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Patrick Watson of Mauldin Economics shares his experiences of the big Texas winter storm and reflects on what it means for the economy when people have to go without the likes of electricity and indoor plumbing

Patrick Watson of Mauldin Economics shares his experiences of the big Texas winter storm and reflects on what it means for the economy when people have to go without the likes of electricity and indoor plumbing

By Patrick Watson*

Finding yourself in the middle of national news is rarely good. But I did last week as much of Texas went dark and thirsty in a major winter storm.

We lost electricity for two days at my home outside Austin. We’re still without running water. That part may take weeks to fix, too, since plumbers are suddenly in high demand.

Unlike some, our lives weren’t threatened. We had a fireplace, firewood, drinking water, and food. It was disruptive but manageable.

This experience was nonetheless maddening because it was at least partially man-made. Mother Nature sent the ice storm (though climate change may have contributed), but that’s not so unusual. Places with much colder climates manage to deliver reliable electricity. Texas could have, too. Natural gas pipelines and wind turbines can be winterized. Ours weren’t.

In other words, this was less a technology failure than a public policy failure, one I hope will be corrected now. We’ll see.

People lived without electricity and indoor plumbing until the last century or two. They still do in some places.

It’s no coincidence economic growth accelerated after we acquired those technologies. They are connected… and the connection may tell us something about the future.

Source: pxhere.

When our well equipment broke last week, my wife and I (mostly her, I must confess) developed a system. We gathered snow in every container we could, brought it inside to melt, and then used it for washing and toilet-flushing. We did it again when the temperature rose and water started flowing off the roof.

Now all those containers are in our garage. We haul the water inside as needed. This laborious but temporary solution was once normal. It’s one reason human civilization formed near rivers: less time and effort toting water.

I can confirm that’s still true today. We’re spending 2–3 hours a day just moving, heating, or otherwise manipulating water. If we were carrying it from the nearest natural source, as they did centuries ago, that 2–3 hours could easily be 8–10 hours.

This work doesn’t create any new wealth. It simply sustains life and basic hygiene. That people used to spend so much time on it helps explain why economies grew so slowly, until recently.

The occasional inventors and thinkers—Leonardo Da Vinci, Benjamin Franklin, William Shakespeare—were “occasional” for good reason. Life was hard. Few people had the luxury of sitting down to write.

Source:Wikimedia Commons.

Great Inventions

Our new water chores reminded me of a 2013 TED Talk by economist Robert J. Gordon. He talked about the various innovations that created modern life, and what it was like before them.

Back before the turn of the century, women had another problem. All the water for cooking, cleaning and bathing had to be carried in buckets and pails in from the outside. It's a historical fact that in 1885, the average North Carolina housewife walked 148 miles a year carrying 35 tons of water. But by 1929, cities around the country had put in underground water pipes. They had put in underground sewer pipes, and as a result, one of the great scourges of the late 19th century, waterborne diseases like cholera, began to disappear. And an amazing fact for techno-optimists is that in the first half of the 20th century, the rate of improvement of life expectancy was three times faster than it was in the second half of the 19th century.

Gordon describes how the utility services we now take for granted propelled humanity a long way, very quickly. Redirecting all those water-carrying and wood-chopping hours added up.

That’s the good news. Gordon also argues the truly big inventions that made the most difference are now complete, and that’s why economic growth has been slowing for decades. He believes it will keep dropping back to the pre-industrial pace, which was about 0.2% annually.

He ends with a challenge.

But I'm now going to give you an experiment… Option A is you get to keep everything invented up till 10 years ago. So you get Google, you get Amazon, you get Wikipedia, and you get running water and indoor toilets. Or you get everything invented to yesterday, including Facebook and your iPhone, but you have to go to the outhouse and carry in the water…

The problem we face is that all these great inventions, we have to match them in the future, and my prediction that we're not going to match them brings us down from the original two-percent growth down to 0.2, the fanciful curve that I drew you at the beginning.

I hope Gordon is wrong. But these periodic disasters that strip away those 20th century luxuries, even temporarily, suggest he may have a point.


*Patrick Watson is senior economic analyst at Mauldin Economics. This article is from a regular Mauldin Economics series called Connecting the Dots It first appeared here and is used by interest.co.nz with permission.

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16 Comments

Life is about whether the juice is worth the squeeze. Texas didn't winterise its wind and gas supplies because the cost was not worth it given the risk of Texas freezing. That's' not a public policy failure but rather a calculated risk. You can reduce and even eliminate risk, however that comes at a cost. Texas didn't want to incur that cost.

