If you were sitting in 1970, you could look at this curve and claim, very confidently, that economic growth requires concomitant increases in energy use. And you’d be wrong. Because the trend is your friend til the bend at the end.

There’s simply no deep reason that economic growth requires increasing use of any physical resource. Economic value is all about the configuration of stuff, not the amount of stuff. If you took a hammer and smashed your phone to pieces, the resulting pile of trash would still contain the same amount of silicon and cobalt and gallium arsenide and so on. But now those resources would not be a valuable thing. Rearranging resources from a less useful configuration into a more useful configuration is what creates value

Wow! It's crazy how *checks notes* "rearranging resources from a less useful configuration into a more useful configuration" was only invented in 1978. I wonder what a meaningful definition for this could be, why US energy use could go down but it's GDP continued to soar?

I wonder if this could instead indicate that the US process of de-industrialization forced the metrics for how GDP is created to change fundamentally, masking the failure for the US economy to grow meaningfully outside of key sectors.

Damn maybe the fact that this predates the internet by an incredibly wide margin indicates that this trend isn't due to the internet reducing the energy cost of the economy but instead that the economy has been allowed to dwindle and deteriorate while those on top who decide how it's measured have decided to inflate it's supposed value. Hell knows that I've never known economic growth while I'm alive outside of the tech sector.

But note that although the use of virtual resources in the digital, simulated world is increasing in this scenario, the use of real-world, physical resources probably isn’t increasing. It probably does not take any more energy, or silicon, or gallium arsenide to faithfully simulate the world of 1900 than the world of 1600 (as long as you’re making sure to simulate the entire planet, particle for particle).

Of course, this example is impossible; we’ll never be able to make a simulation anywhere close to that big. But the thought experiment illustrates the key principle here: People in virtual environments can create economic value without putting any strain on the real resources of planet Earth. You can think up lots of more realistic examples of growth in virtual environments if you like.

In terms of physics and computation:

In principle, a computer is only ever doing one calculation at a time. Carrying out one step after the other, in sequence (albeit rather quickly). In practice, you can spread the work out a bit - have multiple CPU cores carefully timed to work alongside each other, or farm out calculations to dedicated hardware like a graphics card. But... fundamentally, each component is still only doing One Thing At A Time. So, to run a given programme -- like say, a simulation -- you first have to reduce the job down into individual tasks. Then you feed those tasks through the computer one by one. Simulation is, by definition, reduction and simplification. You sketch out the likely path of a physical system by ignoring most of it and hoping you didn't miss anything too crucial. (ideally, you then compare it to real world results and adjust as needed; in practice, you can just say the world is wrong instead)

Our friend Noah Smith, on the other hand, is imagining a machine that can hold the state of every particle and evolve on their interactions over time. That's not a simulation. That's not even a computer. That's a whole-ass physical system (a universe machine, one could argue). He's doing this bait and switch where he wants you to think of binary zeros and ones as if they're particles. They're not. Particles exist and interact concurrently. Binary is static and linear. It just sits there in memory, waiting for the CPU to eventually get round to doing something with it.

One. T.a.s.k. A..t.. A... T....i....m....e....

In terms of economics:

yes, you can measure imaginary gdp

what a shame all the value is just that, imaginary

It’s certainly possible for economic growth to happen in a virtual environment with no increase in real resource use. To see this, just do a little thought experiment: Imagine simply simulating the economic growth that has already happened on Earth. Imagine that sometime far in the future, with highly advanced technology, we create a complete, physically exact simulation of the planet Earth in 1600 A.D., complete with the minds of 554 million digitized human beings. And then suppose we simply run that simulation forward, as the digital people develop steam engines, railroads, tractors, cars, airplanes, and so on. This is a very real increase in GDP!

Okay, now, in Noah's defense, this is about at totally bonkers nonsensical as the concept of GDP itself.

Imagine that sometime far in the future, with highly advanced technology, we create a complete, physically exact simulation of the planet Earth in 1600 A.D., complete with the minds of 554 million digitized human beings. And then suppose we simply run that simulation forward, as the digital people develop steam engines, railroads, tractors, cars, airplanes, and so on.

There is no reason for such a world to have any real scarcity or resource constraint. Any such constraint is made up.

With no resource constraint, there is no market value and no GDP (since GDP is market value of final goods and services).

It’s certainly possible for economic growth to happen in a virtual environment with no increase in real resource use. To see this, just do a little thought experiment: Imagine simply simulating the economic growth that has already happened on Earth.

Imagine that sometime far in the future, with highly advanced technology, we create a complete, physically exact simulation of the planet Earth in 1600 A.D., complete with the minds of 554 million digitized human beings. And then suppose we simply run that simulation forward, as the digital people develop steam engines, railroads, tractors, cars, airplanes, and so on.

Reading this gave me a fuckin aneurism.

This is a very real increase in GDP!

Bro, fuckin how

Its all fun in games (increasing the "value" of something) until you need to cash out.

Unless you're just hoping that you can use the artificial overvaluation of a non-physical asset to sucker somebody into giving you a cash loan for a fraction of the asset's assumed value.

But then you're just creating a situation of creating an ever increasing bubble that will eventually pop and cause another catastrophic recession.

Sounds like a techbro version of the old liberal economics handwave where the possibility of economic growth without an increase in use of material goods (or even a decrease) in certain circumstances negates the problem of “infinite growth on a planet with finite resources.” It ignores the practical reality of what economic growth has done and instead uses a hypothetical outlier. A world with “smart” technology isn’t a theoretical, were there, we can look at what that world has meant for material resource usage.

It’s like if someone looked at the Boba skip and came to the conclusion, this means hours and hours of practice isn’t necessary in order to speedrun a video game.

HOW does he have 226,000 subscribers on Substack?