ProfSteveKeen | This Matters in Economics @ProfSteveKeen | Uploaded August 2024 | Updated October 2024, 2 hours ago.
Mainstream economics often overlooks energy's crucial role in production.
It's like trying to bake a cake without considering the oven.
You can mix all the ingredients, but without heat, nothing happens.
This oversight leads to models that fail to address real-world issues, like climate change.
Take the Neoclassical view that production is mainly about labor and capital.
It's a bit like saying a car runs on just its wheels and chassis.
Without fuel, the car won't move.
Energy is the fuel for our economy.
Ignoring it creates flawed policies that can't tackle the climate crisis.
For instance, empirical data shows that GDP closely tracks energy consumption, with a correlation of 0.97.
That's not just a number; it means our economic output is deeply tied to energy inputs.
Yet, economists like Paul Krugman and Ben Bernanke continue to promote models that treat energy as an afterthought.
It's as if they believe the economy can run on wishful thinking.
This is dangerous because it leads to policies that neglect the ecological constraints we face.
When energy supply drops, production doesn't just slow down; it can collapse.
Imagine a factory that suddenly loses power.
Production halts, jobs vanish, and the economic ripple effect can be devastating.
We need to integrate energy into our economic models.
This isn't just a theoretical exercise; it's essential for effective climate action.
By acknowledging energy's role, we can create policies that reflect reality.
This shift could guide us toward sustainable practices that actually address climate change.
In the end, understanding energy isn't just about economics; it's about survival.
We must stop being energy blind and start seeing the bigger picture.
Only then can we hope to navigate the challenges ahead.
If we don't, we risk driving our civilization into an existential cul-de-sac【6:1†source】.
Mainstream economics often overlooks energy's crucial role in production.
It's like trying to bake a cake without considering the oven.
You can mix all the ingredients, but without heat, nothing happens.
This oversight leads to models that fail to address real-world issues, like climate change.
Take the Neoclassical view that production is mainly about labor and capital.
It's a bit like saying a car runs on just its wheels and chassis.
Without fuel, the car won't move.
Energy is the fuel for our economy.
Ignoring it creates flawed policies that can't tackle the climate crisis.
For instance, empirical data shows that GDP closely tracks energy consumption, with a correlation of 0.97.
That's not just a number; it means our economic output is deeply tied to energy inputs.
Yet, economists like Paul Krugman and Ben Bernanke continue to promote models that treat energy as an afterthought.
It's as if they believe the economy can run on wishful thinking.
This is dangerous because it leads to policies that neglect the ecological constraints we face.
When energy supply drops, production doesn't just slow down; it can collapse.
Imagine a factory that suddenly loses power.
Production halts, jobs vanish, and the economic ripple effect can be devastating.
We need to integrate energy into our economic models.
This isn't just a theoretical exercise; it's essential for effective climate action.
By acknowledging energy's role, we can create policies that reflect reality.
This shift could guide us toward sustainable practices that actually address climate change.
In the end, understanding energy isn't just about economics; it's about survival.
We must stop being energy blind and start seeing the bigger picture.
Only then can we hope to navigate the challenges ahead.
If we don't, we risk driving our civilization into an existential cul-de-sac【6:1†source】.