The author made the same call when deciding not to winterise his well or having a back up well himself. Did he have a generator for power? His own solar generator? Winterised pipes? A winterised (perhaps underground) water tank? It appears not as he had no power and was lugging in snow when his house's plumbing failed.

This was less a technology failure than a PRIVATE policy failure. If you live in a glasshouse...

Yes, lets not overlook Texas had some of cheapest power (especially for industrial use) in the US.
https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a
It is arguable that their neighbours to the east had cheaper residential power but the low electrical costs will have lead to new factories and good jobs.

Hindsight is 20/20. They took the risk (and probably managed it poorly). maybe we actually hear from a Texan if it worth it, when everything's back to normal.

God forbid that one might have to admit that larger government has a use...

Risk doesn't exist in isolation. It is a double sided equation with consequence. It's not the odds that matter most, rather it's the consequence of losing.

He doesn't get the difference between energy and technology.

It was energy we applied, to do the work.

The technology only facilitated, and to a certain (physics-limited) extent, efficient-ised our use of energy.

What economics has done, is to eliminate resilience, or what I call Capacitance; the ability to absorb. Done to Health, it is why we need to Lockdown; not enough hospital capacity. Done to infrastructure, it means rotten power-poles, bursting pipes, not-high-enough levees, etc. Texas is a prime example of laissez faire economics, and it's come back to bite them on the bum. How predictable was that?

Infrastructure, integrity, maintenance & development, failures. Would reckon just about every rate payer in NZ would level that accusation at their respective local councils. Basic stuff, storm water, sewer, water supply, power etc just not sexy enough. And now having had all that neglected, the people are stirring, and the response of those in authority. “Oh, we have listened, and just to make you happy, here is what your rates will need to increase by. Everything is daft, really daft. In Christchurch we have a mayor saying to ratepayers we will need to create a levy to acquire, restore and maintain “heritage buildings” but don’t worry it’s not a rates increase, just a seperate charge.

agree, and they have a building full of people that just push paperwork around, not doing the productive things like fixing pipes, storage tanks etc...just writing reports and producing graphs for the next meeting. The 100k plus workers. meanwhile the poor ratepayer on min wage, well they need to find another 200 dollars a year to support this environment.

There was a time when much of this work was carried out by central government with its own ministry of works but then neo-liberalism came along and everything was sold off and privatised and now we have a government without the capacity to do anything for us. https://en.wikipedia.org/wiki/Ministry_of_Works_and_Development

I hoped you watched where the huskies go, and didn't go eating that yellow snow.

DIY version of a saline drip?

PA you remind me of the old Farside Xmas card. You know all the dogs Xmas partying inside the house, and outside a snowman in the form of a cat, with a track of paw marks back and forth, and a puddle of piddle at the base.

Well, of course, you survived by using that carbon-hungry device called a fireplace. You have to choose between saving the planet or saving yourself.

Or can you have both?

And this is part of the problem, we end up by laziness or by policy design to being reliant on others that don't do what they should, when a few old fashioned devices, like a fireplace, and maybe a few modern ones like passive design with solar and battery back up might make us more self-sufficient and less reliant on command and control structures whose ideology is more for the common good rather than what is good for us individually.

Having lived in Austin for 3 years, one thing I liked (there were many things) about Texans was their 'light hand of Govt. approach,' especially when it came to land use and housing affordability.

In this case, it sounds like it was a little too light, but good lessons will have been learnt from this.

Maybe. Usually, time makes people discount the experience and just go back to what they were.

You're right re passive-solar - couldn't agree more. It's the free gift that keeps on giving. But most folk won't go there without being legislated there, and nobody in the construction game seems to know about it even yet. My first passive house was nearly 40 years ago and I reckon we've run out of time.

NZ have found the golden formulae for such natural/disasters eventuality, current C19 is just the test bed.
All those disasters on the fields can be overcome by printing money, to cover for the cost.
What is unsure about, how many field personnel believe to be paid by even worthless millions.

Resilience. I'm reminded of the south island snowfall back in early 1990s. Places without electricity for 2+ weeks. All those environment positive utilities like heat pumps, pumped septic tank systems, instant activation water pumps, cell tower sites all stopped. That's not a resilient system.
Arguably burning firewood is carbon neutral as it's recycling the carbon. Just like eating food (carbon is in all organic material).

Agreed. And you can grow it with thought aforethought. And burn it more efficiently than in a fireplace.