Mad Max Economics
bit-player.org
bit-player.org
It's not like we lack goals and needs.
There is some hint to this in the ridiculous cash reserves held by some of the big dogs:
http://americasmarkets.usatoday.com/2015/04/27/194b-apple-ca...
They are probably trying very hard to make good use of that money but it is very likely that them being in charge of all that capital is not the most optimal way to generate growth. Each of them is only specialized in a select few markets so for this capital allocation to be optimal it would mean that there would need to be exponential growth in each single market in which the capital is currently held. That is much harder than having exponential growth overall.
And if it is "just" a cash position on their bank accounts, it doesn't mean that said money isn't invested or isn't working. It means that the banks have 194 billion dollars of almost free funding from Apple for their investments.
The structure of the portfolio allocation is also interesting (in rough numbers): 10% cash, 10% short term, 80% long term.
Step 1 starts with an "S" shaped graph of GDP/Capita. Step 2 shows derivative of the curve, but is labeled as dGDP/dt, ignoring dCapita/dt. Author does not consider historical changes in demographics when GDP growth slows.
See demographic changes in Japan, Europe, US for examples of how population growth rates change due to economic and war-related shocks. Also see motivation for China ending the 1 child policy - they want to bring the cost of labor back down and they need a higher pop growth rate to generate enough economic activity to pay pensions, retirement, healthcare for expensive retirement-age cohort where people are living longer and thus costing the country much more.
Author should have challenged Porter's initial claim: "Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist."
While it makes for a good soundbyte, it ignores the symbiotic and (usually) directly proportional but lagged/leading relationship of economic growth and population growth.
We can't make infinite potatoes, but that's not required for infinite growth.
Thus, economic growth is only infinite when all physical goods have zero value. That might happen, but it seems really unlikely.
The value of potatoes have been going towards zero for a long time, anyway. It's not hard to envisage a future with self-maintaining automated farming and fusion energy where potatoes are basically free.
You addressed labor cost, but it is only (the easiest) one amongst several variables. You have effectively changed Porter's claim into: "... exponential growth can go on forever in an ever expanding world..." where your only concern is how to make economy grow faster than population.
Look at your China example. If the root cause of the one-child-policy were a hard biological fact of the human species - i.e. like if women would become sterile after their first successful pregnancy - instead of, well... policy, how would the Chinese government would respondo to the "expensive retirement-age cohort where people are living longer"? Follow the West model and invest in automation whenever feasible? Extend retirement age to 80+? Try to produce a genetically engineered a race of labourers with enhanced chances of having twin (or higher) pregnancies? Gun down the elderly, weak or disabled, and turn them into soylent green? The posibilities are many, but none come without hard tradeoffs and costs, and the ethical dilemas are head spinning.
This argument assumes we are restricted to a finite world. There has been significant discussion about mining asteroids recently, and some very talented people are currently working on plans to settle Mars.
We are constantly learning to make more with less.
Until the finite growth theories start incorporating this notion, I will not treat them seriously.
The other problem I have with these theories, is that they tend to draw very weird and bolshevist crowd who want to start redistributing wealth, rationing out food, and breeding a "stable population" as soon as possible.
If you want to beat a strawman, be my guest. You can even get to call it retarded, it wont care. But to follow with your example.
If you start with 100 people + 50 ingots of iron -> 200 forks + 30 novels. Then you cut your inputs by half:
1. If you want the magic fairy of science to come and sprinkle its progress dust on the ingots so you can keep the same production as before... I am going be calling you something much more offensive than 'retarded'. Most people around here have firts hand experience of how that kind of paralogic results at the end (ahem, Deathmarch).
2. If you value forks badly enough, you might get to produce maybe 120, not the 100 expected, but neither the 200 demanded. You will be able to do this by cutting on the novel writers and put them to figure out better fork designs and more efficient manufacturing projects. You will end up with like 3 novels instead of the expected 15, but probably 10 out of those were going to be crap anyways, so you did not miss much. The best creatives just have to go and express their creativity regardless of financial gain.
3. If you want to push your luck and build 150+ forks, you will succeed in the short term, but then you will face a fork crisis a few years down the road. You cannot apply infinite brain power to make infinitely better physical stuff. If you have only so much iron ore, and you try to make too many forks out of it, the material will be spread too thin and it will break under tenssion. Now your overworked 99 fork makers (1 recognized novellist, 2 moonlighting authors) will have to design a second process to refurbish the broken, low-quality forks, diverting valuable time and resources from making brand new forks.
So, do not dismiss those theories out of hand. You don't have to agree 100% with what they say, but give'em the benefit of doubt and analyse them before making any judgements.
The issue with the crowd that hangs around this "finite growth" thing is another matter. I think they do a diservice to the theories they claim to support by crying "Wolf! Wolf!" like in the old fable.
I was saying, that the total output of the economy is both from physical production and knowledge work. In fact, most of the "first world's" recent growth was knowledge work. Thinking that it grows and shrinks proportionally with only tentatively related inputs is wrong.
