3 Takeaways - MIT Professor, Andrew McAfee: On Prospering From Fewer Resources & Getting More From Less (#8)

Episode Date: September 22, 2020

Most people believe that taking better care of the planet means reducing consumption, learning to share and reuse, and restraining growth. Is that argument correct? Find out from Andrew McAfee, director of MIT’s Digital Initiative, why it's not true. 

Welcome to the Three Takeaways podcast, which features short, memorable conversations with the world's best thinkers, business leaders, writers, politicians, scientists, and other newsmakers. Each episode ends with the three key takeaways that person has learned over their lives and their careers. And now your host and board member of schools at Harvard, Princeton, and Columbia, Lynn Thoman. Hi, everybody. It's Lynn Thoman. Welcome to another episode. Today, I'm here with Andy McAfee. He's a professor at MIT, co-director of the MIT Initiative on the Digital Economy, author of several books, the most recent of which is titled More from Less. He's also a frequent commentator on Harvard Business Review, The Economist, Forbes, The Wall Street Journal, and The New York Times.

He is widely recognized and has been named as one of the most influential people in tech today. Implausible as it seems, Andy McAfee will show us today with unimpeachable data that as we get richer, we are using resources more efficiently, using less energy, causing less pollution, and cleaning up the pollution of the past. We are even reforesting the earth. Andy, thank you so much for being here today. Thanks for having me on. Our pleasure. Let's start with resource consumption. We all know, or in any case,

we think we know that as the U.S. has grown, we've used more of the Earth's natural resources to grow. Is that true? It has been true. And it corresponds really well to our intuition. Economic growth leads to higher levels of consumption. That's the definition of economic growth. Our population has gotten bigger over time. So as both our population and our economy grows, of course, it's intuitive that we would take more stuff, we would need more stuff from the earth. And one really important thing to keep in mind is that intuition was exactly right for almost all of our history. And when the environmental movement really came into force in America and around the world just about 50 years ago, one of its messages

was, gang, this cannot continue. Because that first wave of environmentalists looked at this steady exponential growth in our economies, slower but still exponential growth in our populations, and they looked at how many resources we were consuming to fuel that growth. And they said, gang, we're going to run out. We live on a finite planet. There is this wonderful image of a spaceship earth that was going through the cosmos and that we needed to be really careful about not depleting. And it was true that up until around 1970, our resource consumption went up in lockstep with our economic growth. You can just overlay the graphs on each other. And then something deeply weird happened. And as I've gone back and looked,

I don't think almost anybody was really predicting this. Our economic growth continued, our population growth continued, but our resource consumption in most of the important ways slowed down, tapered off, plateaued, and now is generally going down. And it's a phenomenon of getting more, of getting more growth, more prosperity from less, a smaller footprint on the earth. And I thought it was such an amazing and counterintuitive phenomenon that I decided to write a book about it. So how good is the data? Where does your evidence come from? Yeah, it's a really important question because it's a strong claim. So I need to be able to back it up. And I got lucky and America got lucky in this regard in a couple different ways.

First of all, the U.S. Geological Survey was founded by active Congress, I believe over 100 years ago in America. And one of the things it was tasked with doing was keeping track of how much of the mineral, the natural wealth of the country we consumed every year. So the USGS has this tally of consumption of most of the different important minerals. Think about metals, think about fertilizers, think about stone and rock and talc and zinc and gypsum and all these different minerals that we build an economy out of. The USGS has been keeping a consistent track of our consumption of these things, going back to about 1900 in most cases. So we have this really wonderful clean data going back a long time on American consumption of different kinds of

natural resources. We can go to other places like the Department of Agriculture and get parallel data on what the total area of cropland is in the United States, how much water we consume for agriculture in the United States, our total forest acreage, how many tons of timber products we consume every year. So these really interesting different places to get data from and to try to triangulate and corroborate what you're seeing. And all of these data sources point to this same conclusion that I just brought up, which is resource use was really going up. Almost doesn't matter which resource you were looking at. Then at different times, they start to taper off and plateau.

And now they're generally going down. And that applies really broadly. It applies to timber products. It applies to pulp and paper. It applies to fertilizer. It applies to water for agriculture. It applies to cropland. Like I just said, it applies to metals and some other minerals. It's a pretty broad-based

phenomenon, and the evidence is pretty good. Now, there's one controversy, and would you like me to talk about it? Sure, but first, could you give us some specific examples? Take two products and tell us what's happened to their use over time. Let's talk about the products that come out of the forest. Those are typically divided down into timber products, hardwood and softwood, things you make houses out of, and paper products. And paper usually includes paperboard like cardboard.

