Casa Santo Domingo is an important part of the beautiful colonial reliquary, that preserves in its bowels....

I'm thinking something was lost in the translation...

....

Here's a harmless topic: assume there exists an identifiable national interest for the United States. What set of policies towards the Middle East would best serve that interest?

Insofar as that interest relates to the middle east, be friendly with the governments in the region that cooperate or assist us in securing that interest, and unfriendly or hostile towards those who threaten that interest.

The specifics of what is approprate depend on the importance of the interest.

I would add to rosignols model with an information campaign much stronger than the one in place. Traditionally, where our foreign policy has been beat is in the Middle Eastern street.

A massive public relations campaign the likes of which has not been seen since the cold war.

I am not just talking about flyers and radio stations, but a comprehensive campaign. Poor children go to new American hospitals staffed by US armed forces doctors, poor families are given new houses builds by US troops etc... etc... and all along the way every structure we build has a giant American flag painted on it, so 10 years from the US flag has been branded as a provider of much needed services. Furthermore, if we identify anywhere the local governments are lacking in the minds of the public (such as health care for the poor) we jump in a provide it and make sure everyone knows we provide it.

And do not think this is anything other than realpolitik. The US already has incredible influence at the upper levels of Middle Eastern governments; however its effectiveness is tempered by a general hatred on the Arab street. If we won influence over both parts our policies would not run into any problems.

To put my above post in a sound bite:

If you invade with tanks and do good people tend to hate you regardless but if you invade with hospital supplies and do bad people tend to love you regardless.

Well, too much time spent reading other peoples thoughts creates connections and coincidences... over at Guy Kawasaki's blog he just finished raving about this hotel:
http://blog.guykawasaki.com/2006/04/great_hotel_in_.html

We may yet hear from you on the road.

Leave the Middle East entirely. Pick up all of our military hardware, bases, soldiers, and government outposts and bring them home.

Now, I suspect that the oil would still be available to us, fungible commodities being what they are. But if not: learn to live without Middle Eastern oil now. Rather than 50 years down the road, when the task will be that much harder if not impossible.

Cranky

A massive public relations campaign the likes of which has not been seen since the cold war.

Why? Public opinion has very little influence over what governments in the middle east actually *do*.

Much is made of 'the power of the Arab street', but the sole example of why we should that people can point to is Iran... which is Persian, not Arab.

The USA should commit itself to a long-term strategy of promoting democracy, human rights ans protection of minorities in the Middle-East. Just keep repeating that, to the governments, people in the countries etc. Not with a big PR-campaign, no one believes that, and rightly so. Do it, for ten years, with the use of all sorts of pressure and stimulus, but always quietly and steadily, and then the opinion in the Middle East will start to shift. Military power should not be applied, unless there is really an existential threat. Iran now is no such threat. Ahmadinejad may sound a bit crazy, but he also wants economic improvements for the regular people, and that is not crazy.

"If you invade with tanks and do good people tend to hate you regardless but if you invade with hospital supplies and do bad people tend to love you regardless."

Or take you completely for granted, ala the Palestinians. There is also the intractable problem that nations tend to be poor because they are led by corrupt autocrats, who in turn tend to steal all the aid for themselves. So instead of happy civilian faces you have starving civilians and a tyrant more stable than ever.

Re the previous threads: I’m unconvinced more engagement (in the form of a major PR campaign) will improve U.S. relations with the Middle East. We’ve been pretty engaged. I wouldn’t call that engagement a success.

It is difficult to prescribe policies in the absence of a specific interest. In my mind, the Middle East is of no great strategic interest to the United States, but it matters insomuch as the stability and prosperity of all regions make for a less violent and a better global environment in which the United States (and other countries) can make progress on issues of international importance (reversing environmental degradation, increasing trade, decreasing criminal activity).

The goal, then, is to foster such an environment. I do not think there is one magic bullet, but the general move seems to be to tread far, far more lightly than we have in the past. A good first step would be to stop conflating Israeli national interests with U.S. national interests. We should provide humanitarian but not military assistance to both Israel and the Palestinians, and we should tie it to “good” behavior. The European Union makes an interesting model: the member states themselves follow codified rules of international and domestic behavior, and through a (relatively) clear set of guidelines, have enticed other countries to follow suit with the promise of membership.

Of course the United States can’t use that exact model in this case—there is no membership to use as a “carrot.” But how much could be accomplished if the United States itself followed codified rules of international and domestic behavior and practiced a light foreign policy? It’s hard to even imagine such a scenario, because the United States has not tried it, certainly not post-WWII. I doubt it would transform the Middle East. But it would certainly be in our national interest to remove ourselves as a visible and present enemy. If we earn respect, we may even be able to influence governments and earn cooperation on important transnational issues in the years to come.

The principal interest the United States has in the Middle East is seeing oil revenues channeled into infrastructure to improve the lives of Middle Eastern populations, rather than terror weapons to support Islamic radicals in the global jihad.

The Luttwak article Daniel recently linked notes that for Iran, Sunni Arabian oil dynasties very conveniently have Shiite minorities to be mobilized. Very inconveniently for Iran, though, these Shiite minorities are not Persian, but rather Shia Arabs who are much more sympathetic towards fellow Shia Arabs in Iraq than Shia Persians in Iran. Even more inconveniently for Iran, the Persian Empire also has a Shiite Arab minority to mobilize who are also much more sympathetic towards Shia Arabs in Iraq than Shia Persians in Iran. Most inconveniently of all for Iran, the Shiite Arab minorities in Iran are majorities in the provinces where Iran's oil actually occurs.

Given unmatched American military strength in the Northern Persian Gulf and close relations with Ayatollah Sistani, who would no doubt like to see these friendly Shiite Arab populations liberated from their Persian opressors, the US is in a wonderful position to defund the Shiite radicals funded by Tehran. As Laurent Murawiec notes, the Saudi oil provinces also have a majority of Shia Arabs who are much more sympathetic towards fellow Shia Arabs in Iraq than Sunni Arabs in Saudi Arabia.

A couple of American divisions supporting a couple of Iraqi divisions could control the Northern Persian Gulf, not only defunding 12th Imam Persian Shiite radicals funded by Tehran, but also Wahhabi Sunni Arab radicals funded by Riyadh. We defang Islamic radicals of both stripes simply by dismembering the empires created for Persian and Saudi oppressors by British and French colonialists in the aftermath of World War I.

This wouldn't be blood for oil, it would be blood for liberation, since we would be liberating Shia Arabs from the colonization by imperialist opressors. Ayatollah Sistani would bless the Shia Arab divisions that join us in liberating their neighboring cousins from foreign domination out of Tehran and Riyadh, and agree to international administration of the northern gulf's oil resources in return for the opportunity to unite all Shia Arabs with Najaf. With those Shia Arab divisions at our side, liberating the Shia-majority oil provinces from the Persians in Tehran and the Sunnis in Riyadh ought to earn us a very warm welcome.

