Financial Sentiments

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Book Review: How the World Really Works

If it hasn’t been clear, I think a major theme of what I write is how we can build perspective and context. I think this is increasingly important as more and more of us move into the service economy and lifestyles where we can become increasingly disconnected from the physical world. This hit home for me a couple months ago when driving to Portland and seeing the splattered remains of a person on the highway. It was not a pretty sight, but then there was the state trooper, calmly side-stepping the mush and setting up cones to push cars to the opposite lane. Here was a man diligently doing his work and regularly dealing with things that bothered me for days afterwards before I went back to working on spreadsheets.

Most of us aren’t first responders dealing with car wrecks and obliterated pedestrians. Most of us have never harvested our own food. Most of us have never seen an active mine or worked alongside oil derricks. Most of us have never been in a serious altercation with another human. This is why I place a premium on learning about these experiences.

Which is why books like How the World Really Works are candy to me. Vaclav Smil is my kind of people. A realist. Not one of those loser pessimists who says they’re a realist because they believe in doom and gloom and lack the imagination to see results outside their linear predictions. No, Smil seems to be an honest broker. He presents the mathematics of the situation, assesses the various proposed solutions, and finds most wanting, but doesn’t fall prey to doom and gloom narratives.

So how does the world work?

Smil is a materialist and boils down human progress to energy production. I don’t think it will be shocking for anyone to learn how much energy our modern world consumes with inputs for transportation and homes. It’s an incredible challenge to build infrastructure for future energy consumption, reduce present emission sources, and support a war in Ukraine against one of the world’s largest energy producers. Smil doesn’t discuss the war in Ukraine but it would be worth another book to discuss the importance of using natural gas to support the developing and developed(!) world instead of pushing them to build coal plants or switch old coal plants on to deal with the reduced global supply of natural gas. What I’m getting at is the US needs to be a large natural gas exporter. High level energy concerns aside, Smil highlights how we easily forget the downstream products that use oil and consume significant amounts of energy. Smil identifies four of these products as the main pillars to the modern world and reviews how indebted to fossil fuels they are. The four pillars are:  

  • Ammonia

  • Plastics

  • Steel

  • Concrete

If you don’t farm for a living, you probably don’t think much about fertilizer. Maybe you sprinkle it over your home garden and lawn, but that’s about it. However, ammonia supplements and replaces soil nitrogen and if we reflect on our science classes, nitrogen plays a key role in photosynthesis. This nitrogen supply increases crop yields which is imperative to support our growing population (should cap out at 10 billion around 2100).

Plastics are important for their light weight, durability, and malleability. The laptop I am typing on is encased in plastic, the eggs I buy at the store are often protected by plastic, and much of our fuel efficiency for cars and storage can be attributed to the lower weight of hard plastics vs metal. Steel is obvious and its inclusion reminded me of Bill Gates’s comment about renewable energy, “Yeah, but how are you going to make steel?” And modern society requires a disgusting amount of concrete. Between 2011-2014, China poured 6.6 gigatons of concrete which is more than the 4.4 gigatons the US poured during the entire 20th century.

Verdict

Should you read How the World Really Works? If you want a more honest appraisal of the climate situation and energy production, I think the answer is “yes.” It covers a lot of information in depth, and I am now incredibly uncomfortable thinking about the amount of diesel fuel used to get fresh fruits and vegetables to my dinner plate during the off-season. However, if you’re relatively aware of the facts on the ground and haven’t had your brain rotted by the alarmists, the broad strokes of this book won’t be new for you. Most of US emission reductions comes from switching coal plants to natural gas (outsourcing manufacturing to the developing world has also helped), the irregularity of renewable energy production will need to be backed up by SMRs or pumped-storage hydroelectricity (for some reason people think we’re going to have vast battery backups for cities), the developing world is going to drive most emissions over the next century, Germany has hardly made any progress on reducing emissions despite their pledges, the planet warming isn’t the end of the world and will produce winners and losers, and we are not going to hit our emission reduction targets.

To some people this information is terrifying, but I think most of our ancestors would make the trade. Life used to be brutish and short so slightly more chaotic weather outside my temperature-controlled home doesn’t sound too bad. Plus, worst case scenario we can release volcanic ash or other particulates into the atmosphere to reduce the effect of heating from solar radiation.