“The profits that you refer to are monetary and have no relationship whatsoever to natural capital. “

in the very next sentence when I state that the relationship is a conversion from one to another. My point is that if this conversion is analogous to a depreciation of capital rather than a consumption of sustainable yields then it is more likely to be a net negative transaction for human well being regardless of its profitability in financial terms. The likelihood that such conversions exceed natural income (and are therefore negative transactions) grows larger as the human economy grows large in proportion to the biosphere.

Our current MO is to deplete natural capital (forests, fish populations, oil, etc.) rather than live on the income (i.e. interest on capital or sustainable yield) that healthy natural systems could provide. The profits that you refer to are monetary and have no relationship whatsoever to natural capital. We convert natural capital into products and call the process “income” or “profit” rather than a reduction of assets. Thus, the “growth” we have been experiencing is largely just a conversion of natural assets into financial assets. Put another way, increased industrial production and the increased consumption that it entails is treated as economic “growth” rather than as an increase in the cost of maintaining industrial society.

This regime is all well and good when the physical size of the economy is small relative to the biological and geophysical systems that contain it. Currently, however, the shoe appears to be on the other foot and the depreciation of our natural capital is starting to bite us in the ass. Our failure treat natural capital (and, to a lesser extent, social capital as well) as contributors to well being equal in importance to financial capital is a major problem to address and the “logical” absurdities it can lead to are glaringly obvious in Will's “no limits to growth” wish fulfillment exercise.

In other words, “profitability” is not a magic word you can chant to make our current mode of economic growth last indefinitely into the future.

“Externality” is not a magic word you can chant to make industrial society unprofitable.

Good luck

“And I would also bet (rather more conjecturally) that energy will be basically free by 2050. “
Wow. For the first time in human history, energy is FREE. What's the evidence now for this astounding economic/technological advance? Is it that the price of energy is currently trending down?

When the U.S. needed to put a man on the moon (so that we could stick a flag in moon dust, presumably), John F. Kennedy sequestered the most brilliant astro physicists until they came up with something that could be moved to a state with a lot of electoral votes. Eisenhower actually started NASA–as well as the national highway system–but that's a discussion for a different day.

Where is the leadership for a solution to the energy problem? I guess parceling out tons of money to environmental whackos or cottage-based entrepreneurs a little at a time is somehow better than just starting up a government “project” to solve the problem.

Admittedly, I hate government projects. But isn't this one of the few things a Federal government could actually do with some efficiency?

First, define the problem: “Develop an unlimited, no- or low-cost energy source capable of integrating into the existing electric grid.”

Oh, yeah… we have nuclear energy. We just can't use it because of perceived externalities that don't really exist.

Define another problem: “Develop an unlimited, no-or low-cost energy source capable of powering transport vehicles.”

Perhaps the key here is to redefine transportation. If we could just find a way to bend space (using technology derived from the large hadron collider coming up to speed this month), we could create a method of dropping the Illy cappucino machine into the n-space converter and sending it to 1100 Swallow Street in Blistering Bay, Georgia… or wherever.

Sound silly? So did cooking food with microwaves… which came out of the “put a man on the moon” project.

The point is, there will continue to be technological advances that make our high externality energy resources obsolete (much like whale oil, which involves goring an ox… I mean killing a whale). Perhaps Will could, in fact, make the statement that we will solve the problem as we approach the logical conclusion of the alternatives. We do it time and again throughout history when confronted with the proper stimulus. Annihilation at the hands of our enemies used to be the big government-promoted stimulus. Now we're facing global cooling (1971), global warming, (2005 forward), ocean alkalinity/acidity (previous post).

My only modification to all this is that we need a REAL problem that creates externalities rather than all the hoo-haw from doomsday prophets. Only when there is a REAL, quantifiable (rather than projectable) externality can we adequately determine the level of response.

And the free market does that pretty well outside of military preparedness issues such as those sparking the Manhattan Project and NASA.

Game, set, and match.

Don't mess with the bull, because you'll get the horns.

I'm sure that Will and I would agree that price can be a good aggregator of information, but it does not follow that a lack of a price is equivalent to a lack of information.