Defunding both Tehran and Riyadh seems like a geopolitical masterstroke, fixing the leftover problems from the WWI peace settlement created when those older empires thought they would control those territories and resources. This seems like an entirely appropriate response to the threat that radicals from both the Iranian Empire and the Saudi Empire pose to world stability. Once we put northern Persian Gulf oil production under US-UK-Australia-Canada-Japan-India administration, there's no more worries about an Islamic bomb -- neither the Iranians nor the Saudis will have the money to build it. Nor will they have the money to continue funding Shiite and Sunni extremism.

For a more detailed look at this option, see

http://openerletters.blogspot.com/2006/04/redrawing-map.html

America's primary interest in the Middle East is to maintain a sense of proportion about how important that region is to us compared to other areas of the world.

The Mideast is less important to America than China and East Asia. It less important than India and the Subcontinent, than Russia and Europe, than Latin America. It is more important than sub-Saharan Africa, because of its oil reserves and for no other reason. America will always be important in the Mideast because of its size, wealth and the reach of its armed forces, and also because of the pivotal role it has played in the off-and-on peace process between the Israelis and Palestinians. But this is not a two-way street. There are things the United States should attempt to accomplish in the region -- but efforts to "transform" it and bold initiatives to resolve conflicts that have been dragging on for generations are a misallocation of resources borne of weak-mindedness about where in the world the great questions of our destiny will be asked.

As far as there is an objective US interest in the Middle East in the tradition of (neo-)realism, it must be oil, or the price thereof. Israel, being oil-poor, can only offer us some measure of control over those nations which are oil-rich. More direct means of ensuring the efficiency and stability of our oil supply would be indicated. The significance of the (since '67, entirely theoretical) destruction of Israel pales in comparison to the domestic unrest in Saudi Arabia.

(1) Colonial La Antigua is beautiful. Admire its cool convents with 2 meter wide walls. Visit its underground church crypts.

(2) America's vital interest in the Middle East is to keep rivals out. Local peoples must be kept divided and unable to form a coalition under a strong leader.

(3) America needs to keep the oil flowing - the fields free of guerrilla, the ports operating and sea lines open.

(4) America need reliable, stable allies and bases in the area. Turkey showed during the last war that cannot be relied on. Using German bases for Middle East operations is feasible, but expensive. Bombing Baghdad from Diego Garcia has limited potential. Directing Iraqi operations from Nevada cannot be done in a real war. In the area, only Israel has first class infrastructure (deep ports for atomic aircraft carriers, well equipped air fields, communications), a strong military industry and armed forces, all compatible with American equipment and procedures. If worst comes to worst, only Israel is operable as regional base.

NB: American public seems to think that Israel is a dependant statelet, surviving on American assistance. Nothing could be farther from reality. In all Israeli wars since 1956, Israel had to be constrained by America. Only American pressure keeps Israel from using its power to do what it would like to do, as annexing Judea and Samaria. Israel is the construction of an ideological movement, and regarding America, its long term goal is to bring its Jewish masses to Israel.

Why is it that you academics always end up on junkets to beautiful warm places rather than Gary, Indiana (which has a conference center I'm told)? I know Dan isn't a bleedin' heart liburrll or anything like most of his colleagues - but how is it that they somehow overlook their higher obligations and somehow not think of going to Newark in midwinter, for example?

--assume there exists an identifiable national interest for the United States.

Being a realist, I'll assume the national interest is to maximize US power.

What set of policies towards the Middle East would best serve that interest?

With respect to the Muslim world (which is broader than the Middle East), I'd suggest that the key objective should be to strengthen consent for US power. Louis Halle, The Cold War as History: "... real power is always something far greater than military power alone. A balance of power is not a balance of military power alone: it is, rather, a balance in which military power is one element. Even in its crudest aspect, power represents a subtle and intimate combination of force and consent. No stable government has ever existed, and no empire has ever become established, except with an immensely preponderant measure of consent on the part of those who were its subjects. That consent may be a half-grudging consent; it may be a consent based in part on awe of superior force; it may represent love, or respect, or fear, or a combination of the three. Consent, in any case, is the essential ingredient in stable power--more so than physical force, of which the most efficient and economical use is to increase consent."

Oil is not the only reason to be concerned about the Muslim world. Its sheer size means that it's an important political factor--there are one billion Muslims in the world, the population of Indonesia alone is 200 million. (Another factor worth mentioning is the importance of transportation routes across the Middle East, e.g. Suez.)

The two key grievances in the Muslim world against the status quo, and hence the US (as the strongest supporter of the status quo), are (1) the Israeli-Palestinian conflict and (2) the war in Iraq. Addressing these grievances would diminish Muslim opposition to the US.

With respect to the Israeli-Palestinian conflict, the US should push hard for a two-state solution based on the pre-1967 borders, along the lines of the Geneva Accord.

With respect to the war in Iraq ... I have no idea. Vietnam may be the closest parallel. If it's not possible to stabilize the situation, figure out a way to withdraw with the least damage; but even in the best case, the damage will be tremendous. I'm guessing Iran's cooperation will be essential.

(Addressing these grievances will not eliminate Muslim opposition to the status quo. I see the core issue as national pride, and in some ways (1) and (2) are only symptoms of Muslim weakness. Hopefully Muslim opposition to the status quo will diminish further as more Muslim states modernize successfully, along the lines of Turkey and Malaysia, although this may have its own dangers, since a state which modernizes successfully may not necessarily be pacific; see Japan.)

Is the "middle east" a viable concept? Do we leave the middle east but retain interests in the larger islamic world, including South Asia, Se Asia, and Sub saharan africa? Without buying off on the Eurabia meme, isnt the future of the middle east directly tied to the future of Europe as well?

The Islamic world represents about one quarter of humanity. Now that may be the poorer quarter,oil aside, given that they are (by an large - there are signigicant exceptions) failing to follow China and India in the path of industrialization - but they may be more explosive as a result. In fact Id say that a better analytic concept than the ME, or even the Islamic world, might be that proposed by Thomas Barnett - the core and areas failing to integrate into the core.

Now obviously our relations with the core great powers are particularly important. But you cant measure our relationship with the rest by counting GDP. The problem there, the threat, is NOT GDP, but precisely the failure to develop, and threats that presents.

The problem of the Islamic world is just a subset of that larger problem.

DonS,

You should talk to some librarians. Library conferences tend to be in places like San Antonio in August and Boston in February.