And secondly, sustainable exponential growth in a finite world is impossible in the long term. This is undebatable. However, we just might push the long term far enough for it to be irrelevant.
This is the core of the argument. I am not misunderstanding anything.
There are 3 kinds of stuff (for lack of a better term) in the universe: matter, energy and information.
Your argument is that because we have infinitely more information, limits to matter and energy are pointless.
My argument is that, while it is possible to apply information to enhance the matter and energy processes that support our lifes and our lifestyles, there are hard limits on how far we can push this. This is a matter of mathematical certainty. The curve is a negative exponential. Once you have made a physical process twice as efficient, you've already consumed half of the (upper bound of) potential gains. Surely the multiplier can keep growing an growing to infinity, but the hard savings will be marginal the more efficiency you apply to the process.
A second point, which I have not raised so far, is that information itself is subject to the limits of marginal returns. The amount of data that we have keeps growing and growing, but if we lack the processing power to organize it (and I am talking about weat-were here, our computers are not smart enough yet), paradoxically, our capacity to extract any useful application of that data diminishes. There is a name for irrelevant data, noise, and if you mix it with your useful data, you will have to waste processing power to sort it out back.
Merely adding population does not fix this problem. You have to increase the percentage of population that receives high quality education in order to begin surmounting this problem. That means diverting young people from other useful tasks and pursuits and shelther them for year or decades while they learn in a nurturing yet challenging environment.
I am interested in hearing what people think about the claim that economic growth and growth in energy use are coupled. If the two quantities are coupled, how do you respond to arguments like this one? [0]
"Let me restate that important point. No matter what the technology, a sustained 2.3% energy growth rate would require us to produce as much energy as the entire sun within 1400 years. A word of warning: that power plant is going to run a little warm. Thermodynamics require that if we generated sun-comparable power on Earth, the surface of the Earth—being smaller than that of the sun—would have to be hotter than the surface of the sun!"
[0] http://physics.ucsd.edu/do-the-math/2011/07/galactic-scale-e...
What's more relevant to me is that nations with the most mature economies also have the lowest population growth rates. 35 of 241 nations have negative population growth, including Japan, Germany, Poland and Russia. The US has less than 1% growth [3].
So it seems that all things being equal, the Earth's population will trend asymptotically to some maximum due to human nature, and not out of control into crisis, unless it is somehow self-imposed by politics. And it seems likely to me that we'll be able to feed all those people by means of increasing productivity in agriculture and distribution.
[0] https://www.washingtonpost.com/news/wonk/wp/2012/08/16/a-bri...
[1] http://www.nass.usda.gov/Statistics_by_State/Kansas/Publicat...
[2] http://www.ers.usda.gov/data-products/chart-gallery/detail.a...
[3] https://en.wikipedia.org/wiki/List_of_countries_by_populatio...
The answer lies right here but the author fails to consider it. We could evolve our economic systems to redistribute obscene wealth and build a more egalitarian society. The ones who give in this scenario only lose on paper but they wouldn't notice any difference in their day to day. This is especially true once automation becomes the norm. The article is too simplistic and fails to consider a host of important variables which are only now coming into play.
Not losing anything noticeable doesn't stop the super-rich avoiding taxes today. Why would that be different in the future?
There is not enough of what everyone wants. There's no way to get it. Let's take a trivial example. There are a number of companies out there making smartphones. What if everyone wanted iPhones? There may be enough iPhones out there to give one to everyone in, say, New York City. There is not enough, and there will never be enough iPhones to give to everyone in the entire world.
If you're just talking about money, then that's even worse. If you redistributed all the wealth in the entire world among 7 billion people, every person in the whole world would get a check for the princely sum of $8.57. (Obtained by dividing the entire world's money supply, found on Google, by 7 billion, roughly how many people there are in the world right now) Meanwhile every single organization, every single company doing anything useful for the world has been completely decapitalized.
There simply isn't enough wealth in the world. And making everyone equal is the best way I can think of to ensure that no one will ever have the ability to make more wealth. Like it or not, we're stuck with inequality for the foreseeable future. Either people are going to be unequal in purchasing power terms, or in the fact that production capacities for all possible luxuries people might want are not and will never be world-scale. You can't give everyone on the planet a NYC penthouse. And until you do, people will complain about inequality. We need another way of thinking about the problems of the world than that some people have lots and lots of things that other people don't.
This number is way off. That would mean there are only $60B in the entire world, whereas the Fed was until recently creating $85B per month to buy bonds.
Total worldwide wealth is around $241 trillion, which is $34k / person (which I don't think necessarily contradicts your actual point).
You're right though, I missed a few zeros, my figure comes out to $8571.42. Either way, nobody's really better off. Sure, we'd all have enough to build a mud hut, but the damage done to the world order would far outweigh any improvements.
Rich people owning the majority of the wealth is a tautology. If they didn't, then they wouldn't be rich.
Well, that's right...
> What if everyone wanted iPhones? There may be enough iPhones out there to give one to everyone in, say, New York City.
