Miliband’s timid transition

David Miliband, Britain’s environment minister, gave a characteristic mix of apparently bold rhetoric and timid content in his recent speech on the post-oil economy:

“In the 19th century, Britain pioneered the transition to an industrial economy. The industrial revolution brought together invention and science, a culture of enterprise, and political leadership from our great cities and national government.

“In the 21st century, we are again a transition economy. We need the same combination if we to make a new transition: from a high carbon to low-carbon society. We need to transform the productivity with which we use natural resources in the same way as mechanisation and mass production transformed the productivity of human resources.”

In reality the transition he is suggesting, to a low carbon economy, is fundamentally different from the Industrial Revolution. The nineteenth century transition involved making labour vastly more productive (more output per person) in the context of a rapidly expanding economy. Miliband’s transition involves increasing resource productivity in the context of a static or a least slow-growing economy.

He makes the fundamental error of counter-posing labour productivity and resource productivity. As a general rule, resources are used more efficiently as labour productivity rises. In addition, more energy efficiency generally means more energy use rather than less. As energy becomes more plentiful and cheaper then people, understandably, demand more of it.