Hal

US national interest is hard to think about.

Like, so long as resources are limiting, and so long as the world is near the limits, we can't keep up our standard of living without keeping resources away from other people. We can't be rich unless we make sure other people are poor.

Do we benefit by our "high" standard of living? In many ways, we don't. And it attracts resentment. What we take, others can't have. But politicians sure can't tell their voters they want SOL to go down.

Unless we stop other nations from becoming strong and powerful, they might do vicious competition with us -- they might start wars to show that we aren't on top. If we stay on top that won't happen. But when we keep others down they have an obvious reason to pull us down if they can. Is it possible for us to stay on top forever? Seems unlikely. In the long run we might do better by helping other nations and bowing out of our unique power status as the time comes. But gratitude is rare, and people instinctively feel safer in a position of power. If we help another nation become powerful and they conquer us, we'll feel so stupid....

I say we're better off not competing too hard. We lose resources we could be putting into something more useful. We avoid building up giant resentments, we don't set ourselves up as everybody's target. If somebody mistreats us, we'll be in better shape to resist than we would if we'd spent the last 40 years wearing ourselves out holding all our potential enemies down. But I can't imagine that's a winning plank.for a politician's platform.

It's hard to figure how to serve our interests when the bulk of our population wants stuff that's bad for us. But I figure the most important thing we could do for the middle east is to research a good alternate energy system. We could give it to the middle east too. Let them sell their oil for petrochemicals for the next 50 or even 100 years. Better for them and better for us to make plastics instead of just burn it. Create enough wealth that everybody can have some. Enough to go around. Some nations, the government will take most of the wealth to fight wars. But we don't have to do that to ourselves to try to stop them before they get started.

Two solutions.

Plan A. Get off oil.

If that doesn't work, Plan B:

1. Get troops out of Saudi Arabia, Osama's biggest complaint. We infidels provoke disgust. Done.

2. A massive propaganda blitz:

a. Explain the million dead babies from Iraqi sanctions was a wholesale myth. (I think they don't believe that one any more, they watch Iraqi TV. Might direct this to Western academics.) Explain their governments were complicit in supporting sanctions because it depressed Iraqi oil production thereby increaing the value of theirs. They earned more money!

b. Explain how we are working together with nations like Saudi Arabia to stop Iran from getting the bomb. Iran has been playing the Saddam game with the bomb - distract fears by playing to genocidal fantasies the bomb would be only used against Israel. Of course the Iranians didn't believe it in 1981 and bombed, ineffectively, the Iraqi reactor before the Israelis finished the job.

c. Admit we screwed up in Iraq, we should have imposed our will and a constitution (like in Japan) which they could have changed later.

d. Remind everyone that the Taliban/AQ jihad in Afghanistan was 99% other Muslims.

3. Pretend we haven't been trying to force a deal on the Palestinian issue for 15 years and more. Announce, hey, we have a new idea! Force Israel to "pull back" - they're already trying to do that anyway. Have a stab and bilateralism which will fail, document the failure, and support a unilateral solution. Even better, get Jordan to take the place back! As for Gaza, nobody wants to save it. Forget it. With our new policy stating "it was all our fault" we wipe away the errors and evils of the Arafat era so they don't have to think about it more. This new ahistorical approach will satisfy the "Realists" not very connected to the reality of history. They'll feel absolved.

4. Tax exemptions for SUVs so we burn more oil - more money for them.

5. Sponsor a tour of free Jennifer Lopez concerts. Appropriate dress naturally.

6. And since all of these is unacceptable to a good part or even a majority of them, and given the Liberal/Realist analysis that any anger or opposition is provoked by our sins, we must take the "if you can't beat them, join em'" approach. Submit to Islam. Convert. Everyone. We the Dar al-Harb will join the Dar al-Islam. Since Muslims don't kill other Muslims the whole world will live in peace. The fact that there is a religious element to this dispute and it isn't all or mostly about Israel might pique the world view of the "Realists" but who cares? We know better. Let's unite the world!

1. Abandon Israel -- in the long run it needs to find its own way.

2. Propose global nuclear disarmament -- our conventional weapons superiority is seriously undermined by every petty nation with 2 nukes. Post-India, Pakistan, North Korea and Israel, non-proliferation is dead. With Iran guaranteed to have nukes over the next 25 years, and the Saudis and Egypt sure to follow, nuclear war in the middle east needs to be avoided. There's no hiding the candy from the kids forever.

3. Encourage change from within societies -- Silly propaganda stunts like running hospitals in Saudi Arabia have no value; the flag outside may be American, but the doctor will be Indian, the building contractor Chinese, the nurse Philipina and the orderly Bangladeshi. Convert people to Americanism instead -- encourage the states to build schools (e.g. undermine Madrasas in Pakistan), invest in job-creation (get more women in the workforce in Egypt) and build better bridges with tomorrow's civil society (e.g. scholarships for 100,000 students from the ME to study here costing @ measly $1B/year).

4. Think Long-Term: 50 years from now, the west will be more Muslim. Many muslim countries are incredibly diverse and becomeing more so. True leadership is needed to show the world that it is possible to be a successful, peaceful, polyglot, multi-racial democracy -- the Chinese, Russians, Indians, Japanese, Europeans don't yet have a clue. Do we?

There is one point no one has touched. America has a critical interest in keeping nuclear technology out of the hands of hostile regimes. How much plutonium is required to make Saudi oil fields unapproachable?

Make the ME a nuclear free zone which would mean that Israel would have to give up its "strategic ambiguity" nuclear policy.

Force Israel to first stop settlements in the territories and then pull back to pre 1967 borders. If they don't then implement sanctions against them.

Set target dates to wean ourselves off of oil. 5, 10, 15 year targets.

Create more opportunities for education and dialogue between the US and ME countries.

Elect me as president.

You should talk to some librarians. Library conferences tend to be in places like San Antonio in August and Boston in February.

I can sympathise. The last time I went on a corporate 'junket' it was to Boston in January. Brrrr! That was some years ago before I reverted to being self employed. Now I go to a yearly conference in Antwerp - in mid December.

It appears that our current policy is state occupation and governance for a variety of spoken goals that have been rather dodgy.

If we can stop doing this it might be a good start.

Like, so long as resources are limiting, and so long as the world is near the limits, we can't keep up our standard of living without keeping resources away from other people. We can't be rich unless we make sure other people are poor.

That's just appallingly wrong.

Given enough money, we can produce Stuff™ in whatever quantities are desired, or, if the quantities of the necessary raw materials are finite, develop more efficient technology or substitutes that will serve just as well.

The problem is that this takes time and money, and a lot of the people who want [Stuff™] want it now, aren't willing to pay the going rate, and, most importantly, aren't offering a price that entrepreneurs think will pay for developing more efficient technologies or coming up with a substitute.