But that's not. Bad example. iPhone production can increase as much as demand asks for. If we let anybody build one, there'll easily be an iPhone for everybody that wants one.
Yet, there are few islands, beachfront properties, waterfalls... The things not available for everybody fall mainly on the non-renewable natural resources, with some slowly renewable ones at the borderline.
We can't make capitalism go away. At least not until humanity changes completely into something that craves what's available at space (mostly energy), instead of what's available at Earth.
What? This statement makes no sense. Here, let me demonstrate by quoting an ancient islander who likes to build statues:
> Tree production can increase as much as demand asks for. If we let anybody grow one, there'll easily be a Tree for everybody that wants to cut one down.
It's absurd! and exactly the thinking that will lead to people cutting down the last tree. iPhones depend on resources just as much as those trees, if not more.
I'm all for the expansion of classes that aren't ultra-rich and ultra-poor. But that process is already happening as fast as it really can happen, it's what globalization is if you can look at it with a rational eye. Through capitalism and markets. Big political solutions are sledgehammers that tend to only wreck things.
How are you going to do this? You can't just print money and give it to them. If you do that, then you're either just creating another, tiny, class of people, or if you do it for everyone, then you're just devaluing your currency through mass inflation. If you take it from people that do have it, then you either have a huge management problem, how are you going to decide which wealth is worth redistributing and which is worth leaving alone, or you'll have mass chaos.
> The way things are going, companies with only a handful of employees can be worth billions.
That's just, like, your opinion man. Mine is that the living standards of the poor have markedly improved in the last 50 years and continue to improve. Purchasing power is only one thing. There's access to food, political stability, access to a social ladder. All of these things are more important than how many dollars are in their pocket. Even the most autocratic nations have in the past few years had to open up.
Nonsense. Globalization is why Walmart can feed the hungry and clothe the naked with cheap food and clothing. Globalization is why Apple, Samsung, LG, OnePlus and other phone manufacturers can produce supercomputers that fit in our pockets.
Globalization benefits us all.
Except nobody knows how and so far all attempts at this failed. I think we have better chances in hoping for fusion power than working model of communism.
We can treat food, housing, and basic healthcare as public goods without going full communist. In fact due to the concentration of state power historical communist society's are less egalitarian than Germany is today.
PS: We also know a lot of things that don't work. Price controls for example cause lot's of problems, so free markets are really useful. The problem is when power is concentrated into the hands of a few you end up with what is effectively a planned economy. ex: Intel's on CPU GPU is good for them, but not the wider economy.
Catalonia in Spain and the Free Territory in Ukraine are the big ones. They lasted for a few years each. Catalonia failed because the Stalinists in Spain betrayed them and that allowed the fascists, backed by Nazi Germany of course to win the civil war. George Orwell fought with the anarchists in Spain. It's very enlightening to read about the social institutions they developed before they were defeated militarily.
The Free Territory was a model of extreme democracy where power was decentralized to an extremely fine-grained level. It was defeated by the Bolsheviks after Trotsky invited anarchist leaders to a joint meeting and then summarily executed them.
Implementing communism does not seem impossible due to internal factors. After a few decades of build-up, both Ukraine and Spain saw the birth of egalitarian communist societies that flourished in the brief time that they were allowed to exist. They were crushed by external authoritarian conquerors.
And how it would fit right in the middle of the "middle ages" if you're looking at it from the perspective of the caliphates.
And for the Mongols, their "Genghis Khan" era was equivalent to our modern era.
The size of our population grows and, because of scientific advance, the amount one person produces increases too.
As long as non of those two factors becomes negative, everything should work fine.
The only problem I see in the future is, that we converted too much of earths bio mass to humans before we are able to get to other planets.
You see per capita productivity increase, where "productivity" not necesarily means "producing more". If you can cut your production in one third and get away with doubling your prices (inelastic market), that couonts as productivity increase: you are producing more Profits with the same Capital investment. If on top of that you go and lay off 40% of your work force, you get the per capita part as well: You are running the same Productive Assets with less Labour.
That last is always a goal of Management, because of (19th century) reasons.
The constraints seem to be our intelligence and perhaps energy. Energy could probably be solved with sufficient intelligence as well--e.g. nuclear fusion.
Negative externalities, such as anthropogenic climate change, are a real concern. We do not yet have good ways to neutralize all of those but it does not mean we never will. It is in some sense a race between consumption and invention.
John McCarthy, a father of AI, wrote a mini-site on this with some strong arguments: Progress and its Sustainability: http://www-formal.stanford.edu/jmc/progress/index.html
How can the GDP/Capita in the Mad Max age stay the same than the GDP/Capita in ~2050?
Shouldn't it go back to the same level as the GDP/Capita during the stone age?
I'm probably missing something there.
Irrelevant, because exponential growth of wealth does not depend on exponential growth in any of these things, or in anything material. Wealth is what you can do, not how much stuff you have; as technology advances, we figure out ways to do the same things as we did before, using fewer material resources (not to mention doing new things that no one could do before--like posting here).
People are much happier and get along much better with everyone else when they expect tomorrow to be better than yesterday.