12 ms·

Can Economic Growth Last?

Machiq 11y ago
Very interesting article. In human history, we have always had periods where growth comes from expansion and then periods where growth comes from innovation. Globalization was an expansion-driven growth phase and we have reached the end of what it can do for global growth - yes there are regions that are still catching up with the rest of the wrold but barring Africa, their population is relatively small so their catch-up will not contribute to significant global growth. We have transitioned into an innovation driven growth-phase now. We'll have to wait for it to start to sputter before we know what kind of expansion-driven growth we will see next. I like the fact that the author thinks of "what comes after" because a lot of the green efforts that we are seeing are looking to prevent climate change/global warming and not enough of preparing for the eventuality that our preventive actions may fail and what would the world look like if we failed and how do we survive & benefit from that.
jevgeni 11y ago
I'm always a bit weary, when people rely on physics or rigid math to derive economic conclusions. In this case the author assumes causation between energy production/consumption and economic growth. The conclusion being that since we have a limited capacity to produce energy on Earth and a limited ability to increase efficiency of energy consumption, growth is therefore limited. Which is true, given the above assumption holds. Real world economics is known however for messing up assumptions, however reasonable.
- skimpycompiler 11y ago
  He obviously added the efficiency to the pot. But energy use is one of the main factors of growth. That is one of the reasons why newly emerging economies from the third world feel like their growth is mutilated by all the requests for reducing carbon emissions. Same reason why China decided to completely ignore the environmental effects, if they had fewer energy sources, their growth wouldn't be as gigantic. It's quite interesting what will happen with India and with countries of the African continent. When they start enjoying their increased standards of living, they might want to use more energy, currently they are just a tiny speck of the world energy use.
  - matt4077 11y ago
    China has actually become quite concerned about the environmental effects of their energy use. Not global warming so much as pollution, but the effect is the same: they're investing heavily in alternative and nuclear energy. Independence from fuel suppliers, becoming the #1 manufacturer of solar arrays and the fact that alternatives are rapidly becoming cheaper are also factors. Maybe some of the now-emerging countries skip the oil/gas/coal phase entirely and go directly to renewables, in the same way that Africa skipped the landline and the traditional banking in favour of mobile phones and apps.
    - sa1 11y ago
      Alternative and nuclear energy use is still energy use. It may not create the same pollution as coal or oil, but that doesn't affect the arguments from the article. Growth of energy use is unsustainable, and that may mean economic growth is unsustainable.
- jacobolus 11y ago
  Friendly note: you probably meant wary.
  - jevgeni 11y ago
    Oh, thanks. :)
- danbruc 11y ago
  So what does the size or growth of an economy fundamentally measure, i.e. how do you quantify the size or growth of an economy without resorting to money at any point? This should help seeing things way clearer than thinking about how to grow an abstract amount of money.
  - icebraining 11y ago
    There are a few suggested alternatives, like https://en.wikipedia.org/wiki/Genuine_progress_indicator https://en.wikipedia.org/wiki/Genuine_progress_indicator
- peterashford 11y ago
  i'm always wary of the tendency of economists to assume that no laws of nature apply to economies.
  - vixen99 11y ago
    Of course they apply but how and to what extent? CO2 is a GHG and we expect some warming in relation to its level. Where is the empirical data unambiguously linking CO2 production and levels to Anthropogenic global warming? Currently we are talking about endless massaged data from various sources generating a global composite temperature of +0.28 C (about 0.50 degrees Fahrenheit) above the 30-year average for August in an El Nino year. http://wattsupwiththat.com/2015/09/11/global-temperature-report-august-2015/ http://wattsupwiththat.com/2015/09/11/global-temperature-rep.... Moreover - http://notrickszone.com/2015/09/09/spiegel-slams-sorrowful-state-of-climate-science-communication-reports-hardly-trustworthy-arrogant-scientists/#sthash.yvfvJx9C.dpbs http://notrickszone.com/2015/09/09/spiegel-slams-sorrowful-s...
  - jevgeni 11y ago
    Well, I find it difficult to imagine, what laws of nature would apply to economics? The best and most resilient example I know is the Black-Scholes equation - a framework to model option prices - based on a heat diffusion equation. Thing is, now it's never used with its original assumptions, but rather with a bunch of fixes. Oh, volatility isn't constant as we thought, let's add stochastic volatility. Oh, stock pricess are fat tailed and don't behave according to a geometric brownian motion, let's add discontinous jumps. Not to mention, that nobody uses historic volatility anymore. A hack of hack of a hack. So much, in fact, that the original elegant theory has just become a sort of convention, how everybody does their calculations. I really don't understand the argument that laws that have been proven to work in one domain should work in another. I think it's a kind of quantitative mysticism.