We have a very conspicuous example of this taking place right now- with oil at $72/barrel, hybrid cars (using the resource more efficiently), oil shale (a substitute for crude) and hydrogen fuel cells (an outright alternative) are all getting serious attention and R&D.

The idea that our prosperity and comfort is based on screwing other people is pervasive, (IMO) the basis for a lot of the 'we deserve it' feeling floating around on the left, and most importantly, it is utterly and completely wrong.

Best policy would be for the United States government to mind their own business and stay out of other countries. If the U.S. is threatened, as in 9/11 by Al Quaeda, then by all means invade Afghanistan. Short of that, stop starting wars.

Rosignol, so long as resources are limiting, there will be only so much stuff to go around. If we get it, somebody else has to go without.

As you point out, to somr extent we can reduce resource limitations by new technology. That's certainly worth doing. But notice that we were starting to work on alternate energy back in 1979 and then we mostly turned our backs on that until now. Why work on alternate technology when with careful diplomacy and military intimidation we can keep the price of oil low? And it worked for nearly 25 years. The iranians and iraqis had their war with us helping the weaker side, and they sold lots of oil cheap to finance the war. The saudis have been intimidated enough to keep their production high and prices low.

For the past 25 years we've been making sure we got the oil. In the short run it made sense. At $30/barrel alternate energy didn't make sense. And we could manipulate the price down that low, for us. Why put money into alternate energy when it probably won't pay off for twenty years? Now energy research is getting serious attention, and in 20 years it will pay off handsomely.

The idea that our prosperity and comfort is based on screwing other people is pervasive,

And to a large extent it has been true. It doesn't have to be that way.

(IMO) the basis for a lot of the 'we deserve it' feeling floating around on the left,

Those moral ideas are useless, they're left over from christianity or something. Never mind what we deserve. We are better off when we -- or anybody else -- figure out how to do more with less. When there is more to go around. Compare how much we spend doing that, versus how much we spend on the world's strongest military making sure we get our share. Morality aside, we do better when we help the world do better. It's in our long-term best interest.

Looking too much at the short term has gotten us where we are today. We don't "deserve" it any more than you'd "deserve it" to get wet when you jump in a lake.

Rosignol, so long as resources are limiting, there will be only so much stuff to go around. If we get it, somebody else has to go without.

As you point out, to some extent we can reduce resource limitations by new technology. That's certainly worth doing. But notice that we were starting to work on alternate energy back in 1979 and then we mostly turned our backs on that until now. Why work on alternate technology when with careful diplomacy and military intimidation we can keep the price of oil low? And it worked for nearly 25 years. The iranians and iraqis had their war with us helping the weaker side, and they sold lots of oil cheap to finance the war. The saudis have been intimidated enough to keep their production high and prices low.

For the past 25 years we've been making sure we got the oil. In the short run it made sense. At $30/barrel alternate energy didn't make sense. And we could manipulate the price down that low, for us. Why put money into alternate energy when it probably won't pay off for twenty years? Now energy research is getting serious attention, and in 20 years it will pay off handsomely.

The idea that our prosperity and comfort is based on screwing other people is pervasive,

And to a large extent it has been true. It doesn't have to be that way.

(IMO) the basis for a lot of the 'we deserve it' feeling floating around on the left,

Those moral ideas are useless, they're left over from christianity or something. Never mind what we deserve. We are better off when we -- or anybody else -- figure out how to do more with less. When there is more to go around. Compare how much we spend doing that, versus how much we spend on the world's strongest military making sure we get our share. Morality aside, we do better when we help the world do better. It's in our long-term best interest.

Looking too much at the short term has gotten us where we are today. We don't "deserve" it any more than you'd "deserve it" to get wet when you jump in a lake.

J Thomas and Rosignol,

You are both right and wrong.

To the degree that we want improvments in our standard of living greater than the growth rate of the global economy (which factors in increases in effiency, productivity, etc.) than on a global level, other must lose for us to win.

On the flip side, our standard of living can improve year over year within/at the global economic growth rate (and not cause others to lose), since there are improvements in efficiency and productivity every year.

Rick, I completely agree. Actually, the specific way you say it isn't quite right, there's no need for us to improve at the rate of the global average. But my disagreement there is a pedantic one -- the way you say it points toward truth.

I don't know what the policy would look like, but if it could safeguard our gas prices....then do it!!

What's sad/funny is that there ain't nothing that will "safeguard" our gas prices.

There's policy that might make the sticker price look a little better for a short timt, but you will just have to make up the payment in some other manner, taxes, security costs, environmental costs, the death of a son or daughter, and yet that sticker price will still start creeping up.

Rosignol, so long as resources are limiting, there will be only so much stuff to go around. If we get it, somebody else has to go without.

I posted a response to this earlier, but it seems to have been eaten.

I'm just a layman, not an economist, but my understanding is that resources are not limiting. The reason there's such a disparity of wealth between the rich countries and the poor countries isn't access to resources--it's capital, i.e. tools, machinery, etc. If you're a farmer, for example, you can produce a lot more with a tractor than you can with a hoe. We have a high standard of living in the rich countries because we've been accumulating physical capital for several generations now.

John Paton Davies, Jr. describes the process:

The cost has been high for those societies that have done it on their own. Britain, Japan, and the Soviet Union are three disparate cases. About the only thing that they had in common was that they were in the same general latitude. Yet their patterns of growth had certain things in common.

A small minority decided instinctively or by plan to industrialize and expand the economy. They kept control of the process in their own hands. They siphoned off a small fraction of the increase for their personal benefit. The bulk of it was reinvested. None was distributed to improve the lives of the workers. To the contrary, generations of workers and peasants were sacrificed to the national growth process. But it worked.

Since then, the Asian tigers (South Korea, Taiwan, Hong Kong, Singapore) and now China have followed suit. Paul Krugman's article "The Myth of Asia's Miracle" discusses capital accumulation in those countries.

Trade can be quite disruptive for poor countries, but it's usually because it's hard for workers to compete with cheap imports, not because of limited resources.

(I think encouraging energy conservation and developing alternate forms of energy are good ideas in themselves, but I don't think it'll do much for the problem of world inequality.)

Russil, first off, since we're exchanging ideas through blog comments, we're severely bandwidth-limited. We can present sketches that show vaguely what the actual arguments would look like, but we can't expect to provide enough data to "prove" or "disprove" complex ideas. We can maybe give some idea how the arguments would go.

my understanding is that resources are not limiting.

