts the efficiency arguments (that technological innovation will induce substitution and other efficiencies) and also believes, with Michael Masters, that a lot of the demand for commodities is driven by financial speculation. But the novelty of his argument lies in his insistence that a profound paradigm shift is coming in ways of life that will sharply reduce demand for energy and other commodities: 
People who are staring at a tsunami of demand for commodities from the developing world and predicting a doomsday of $400 oil and $4000 gold are missing the longer-term retreating tide of demand as citizens of the developed world actually demand decreasing amounts of energy, large goods, and heavy infrastructure. We won't be packing up and moving to Mars, as the science fiction solutions to resource depletion propose. We will pack up and move into the virtual world. . . .
In The Technology-Driven Consumption Trap I argue that in the not-so-distant future the main items we will demand, beyond food, clothing and shelter, are “game systems” that approach the level of Nozick’s experience machine, allowing us to have the experience of being anyone we want, wherever we want (even in a world we have designed), accompanied by whomever we want, all in Realicta Immersion 3-D® with full sensory feedback.
Our demand for housing and transportation, two of the biggest commodity hogs, will be lower. McMansions will be totally passe. It should already be dawning on people that most all of our non-sleeping hours at home are spent in the kitchen and its adjacent family room. Living rooms and dining rooms are relics. When people internalize the fact that they spend most of their non-sleeping, non-bathroom, non-eating time in a ten by twelve foot space with their various experience machine prototypes, large homes will, by and large, go the way of cars with fins and chrome.
We obviously will not need to drive around as much, given that so much of what we want is delivered to us electromagnetically. And, getting back to real goods and technological advances, if we take the web-based distribution a few steps further, rather than having thousands of cars running from one store to the next, a couple of delivery trucks will ply the streets. So per-capita consumption of energy and resource-intensive infrastructure will decrease.
Given our evolved interests a few decades hence, most of us will be spending a fraction of our income on consumption. There just won't be a lot that we will demand that requires nonrenewable resources. What we will demand will be in the way of electronic products, which will only consume a few ounces of such commodities. We will basically eat, sleep, work and then veg out. Give us food, plumbing, heat and our two-hundred dollar experience machine games, and we will be happy as a clam.
Much as I like Bookstaber, I have to say that this strikes me as bizarre. Surely he is joking. Technology of the sort that Bookstaber describes would incline people toward solipsism and end with deeply unhappy human beings, however sophisticated their "Realicta Immersion 3-D® with full sensory feedback" and "experience machine prototypes." To quote the eminent philosopher Marvin Gaye: there ain't nothing like the real thing, baby, ain't nothing like the real thing.  

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