Both of those really tapered off and hit their maximum about 10 to 12 years ago. And now consumption of both, total American consumption. And I want to be clear, every time here, I'm not talking about per capita consumption, consumption per American, I'm talking about total consumption, consumption by all Americans put together. Both timber and paper product consumption is now going down. And I think there are two different causes for that. The really short answer for why paper consumption is going down, I think, is the smartphone. When was the last time you printed out a map to go somewhere?

Do you have a paper atlas in your house? Do you print out all the memos and things that go around your organization? I'd be surprised if the answer were yes. And so the smartphone has just allowed us to dematerialize our consumption of lots of different kinds of paper. When we turn and look at wood, a couple of things happen. Number one was the Great Recession, which hit construction really hard. But another thing that's happened is we're getting better at building houses and other kinds of buildings that are sufficiently strong and sufficiently wind resistant, but that need fewer materials, fewer pounds, less tonnage. They can do their job of sheltering us and not blowing away while using fewer resources over time. So for me, that helps explain the wood story.

The smartphone and the computer era help explain the paper story. And when you put those two together, we are using fewer forest products now year after year. One of the first objections I hear when I bring this up is what about cardboard? I look outside or at all my Amazon, my other e-commerce deliveries and cardboard use must be going through the roof. It is going up at a gentle rate these days. Total American cardboard use is about where it was in the mid-1990s. I found that almost a shocking statistic. But in our economy, we used to use a lot more cardboard than we do now.

So people can understand, of course, the iPhone has changed things. But how about products that the iPhone is not linked to? Let's say milk or aluminum. What's happened to those? Milk is this hilarious example. We used to need a lot more cows in America to get all of the milk that we drink in the country. And now, I forget what the previous year comparison is, but now we drink more milk than we did, I forget if it's 30 or 40 years ago, we get that total volume of milk

from fewer cows. It's this incredibly vivid story of literally getting more from less, getting more milk from smaller herds of cattle. And it's a phenomenon that we just see repeated and amplified all over the place. Total American aluminum consumption, it's a little bit tricky because of imports, but total American aluminum consumption has probably plateaued and is now going down. And there's a very vivid example of how that could be the case. The total amount of aluminum that is needed to make a beer can or a soda can is less than 25% of what it was when the first aluminum cans came out. And what's been happening is beverage companies realize you and I don't value the aluminum, we just want the drink.

And so they get to work to design smaller, not just smaller, thinner, more lightweight aluminum cans so that their total spending on aluminum, on packaging goes down. And those savings add up and add up over time and across industries. And they eventually bring us into this world where we're now getting more from less. And what percentage of natural resources roughly do you think that we're consuming less of? In America, I think the big majority fall into this category of more from less. Now, the biggest exception that I can find is plastics, where we are still using more year after year. But there's been an interesting change. Up until about the Great Recession, the rate of plastics usage growth was increasing faster than

the growth of the overall economy. We really, we love plastics. We use more and more plastics every year, even faster than the overall American economy was growing. Since the Great Recession, the overall growth in plastics use is slower than the overall growth of the economy. Now, I don't know when we're going to hit peak plastic in the United States, but I think we're going to get there in the not crazy distant future. But plastics is the one big exception to the more from less story that I'm telling. Amazingly enough, energy is basically flatlined right now. Total American energy use is basically flatlined even as the economy continues to grow. And I can't tell any other story about that except for a cumulative efficiency story. I think we're at peak energy. I've put a public bet out there that when we come back in 10 years,

I think America's total energy use will be lower than it is today. Is it just the U.S. or are other countries also using less natural resources? The reason I can't talk with as much confidence about other countries is the data, as my team and I looked at it, the data is just not as high quality and it doesn't go back as far. So I can't say things with the same level of confidence as I can say them about the US. However, another researcher looked at the United Kingdom and came to almost exactly the same conclusions. And I've just seen some research that says the OECD, the Rich Countries Club of the world, and the EU

are progressively dematerializing. They're using less tonnage throughout those country groups year after year. So as I look around a little bit, I start to conclude that it's a pretty broad phenomenon. I want to be clear, the world as a whole, the planet Earth as a whole is not dematerializing. That's because we have lots of low income countries that are building up their infrastructure, building up their housing stock, building up their transportation infrastructure. Doing that takes a lot of materials. So as the base of the pyramid becomes more affluent, it is going to use up more resources around the world.