My expectation is that sometimes resources are limiting, sometimes capital, sometimes workforce, sometimes technology. Sometimes we can substitute capital for resources. One man with a tractor can do more than fifty men with hoes -- provided he has enough fuel. One man with a chainsaw can do more than twenty men with axes -- provided he has enough fuel. One special forces squad with a helicopter can sometimes do more than an infantry brigade -- provided they have enough fuel.

Just now, iron is not limiting. We can easily mine more of it than we need, the world can easily produce more steel than we can sell. (Low bandwidth, I ignore the chestnut that we can sell any amount if the price is low enough etc.) Oil is limiting. The more resources and capital and labor we put into squeezing out the last drops of oil, the less we have left for everything else. We can't maintain nearly the standard of living with $70 oil as we could with $10 oil, and that's true whether it's $70 oil or $70 synfuel.

Trade can be quite disruptive for poor countries, but it's usually because it's hard for workers to compete with cheap imports, not because of limited resources.

Again sketching it out, poor countries that lack resources tend not to have to worry about cheap imports. Cheap imports are expensive for them. But poor countries with resources get outside help to extract those resources. Chainsaws for the forests, drilling machines and explosives for the mines, etc. Roads and railroads to get the resources to the ports. Some of the poor people get jobs doing that. The result is cheap imports for rich people, and minor cheap imports for poor people who can get good jobs. If the poor happen to be living on valuable resources they get pushed off their land and become a social problem.

I don't want to claim any sort of moral problem here. If rich people prefer cheap imports to handmade stuff, that's their choice. The people who own the country do what they want with it. It can be argued that we use those resources better than a bunch of peasants, so we deserve to have them. Etc. My point is that resources can be limiting, and whoever doesn't get them has a problem.

There was a time when to run an effective military needed a lot of steel and coal. Look at a resource map of europe, where was the steel and coal? Britain had it. Germany. Alsace-Lorraine. Poland. Whichever of france and germany had alsace-lorraine could deny those resources to the other.

By WWII oil was limiting, though japan had trouble with steel too. Japan needed the ores in manchuria, and they needed indonesian oil. They attacked the USA when we quit selling them steel etc, their military would collapse without our support and they had to use it or lose it. On the german front, we managed to severely reduce their oil transport. It reached the point they confiscated horses wherever they went, from the railroad depots to the battlefront they depended on horse transport because they couldn't spare the fuel. If oil hadn't limited them, the war would have continued until they reached some other limit -- perhaps population. The germans came up with various innovations to substitute capital for oil. They extracted vegetable oil from their crops, etc. Oil was still limiting.

Now for some military purposes, uranium is the limiting factor. We try hard to deny uranium to undeserving nations. "The British government has learned that Saddam has attempted to buy yellowcake from Niger." Iran has their own uranium which they are actively mining. We want to deny them the use of their own uranium. "Iran doesn't have any need for nuclear power! They have more oil than they have any use for!"

The resources we use are not available to anyone else. Most resources are finite, some are in short supply. In general, the people who can least afford limiting resources are also least able to substitute capital or technology for those resources.

Morality aside, I claim it is against our long-run best interest to sequester too many of the world's resources and use them for frivolous things like an absurdly "high" standard of living and the world's most expensive military.

Sometimes we can substitute capital for resources.

The examples you then give are not examples of substituting capital for resources. They're examples of how to make workers more productive, and therefore able to consume more:

One man with a tractor can do more than fifty men with hoes -- provided he has enough fuel. One man with a chainsaw can do more than twenty men with axes -- provided he has enough fuel.

Sure. And processing and distributing the fuel requires a huge amount of physical capital in terms of processing plants, distribution infrastructure, etc. But I'm arguing that lack of raw materials is not the problem. Nigeria has plenty of crude oil, but it's not rich.

Do you have any non-military examples of resource limits? Crude oil is the only example that I can think of, but even there, China--not a rich country yet--is easily able to import the crude oil that it needs.

Again, I'm not arguing against resource conservation as a good idea in itself. I agree that there's a tremendous amount of waste in our current lifestyles, which we should be working on reducing. (A simple example: vehicle fuel-efficiency standards.) But I don't see this having any impact on world inequality. I think the basic problem in poor countries is accumulating physical capital. When you barely produce enough to meet current consumption needs, let alone invest in physical capital, that's extremely difficult to do. (Not to mention the problems of political turmoil or actual civil war, corruption, etc.)

I realize we're bandwidth-limited, but can you give an example of a poor country in which lack of raw materials (because of high demand by rich countries) is a problem? The poorest countries in the world are in sub-Saharan Africa, and they have tremendous natural resources.

Sometimes we can substitute capital for resources.

The examples you then give are not examples of substituting capital for resources. They're examples of how to make workers more productive, and therefore able to consume more:

Yes, you caught that! They were all examples of substituting capital (and resources) for labor. So you can get the same work done for less labor cost. And so labor gets a smaller share of the total production. As I am not a marxist I will let that slide on by.

But I'm arguing that lack of raw materials is not the problem. Nigeria has plenty of crude oil, but it's not rich.

Dubai has plenty of crude oil and is rich. Mali on the other hand has few resources and is very very poor. And yet japan has few resources and is not poor. That's all four cases, and I'm sure we could find a couple in the middle range. Clearly resources are not the only constraint. And yet for Mali they are a constraint, and lack of resources was a central problem for japan, leading to their Co-prosperity Sphere and their place in WWII.

I say that resources are one of the problems, and sometimes a central problem.

Do you have any non-military examples of resource limits? Crude oil is the only example that I can think of, but even there, China--not a rich country yet--is easily able to import the crude oil that it needs.

I may be wrong, but it looks to me like world oil production has sort of plateaued. New discoveries are smaller and fewer. Old fields are getting depleted. Production is not particularly rising, and whoever can least afford oil is having to do without. China wants more oil than they have gotten so far, and increasingly oil that goes to china has to be diverted from elsewhere.

Gold could be a minor example. For a long time the USA subsidised the price of gold, we bought it at a high price in dollars. We sequestered a lot of gold that was then unavailable for any other purpose. Luckily there are substitutes for most uses. When the dollar inflated too much, the gold went away along with our silver and copper coins. But for awhile there we were limiting the use of gold, the gold we stored was unavailable for any other use.

It's hard to point to clear examples because the world economy is an interconnected web. When a resource is limiting, rich countries and rich people tend to get it while poor countries and poor people do not. But of course the reason they don't get that resource is because they are poor, and we're left with a circular argument -- they can't get limiting resources because they're poor, they're poor because they can't get limiting resources. It's hard to argue cause in a feedback loop like that. And yet, the result is that those particular poor inevitably stay poor.

Military examples are much easier, historians often agree on the intentional strategies and on the extent that they worked.

