By late afternoon the heat had started coming off the yacht club. Kids were running around the tables, gulls were working the chips, and the water slapped under the dock. Nobody was sailing.
Tony came back from the bar with four beers.
“Forty-eight fucking dollars.”
“Market forces,” said Mitch.
“Fuck off.”
“Supply and demand.”
“There are seventeen f*cking taps!”
Anna took a beer. “Economics is brilliant like that. Whatever happens, there’s already a reason why it had to.”
“That’s because you don’t understand economics.”
“Neither do economists. It’s like all that new physics. Make something up, give it a name, then spend twenty years sucking on the taxpayer teat while you pretend to be looking for the f*cker.”
A kid tore past with another kid’s shoe.
Adam watched them go. “You know what I don’t buy? Substitutability.”
Mitch sighed. “Here we go.”
“No, the idea’s perfectly sensible. Something gets scarce, price goes up, we find something else.”
“Which we do.”
“Yep.”
“So?”
“So doing something repeatedly doesn’t mean you can do it infinitely.”
Mitch shrugged. “Nobody says infinite.”
“Markets rather depend on it.”
“Not really.”
Anna shook her head. “They sort of do. As soon as growth runs into a resource constraint, technology gets invoked. Resource runs short, substitution gets invoked. Energy gets expensive, efficiency gets invoked. There’s always another move.”
“Historically, there has been.”
“Exactly,” said Adam. “That’s evidence we’re clever. It isn’t evidence physical reality has signed the contract.”
“Liebig,” said Isobel.
“What about him?”
“You can substitute your way out of a scarcity. You can’t substitute your way out of having a limiting factor. You just change which thing is limiting.”
Tony frowned. “So we’re not removing the wall. We’re moving along it.”
“Pretty much.”
“Well, that’s less fucking encouraging.”
A gull went for a chip and Kelly slapped the table. It retreated about eighteen inches.
Mitch said, “Scarcity genuinely does drive innovation.”
“Of course it does,” said Anna. “That’s why the argument works. The crock of shit is the bit where technical substitutability quietly becomes unlimited technical substitutability.”
“Give me an actual example.”
Anna smiled. “Samarium.”
““That where Conan the Barbarian came from?”
“Cimmeria.”
“What?”
“Conan was from Cimmeria.”
“Of course you fucking know that.”
“Samarium’s a rare-earth element. Makes magnets, bloody good magnets…
“So?”
“Aerospace. Motors. High-performance systems. Defence.”
Tony looked at her.
“Missiles?”
“Some missile systems use rare-earth permanent magnets, yes.”
“And then?”
“And then you blow the fucking missile up.”
Tony stared at her for a second.
“Well, that seems suboptimal.”
“That’s one word for it.”
Mitch laughed. “Hang on. You can make anything sound stupid like that.”
“I’m not making it sound stupid. I’m removing the PowerPoint.”
“It has a strategic purpose.”
“Sure. But look at what physically happens. You mine a constrained material, process the shit out of it, refine it, manufacture an incredibly sophisticated component because it can survive extreme conditions, put it in a weapon, then deliberately destroy the whole fucking thing.”
“Assuming it’s used.”
“Obviously.”
Adam said, “And if it is used, the destruction isn’t an externality of the product.”
“No.”
“It’s the point.”
That shut them up for half a second.
Mitch said, “You’re ignoring deterrence.”
Tony frowned. “Deterrence is basically, ‘I need mine because you’ve got yours,’ isn’t it?”
“At its crudest.”
“Sounds like America’s gun argument.”
“Pretty much,” said Anna. “Your gun justifies mine. Mine justifies yours. Everyone is individually rational and collectively surrounded by fucking guns.”
“Still doesn’t prove they have no value.”
“No,” said Adam. “Value to whom?”
“The bloke firing it or the bloke it lands on?”
Mitch shrugged. “Manufacturing it still creates jobs.”
Anna groaned. “Oh, fuck me.”
“What? It does.”
“Of course it does. So does manufacturing mirrors.”
“Mirrors?”
“Whatever. The alternative to building a missile isn’t paying five thousand engineers to sit in a shed staring at their hands.”
Adam nodded. “That’s the stronger argument. The counterfactual isn’t produce the missile or produce nothing. It’s what else could the same engineering, energy, capital and constrained materials have produced?”
“Exactly.”
“So yes,” said Anna, “the missile creates economic activity. Dig up samarium, GDP. Refine it, GDP. Build the magnet, GDP. Build the missile, GDP.”
“Blow it up.”
“Then build another one.”
“GDP.”
Tony took a drink. “That’s fucking magnificent.”
“It is if you own the factory.”
Mitch pointed at her. “There. Now you’re turning it into capitalism-is-evil.”
“No, I’m not. That’s too easy.”
“Sounded like it.”
“The capitalist isn’t an ogre any more than the communist was. That’s part of the distraction. You don’t need evil people. You need incentives.”
“And customers.”
“And a story,” said Adam.
Anna nodded. “That’s the interesting bit. Some people benefit enormously from keeping particular flows going, and those same interests have disproportionate ability to shape the story about why those flows are necessary.”
“National security.”
“Growth.”
“Jobs.”
“Technological leadership.”
“Freedom,” said Tony.
“Always f*cking handy.”
Greg looked up. “Masters of War.”
Anna pointed at him. “Exactly. Dylan. ’63.”
Tony looked genuinely offended. “He’s only 63? Fucking hard life.”
“1963, you dolt. Jesus hair, peaceniks, rad hippy cunts.”
Tony stared across the marina for a moment.
“Free love. Beats hitting each other with rocks.”
He picked up a chip.
“They tried, at least. Wow. Now we’re fucking hitting each other with billions of dollars of taxpayer-funded rare-earth magnets.”
Anna laughed. “There it is.”
“Progress,” said Tony, just as a gull nicked the chip straight out of his fingers.
“Fucking hell!”
Kelly laughed. “Resource reallocation.”
Kelly laughed. “Resource reallocation.”
Anna watched the gull swallow it. “That’s the other half of the fucking problem. Resources get allocated where they’re most profitable.”
“Think rare earths. Taking samarium through all that processing to pilot a missile might be highly profitable. Doesn’t mean blowing things up is the best use of samarium.”
Adam nodded. “And substitution is what makes that seem sustainable.”
“How?”
“Because you never have to ask whether this is a sensible use of a finite resource. Use it. Destroy it. If it gets scarce, price goes up and we substitute something else.”
Mitch shrugged. “Usually we do.”
“Usually.”
“So what comes after samarium?”
Anna smiled. “There.”
“What?”
“You just did it.”
“Did what?”
“Assumed there is something after samarium.”
“So?”
“You assumed infinitely more.”
Mitch looked at her.
Anna finished her beer.
“That there is the whole fucking problem.”
Ceteris Paribus 