But what I'm pretty confident about is they're very quickly going to get to the point that we got to of plateauing and then starting to get more from less. Just to give a silly example, there is no way that Nigeria or Bangladesh are going to build copper telephone networks to interconnect all of their people. That would be a ludicrous thing to do in the era of the mobile phone. So as technology progresses and distributes all around the world, we make different choices about materials use, and most of those choices go in the direction of using fewer materials. Copper is a great example. Why has this come about? What's causing it? This dematerialization, this more from less phenomenon, is driven by two forces that we've Why has this come about? What's causing it? we're seeing in artificial intelligence and machine learning, which can do things like run a big data center in a much more energy efficient way. When you turn over control of a data center

to a properly designed machine learning system, it becomes a lot more energy efficient. So we've got this technology toolkit, which helps us trim away at all the resources, all the materials that we want to consume. That's great. Why are companies so interested in trimming their materials budget? Look, this could not be simpler. Materials cost money. Companies don't want to spend money that they don't have to. The profit motive is also a motive for companies to be laser focused on their cost structure. Resources, materials typically cost money. If you can satisfy all your demands and make your markets happy while spending less on resources, companies will take that deal over and over and over. Think about the aluminum beverage can. So the way I

think about it is that tech progress opens up the opportunity and competition and market-based competition provides the motive to start getting more from less. How important is capitalism? It's essential. Monopolists don't have an incentive to save every fraction of a penny on their materials budget because monopolists can just pass that cost increase onto their customers. We need competition. We need really ruthless competition among companies for our business to get them laser focused on those cost reductions. And how popular is capitalism

now? It depends on who you talk to. What I've learned is that people who have lived under different systems, people who have actually lived under centrally planned governments and the alleged socialist workers' paradise, wow, were they really fond of capitalism. Now, I appreciate there's a segment, particularly of younger people today in the rich world who think capitalism is part of the problem instead of part of the solution. What I want to say to them is twofold. First of all, look at the evidence in a bit more detail. Second of all, when people like me talk about capitalism, there's a set of things that we're not talking about. We're not talking about corporatism.

We're not talking about government and big companies just doing favors for each other. We're not talking about cronyism. We're not talking about financialization. We're not talking about regulatory capture. In your Econ 101 textbook, all of these things are brought up as failure modes or exceptions to capitalism or detriments to it. I'm also trying to be clear that I'm never talking about unfettered capitalism, because we need to be honest. If businesses are allowed to pollute, they will pollute. If

pollution is free, businesses will pollute. They'll foul up the environment that way. So in addition to these two forces of capitalism and tech progress, two other forces, which are essential here for taking better care of the planet, I call them public awareness. And I'm really grateful to the environmental movement for making us aware about how precarious our situation on the planet was and the need to take better care of the earth. We need an aware public and we need governments that are responsive, that respond to the will of their people and that can be persuaded to do the right thing. For example, make pollution expensive so that companies start to try to do less of it. And some of the huge triumphs of the environmental movement around the world have been pollution

reduction efforts. Those did not come about purely because of capitalism and tech progress. They came about because people demanded a cleaner environment and they got it from their governments. Is the environment actually cleaner today, the air, the water, cleaner today than it was before? In the rich world, I find it really hard to try to communicate how much cleaner our air and our water are than they were 50 years ago. They're not clean enough. Most of the evidence that I've looked at says we need to be even more vigilant about pollution than we are being. But if you look at air pollution, if you look at our waters, if you look at how many Superfund sites there are around the country, the land was just

unbelievably followed up by pollution. We are so much better off than we were in 1970. I think in 1970, you could still put leaded gasoline in a car. We still had smog alerts in cities like Chicago and London and LA and New York. The morning drive time radio would tell you how bad the air was. We don't live in that world anymore. The research is overwhelming about how much cleaner the environment is in the rich world than it was 50 years ago. That's because I think as people become more affluent, as their societies

become more prosperous, they have the freedom to look around and start to demand a cleaner environment and get it from their governments. So my prescription is for these low-income countries that are still experiencing a lot of pollution, my solution is let's make them rich as quickly as possible. Let's help them become prosperous. Their people will do exactly what we did, which is start to demand a cleaner environment. We're already seeing this in China, where the air has got about 30% cleaner across the country in less than five years. Now, it's not clean enough. I need to stress this over and over again. Pollution is still a terrible problem, even in the rich world, let alone the lower income countries.