Again, I'm not arguing against resource conservation as a good idea in itself. [....] But I don't see this having any impact on world inequality.

When there's more to go around then the poor *might* benefit, they can have more even with the same inequality.

I figure the question of how to make a poor country rich will turn out to have a lot of answers. It's like, you take a junker car that just barely runs, and start figuring out how to tune the engine. There are dozens of things that could be wrong with it, and once you handle all the ones that are actually wrong with that particular car then it might run pretty well. But if you get everything else just right while the air filter and the fuel filter are both clogged, and then you fix those, everything else won't be just right any more. The places that got rich first are the ones where everything lined up right. We can point to various of the things that worked but we're unlikely to notice all the things that had to work.

So *one* of the problems that poor countries face is that they have to compete with rich countries for resources, and their competition has already spent a lot of capital that lets them use those resources more efficiently. So they can afford them better. How can the new guy compete? Can't win for losing.

[...] can you give an example of a poor country in which lack of raw materials (because of high demand by rich countries) is a problem?

That takes a lot of interpretation. Poor countries tend to have lots of problems. When they have "resources", it tends to be a few of the things that richer nations find useful but not all of the things the poor countries would need for themselves. So it could make sense that they're better off to sell their resources to those who can make best use of them, and selling off their resources is a solution and not a problem.

Blurring the picture even more than usual, I once read that Mali had a problem like that. Their main resource was farmland. They needed foreign exchange so they grew cotton even when they couldn't produce enough food for their people. Possibly the cotton might have been worth more than the food they could have grown, and they'd be better off to sell the cotton and buy food. But they didn't imnport food, their poor people starved instead. I just did a quick web search on Mali and found facts that *could* be compatible with that happening in the 1970's or 1980's, but my few quick references today didn't mention anything like that simple story.

But that's where I'd look for a simple example. Say a poor country has uranium. They let a foreign company come in and extract it and sell it, and they get a little money. If they had an economy that could use uranium it would be worth far more than they're getting. But they don't have such an economy, so what use is uranium to them? Hard to argue that it fits what you're asking for. But when people don't have food, it's obvious they aren't getting what they need.

Even then, there are devils in the details. Some years ago there were claims that argentina was selling the USA cheap beef when their own population was protein-deprived. But poor people can't afford beef. If they don't use their plantations to raise cattle for export, the natural alternative is to break them down into tiny subsistence farms where poor people could grow beans. The result might likely be worse, even if they have more protein for local consumption.

I don't think I can support my claim at this blurry level. I'm not sure I could support it with more bandwidth either; possibly I might be wrong. Even the way I state it is oversimplified. But it makes sense. Given finite resources, the resources that we take are not available to others.

In Econ 101 terms, there's a point of diminishing returns for extracting resources. Producers only extract as many resources as people will pay for, and they first take the resources they can extract at lowest cost. If we want enough of some resource to bring the price to $X, then anyone who can't afford $X for that product must do without -- unless they can get a discount. When we want enough that the marginal cost goes up, we inevitably price other consumers out of the market. It sounds plausible, and plausible is the best I can do just now.

Mali on the other hand has few resources and is very very poor.

Thanks, that's a good example of a situation where high oil prices have caused problems for a poor, oil-importing country.

http://www.state.gov/r/pa/ei/bgn/2828.htm
The high cost of petroleum products, the fall in the world market price for cotton and gold, and corresponding loss of customs revenues put pressure on the economy and led the government to be very tight on cash disbursements in recent years.

Another link relating Third World debt in general to the 1973-1974 oil crisis:
http://www.mtholyoke.edu/acad/intrel/globdebt.htm
After the oil crisis of 1973-74, however, many commercial banks found themselves awash with "petrodollars" from some oil-producing states, and these private banks were eager to put this windfall capital to productive use. The banks assumed that sovereign debt was a good risk since there was a prevalent belief that countries would not default. Many developing countries, reeling from oil price increases, were eager to receive these loans. These countries assumed that loans were an intelligent way to ease the trauma of the oil price increases, particularly given the very high inflation rates at the time.

Although in this case the problem wasn't high demand, it was OPEC's quadrupling of prices.
http://en.wikipedia.org/wiki/1973_energy_crisis

I'm still not sure that the rich countries could lower world oil prices by lowering their consumption--presumably OPEC would seek to keep prices relatively high, by increasing their spare pumping capacity. Demand from the rich countries is definitely a factor in the situation, but it's only one factor.

I'm still not sure that the rich countries could lower world oil prices by lowering their consumption--presumably OPEC would seek to keep prices relatively high, by increasing their spare pumping capacity. Demand from the rich countries is definitely a factor in the situation, but it's only one factor.

Sure. But again, oil is a non-renewable resource and we're set to use it until it's all gone. OPEC would like to burn it slower at higher prices, satisfying only the richest part of the demand, and the more of it we use the less there is for anybody else. That's still true regardless of the precise mechanism that leaves us getting it and others not getting it.

I'm not sure what moral conclusion to draw from that. People could argue morality all day. Like, we deserve it because we have the money, if we didn't deserve to be the ones to burn the oil we wouldn't have the money to buy it. Or we deserve it because we are the ones who can make the best use if it. Or we deserve it because we're America, the best nation in the world. Etc. I'm not sure there's much point arguing about morality. But still it's true that what we use isn't available for anybody else to use and God isn't making more of it very fast.

I'm not sure what moral conclusion to draw from that. People could argue morality all day.

Like you, I don't think it's so useful to look at it in moral terms. The question is what policy would be in the US's interest. Maybe trying to share the world's resources more equitably would be in the US's long-term interest, by reducing resentment on the part of poor countries. I doubt it, but you could make that argument. (George F. Kennan: "... most foreign peoples do not believe that governments do things for selfless and altruistic motives; and if we do not reveal to them a good solid motive of self-interest for anything we do with regard to them, they are apt to invent one. This can be a more sinister one than we ever dreamed of, and their belief in it can cause serious confusion in our mutual relations.")

Personally, I think that Arab and Muslim hostility to the status quo is motivated much more by national pride (and a feeling of humiliation and weakness) than by economics. The Arab and Muslim states aren't especially poor; Osama bin Laden was a wealthy man. And I think the intangible factor of the US attitude towards the Arab and Muslim world, which combines ignorance and arrogance more or less equally, is a significant factor. As one woman bitterly described it to me, shortly after 9/11: "We are nothing to them. The only reason they care about the region is that they need the oil."

Here's one conclusion, coming up. The first world is using lots of nonrenewable resources, prominently oil. We piously talk like we want the whole third world to improve their economies to first-world levels. But the resources aren't there. Even the renewable resources aren't there. If the third world used as much wood as the first world does, we'd have to log a much larger part of the planetary landmass. And to provide the world with the amount of beef americans eat....

The third world is going to have to stay third-world until we get a new technology that's far more sparing of resources. We don't have it now. Further, without that hypothetical technology a lot of people will have to gradually (or suddenly) slip out of first-world status. And as the resources tighten up, that's either going to include a lot of americans or it's going to be pretty much all of the rest of the first world.

That was my conclusion. Now a question. Who's going to invest in this technology and where will the work get done?

We piously talk like we want the whole third world to improve their economies to first-world levels.

More importantly, there's Third World countries which are highly motivated to do so.

The third world is going to have to stay third-world until we get a new technology that's far more sparing of resources.

Actually, no. China was part of the Third World not so long ago. Now it's rapidly industrializing. What happens is that as China's production increases, it can pay for the resources it needs to import (including oil and food).

From an economist's point of view, what happens is that resource prices go up. Paul Krugman talks about this in "White Collars Turn Blue":
http://mit.edu/krugman/www/BACKWRD2.html

I agree that environmental constraints are a major global challenge. Finite supplies of oil are one issue; the limited atmospheric sink for carbon dioxide is another.

I'm not so sure that it's a technology problem. I see it as a policy problem: how do you tighten consumption of natural resources? Realizing that it'd be smarter to use light, small vehicles for urban or suburban commuting instead of large, heavy SUVs isn't a technical problem.

One obvious answer is to raise prices, e.g. of gasoline. There's more dirigiste solutions--Singapore auctions off a limited number of automobile licenses each year, for example, so as to limit the total number of cars.

I still think that Arab and Muslim hostility to the status quo is quite separate from the environmental problem.

Okay, I've learned my lesson: don't post comments which include URLs. They get eaten by the web server.

Let me try again:

We piously talk like we want the whole third world to improve their economies to first-world levels.

More importantly, Third World countries are doing so themselves (notably China and India).

The fact that raw materials are limited, or that the rich countries consume a disproportionate share, hasn't prevented China from industrializing rapidly. As China increases its manufacturing exports, it can import the raw materials that it needs.

So I don't agree that over-consumption in rich countries forces Third World countries to stay poor. I would agree that as Third World countries (like China) become richer, our global environmental and resource problems will become more and more acute.

In the best case, soaring resource prices will automatically force us to reduce our per-capita use of raw materials, and our economies will adjust reasonably well. Paul Krugman describes this scenario in "White Collars Turn Blue."

Technology may play a part in this, but I think policy is as important. We don't need some kind of technological breakthrough to figure out how to replace large, heavy SUVs with lighter, smaller vehicles for urban commuting.

Less optimistically, we could see some pretty serious discontinuities, crashes, and conflicts. Urban densification, decarbonization, and nuclear power plants can't be put in place overnight.

Russil, china increases its exports by taking markets away from other countries. American consumers drive the world economy, everybody wants to export to us, but that's a limited market -- we can't just keep buying more, especially as we lose jobs and lose exports ourselves.

And as china does start to get richer (as opposed to keep expanding their industry and their exports) they'll be competing with us for resources. We don't mind them importing resources to make stuff for our consumers to use. When they're importing resources to make stuff for their own consumers to use, the more they have the less is left for us. If a billion chinese use the resources that 300 million of us used to uose, they still won't be at our level -- but they'd drag us way down.

So I don't agree that over-consumption in rich countries forces Third World countries to stay poor.

Whichever necessary resources are most limited, limit consumption. Steel is not limiting. Coffee is not limiting, people can get over the physical ymptoms of caffeine addiction in just a few days. Oil is limiting. Titanium is limiting for military aircraft. There isn't enough titanium mined to build as many high-performance warcraft as the world wants. I don't know which resources are limiting besides oil. Maybe we mostly won't notice the second limit until we overcome the first.

Simple arithmetic. 300 million people use X bbls of oil a year. Other things equal, to reach our standard of living 6 billion people would use 20X bbls of oil. To let them do that for 20 years requires there be 400X bbls off oil in the ground, as as far as we know, it isn't there.

In the best case, soaring resource prices will automatically force us to reduce our per-capita use of raw materials, and our economies will adjust reasonably well.

This is your best case? Is it thus you console me? We revert to third-world economy ourselves?

Technology may play a part in this, but I think policy is as important.

Agreed. Without the technology we can't do it. With the wrong policy the technology will be legislted to be unprofitable.

Less optimistically, we could see some pretty serious discontinuities, crashes, and conflicts. Urban densification, decarbonization, and nuclear power plants can't be put in place overnight.

Yes, and we won't get any consensus while Bush is in office. Another 3 years before we can start.

We revert to third-world economy ourselves?

It won't be that bad. Look at Western Europe and Japan: they consume much less energy on a per-capita basis (France's level is about half of the US level, for example), but they've got a comparable standard of living. Their cities are much denser, there's more public transport, they don't have big suburban houses, they have smaller cars. My best-case scenario is that people adjust to this over the next 20 years or so.

To the extent that individuals can anticipate what's coming and make decisions accordingly, that'll make the eventual adjustment easier. To take one example, with high gas prices today, SUV sales are down; sales of smaller, more fuel-efficient cars are up.

Russil, think about what happens when you put a few E coli into a bottle of sugar water, ammonia and salts. First they retool, they make the tools it takes to grow on that. Then they start exponential growth. They double their population, and double it again. Each of them grows as fast as it can, because whoever lags behind doesn't get his share of the goodies. If one tries to conserve the others keep gobbling.

So they double, and double. Eventually there are enough of them they've used 1% of the sugar. The next generation they use another 1%. Then 2%, then 4%, then 8%. At this point there's still 84% as much sugar in solution as there used to be, they aren't slowed down much. Then they use 16%. There's still 66% of the sugar left, they're growing fast. The next generation they use 32% and now they notice -- there's only 36% left and that's enough to slow them down a little.

The next generation they run out entirely. They have to stop. So they stop and retool. They start breaking down their ribosomes -- the tools that let them build new enzymes quickly. They needed a lot of them while they were growing fast, but now they're growing slow. They retool to start eating the waste products they dumped in the water while they were growing fast. They grow slow on the waste products, and as each best waste product gets used up they switch to the next. (Some of them skip one waste product and go straight to another, so they save a certain amount of retooling.) In a few generations when the waste products are mostly gone, they start dying. They retool once again to build the tools it takes to live off the dead bodies.

If some of them get transferred into a fresh bottle of sugar water, they retool and start over.