We need to be fighting it better and harder than we are, but we know the playbook for fighting pollution. You have two great data points in your book on pollution. One is EPA and the other is a Matt Ridley quote. Can you tell us those? The EPA, which was set up, I believe, in the early 70s when Nixon was president, has been monitoring the air quality in America for a long time. And the overall level of most of the atmospheric pollutants that we care about, the ones that will make us sick, and there's a huge exception here, which is greenhouse gases. And let's talk about that later. But for things like sulfur dioxide and nitrogen oxides and particulate matter, the air is more than 90% cleaner, I believe in most cases, than it was

50 years ago. It is really easy to lose sight of our victories over pollution. You bring up this wonderful Matt Ridley quote. Again, with the exception of greenhouse gases, we need to be very clear about that. A car that you drive today is essentially an air filter. The atmosphere that comes out of its tailpipe is cleaner than the air that the car takes in. That's not because the auto company suddenly decided they wanted to be good to the planet. It's because we put tough measures in place and we enforced them. And the Matt Ridley quote?

It's something like, a car driving at full speed today emits fewer pollutants than an idling car did, I believe, half a century ago. Exactly. It's extraordinary because we all believe that the opposite is true, that the earth is becoming, the U.S. is polluting more and more, not less and less. We hear that a lot and it's just wrong. It's very counterintuitive and it's wrong. There's another thing that I hear, which is, okay, if our land and air and water have got cleaner, it's just because we've outsourced all of our pollution to lower income countries because we outsourced all of our manufacturing. I hear that a lot. Again, it is not accurate.

We have not outsourced all of our manufacturing. Manufacturing is a large and growing industry in the United States. Now, we have offshored some production. That's absolutely true. If we brought all that back, the air would still be a great deal cleaner. There are a couple really telling data points here. One is that Germany is a net manufacturing exporter and its trade surplus grows every year while its air gets cleaner every year. So that story about Germany outsourcing its pollution, flat doesn't work. And like I said, a little while ago, China is now finally getting cleaner air all around the country, not clean enough, but cleaner air, even as it continues to be the world's

factory. So this notion of rich countries getting cleaner by offshoring all their pollution, I hear it as a slogan, It is not accurate. It's not correct. And how about for use of natural resources going forward? What do you see happening to those? I think globally, total natural resource use is going to continue to go up for a while. And then like we're seeing in the rich world, it's going to plateau and it's going to start to go down. We should keep in mind that global human population is expected to peak, I believe, closer to 2050 than 2100, after which there will be fewer people on the planet year after year. So population decline is going to help us lighten up our footprint, and so is capitalism and tech progress. They're going to help us lighten our

footprint as well. The thing I really want to stress, though, we do not need to worry about running out of the earth's bounty. We just don't. The earth is huge. It has more than enough minerals and resources and natural bounty to satisfy all of our needs for as long as we're going to be around. This is super counterintuitive. And it runs counter to most of what we hear, especially from the older factions of the environmental movement. But man, running out of natural resources that we need to fuel our lives and our growth,

this is not a thing that we need to worry about. And we should cross that off our list of concerns. So before I ask you for the three key takeaways from our conversation today, is there anything else you'd like to touch upon that you haven't already discussed? In general, we human beings have a negativity bias. Bad news is more vivid to us. It sticks around. That negativity bias is reinforced in many cases by the media. In journalism, they say if it bleeds, it leads. And I have found that it's easier to make a name for yourself as an elite commenter on

important topics by stressing the negative instead of stressing the positive. And there is no shortage of negative stuff going on. We should be very clear about that. There's also a huge amount of profoundly good news out there that does not get reported on. And finally, the three key takeaways from our conversation today. My three key takeaways are, first of all, that the battles we desperately need to keep fighting are about ecosystem protection and pollution reduction, including greenhouse gases. That's number one. Number two is that our earth is abundant enough to support us and our prosperity for all time going forward. And then number three

is I would love it if everybody would keep in mind what I call the four horsemen of the optimist, these four forces, that when we have all four of them are bringing us into a better, greener world. And for me, they're tech progress, capitalism, public awareness, and responsive government. Let's put all four of those in place and have some confidence that we can improve both the human condition and the state of nature simultaneously. Andy, thank you for our conversation today. Your book, More From Less, is one of the most interesting and insightful that I have read.

So thank you. That's incredibly kind. Thank you. And thank you for having me on. If you enjoyed today's episode, you can listen or subscribe for free on Apple Podcasts or wherever you listen. If you would like to receive information on upcoming episodes, be sure to sign up for our newsletter at 3takeaways.com or follow us on Twitter, Instagram, Facebook, and LinkedIn. Note that 3takeaways.com is with the number three,

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