We get more warning than they do, because we aren't in a uniform environment. We used the best oil that was easiest to get first, and then we moved on to oil that took more and more processing. At some point it isn't worth doing, but that comes gradually. Depending on economic distortions by government etc, we're likely to keep refining oil past the point it isn't worth doing. People are talking about refining tar sand with a process that burns 3 barrels to get 4 barrels output. We don't have all that much tar sand when you consider that we're going to burn the best first. The obvious proposal is to build nuclear reactors to provide the energy to refine tar sands.

So we can spend 20 years to get to where europe is today? We'll need a lot of retooling to adapt to energy sources that aren't as good. And the public mostly isn't going to be supplying the capital for that, a lot of them have their money tied up in suburban houses.

It could easily wind up third-world. A few rich people who own everything, and a lot of people living in slums looking for some sort of opportunity. I don't particularly see what to do about it. We could vote for something or other, and depend on the government to competently carry out whatever we chose....

[The bacteria] double their population, and double it again.

Not sure how applicable this analogy is. We're talking about growth in per-capita consumption, which is easier to control, not population growth. (Birthrates in the West are declining, China's population is expected to start declining in two or three decades.)

So we can spend 20 years to get to where europe is today? We'll need a lot of retooling to adapt to energy sources that aren't as good.

Yeah, that's what I'm thinking.

And the public mostly isn't going to be supplying the capital for that, a lot of them have their money tied up in suburban houses.

Market economies are flexible. I think people will adapt, once they see this coming. People who already own suburban houses may not have much choice, but people who have to decide where they're going to buy a house today may already be taking gas prices into consideration.

I guess my analogy was hard to get across. Low bandwidth.

Think of a bacterium as a complex factory. It has cell wall and other structural proteins for infrastructure. It has surface transport proteins that extract resources from the environment and concentrate them inside the cell. It has enzymes for assembly line machinery. It has a library of machine designs (DNA) and assembly lines to make capital equipment (mRNA ribosomes etc). It has a complex regulatory system, to build the right proteins in the right amounts. This includes adjusting the resources put into new capital equipment, resources put into expanding each individual assembly line, plus short-term controls to raise and lower the amount of raw materials entering each branch in the net of assembly lines. The whole system is arranged to maximise its own growth.

When it's growing exponentially (say, growth at 100%/hour, like a constant % rate of growth of GDP) the natural thing is to just keep growing. Nobody's in control, and if one factory tries to conserve resources that only means more for the rest. So when 5% of the limiting resource has been used, the resource level goes 95% 90% 80% 60% 20% gone. From almost maximum to nothing in 5 hours.

They can't very well plan ahead. If one of them predicts 3 hours early that there will be a problem and it starts to prepare, it slows down its growth then. But the others keep right on growing, so it's at a disadvantage. It's *gambling* that the crisis it's preparing for will happen. It loses outright if it's wrong, and it doesn't gain much if it's right.

So when the crunch comes there's this big shock. Nobody prepared for it. All of a sudden they aren't growing. So they start scavenging. They tear down the surplus assembly lines that aren't needed at the moment and consume them. Parts are burned for energy while other parts are converted into new assembly lines to do something new. The cell puts a bigger fraction of resources into transport proteins and more into structure -- it needs a bigger surface to volume ratio to extract resources. So the cells get smaller even while there are more of them. Finally the retooling is complete and the cells grow -- but slower. The payoff on the new resource isn't as good. (If it was they'd have been using it all along.)

When they run out of the next resource they retool slower, because they don't have as many resources lying around to cannibalise for the retooling. Also the competition isn't as stiff, nobody's growing as fast so it isn't as important to be first.

When it gets down to resources they can't grow on but only maintain themselves there isn't much urgency at all.

Does the analogy work better now? The more of our economy we need to put into resource extraction, the less is left for anything else. When the economy is growing at 2% per year and we need to put an extra 3% (on a continuing basis) into resource extraction, what happens to the growth?

It wasn't worth putting resources into alternate energy when oil was cheap, it would have slowed us down. We couldn't really guess when the oil would run out, particularly when we were getting lies about the reserves in saudi arabia and iraq and such. It made economic sense to wait, though perhaps not political, diplomatic, or military sense.

We tend to try to measure things in dollars because it's hard to handle details. But dollars are a stretchy rubber ruler. People say that at $70/barrel we have all the oil equivalent we want. But that's after the capital equipment is in place, that hasn't been paid for and that's hard to pay for after the economy stumbles. And $70/barrel is shorthand for saying it takes a lot of resources, skilled labor, etc to produce the stuff, and all of that is unavailable for other uses. Slow growth, less to go around. (It's possible to grow bacteria so that 20% of their cell protein is used to collect a single energy source from the culture medium. They grow slow.)

Market economies are flexible.

Oh yes. Every third world nation that can't afford much government has entirely a market economy. Ver flexible. ;) Of course when you get things like power grids and waterworks then somebody has to plan a decade or more ahead and you lose some flexibility.

I think people will adapt, once they see this coming.

I saw this coming as a kid in the 1970's. I tried to avoid driving as much as I could. I walked a whole lot which was healthy for me though not time-efficient. I could think while I walked but I couldn't think real deep for fear of walking into lampposts. When I broke down and bought a car it was a small car that got 30 mpg. To get better mileage I'd have had to pay so much it wouldn't pay off over the life of the car. Then I got married and we had a kid and my wife got pregnant again and she said, "We need a station wagon.". Now I have a station wagon. I don't see that we need a station wagon but I figure it comes with marriage. At least she didn't want an SUV.

People who already own suburban houses may not have much choice, but people who have to decide where they're going to buy a house today may already be taking gas prices into consideration.

I haven't bought one yet. My wife wants one, She wants one with trees. We could get a very small place in the city in a transition zone that might get gentrified and might turn slum, where the schools don't get much money. We could get a somewhat rundown place farther out, with poor insulation and 25 minutes from the fire station, rather much cheaper. What's stopping me is taking the ARM into consideration. I don't know where I'll be working in 5 years and I don't know what my interest rate will be. I figure, if people will buy in spite of *that* why would they worry about gas prices? They're buying houses the way I bought my station wagon.

It might not matter. We could be heading for a temporary time when the best jobs a lot of people can get is tearing down suburban houses for used brick and lumber and pipe fittings. And then when they run out of suburban houses to tear down, we might temporarily see some real poverty.

Sorry for the delayed response. I still think we can plan ahead better than the average bacterium. As you noted, we're able to organize plenty of very-long-range projects.

Then I got married and we had a kid and my wife got pregnant again and she said, "We need a station wagon."

Congratulations! (We've got two kids as well; so far we're getting by with a Honda Civic.)

It's true that demand isn't perfectly elastic: if gas prices rise, some people may grumble and pay the extra money instead of making more drastic changes. I still think that some people will cut back, though. I assume there's a reason that the Hummer H1 is being discontinued.