    - emodendroket 11y ago
      OK. Imagine there are no more fossil fuels tomorrow. Is the economy going to keep chugging along, unaffected by this change?
- notahacker 11y ago
  Several of the commenters below the article do a pretty good job of pulling the article apart because its assumptions simply aren't very good even when faced with today's data (and in the case of aircraft efficiency, are simply wrong). It's so well established that growth in energy use and population have slowed sharply in the industrialised world, and that energy use per unit of real GDP is falling sharply that any argument based on the assumption of constant, exponential rates of growth that doesn't address these points is utterly facile. His assumption that "a certain, finite fraction" of the population must be engaged in agriculture also seems to overlook the fact that this fraction has fallen sharply over time, and has plenty of scope to continue doing so. The assumptions fundamentally aren't reasonable; they're considerably less reasonable than Malthus' arguments that economic growth could never outpace population growth in the first place, which were at least written just before world per capita output started to accelerate. If economics isn't a hard enough science, then getting physicists to do the theorising instead doesn't seem to be helping ;-)
  - danbruc 11y ago
    Then just view it from a different angle - there is only a finite number of people on the planet, they have finite lifespans, they can only consume a finite amount of stuff.
    - notahacker 11y ago
      A finite physical amount of stuff doesn't mean that people won't pay ever increasing amounts for stuff marketed as "better", which is all the growth that's needed for real economic growth patterns to continue, even if "better" requires the same or substantially less energy usage. It's probably a failure of imagination to assume that even the rich nearing the limits for stuff we want to consume too. The amount of GDP spent on healthcare is rocketing in developed nations, not all of that's all down to predatory companies and over-regulation, and it's perfectly rational for people to continue to spend ever-increasing amounts on factors which most significantly impact their quality of life. I also think we've barely scratched the service of what can be done there in future...
- netcan 11y ago
  That's the nail on the head. Once you start getting into these sorts of assumptions about trends and correlations, you really have to have a good understanding of all these inputs. They are all suspect to different degrees across different time horizons and scenarios. What you really have when you put together these predictions is "Given A,B,C & D, this Y is likely to be whatever." That only works when you understand A,B,C & D quite well and keep them in your head. It's also bait for our biases and grand worldviews. I had this massive argument 10 years ago with a politically active friend on the left. He was/is a sort of modern socialist-environmetalist. He brought up exactly this energy-gdp correlation and was extrapolating a log way into the future. It also played into his general sense that GDP growth is an unbecoming central goal for a society and that economic progress is at odds with the environment. It's not a nonsensical perpective. That correlation is relevant. But, you need to get into the subtleties. Even the concept of "economic growth" is an abstract thing. GDP as a measure of economic output is becoming less and less useful metric. Wikipedia consumption contributes nothing to GDP. Some kid torrenting game of thrones contributes nothing to GDP. These things have value, but monetary exchanges are not good proxies for them. Even within the "energy intensive manufacturing" paradigm, an iphone's utility-to-energy cost ratio is a funky thing to try and fit in to the GDP concept which ultimately uses money to measure value. A 2015 iphone is worth more than a 2010 iphone. You can see this if you try to sell one and if you could go back to 2010 in time with a box of 2015 iphones you would see it as well. But beyond that, trying to do price adjustments (which are the basis of "keeping interest rate constant") on a rapidly developing technological product puts you in the weeds. This complexity is exactly why these correlations and trends are interesting They cut through the messiness. I think we should still do this. But… you need to treat these in the same way you'd treat Kurzweil's theories. Interesting, but built on a lot of unknowns. Too many to make you too confident.
  - DanielBMarkham 11y ago
    Yep. Kurzweil's theories are very similar. Also the Drake Equation. Great for late-night BS sessions, and maybe a fine thing to put some faith in -- but it ain't science or logic. "...I had this massive argument 10 years ago with a politically active friend..." Reminds me of a similar story. Worked with a guy many years ago who was a double major, math and physics, I think. Brilliant guy. At the time, he assured me that now was the time to get in the market and bet on oil prices going higher. Peak oil was here! Shortages and chaos were upon us. I pointed out that peak oil had been called many times over the years. It was doubtful we were on that exact spot. In fact, some economists have even said that anything you can dig out of the ground is bound to go down in prices as extraction technology continues to mature. He countered by showing me a study from the U.S. Defense Department (I believe), it showed that yes, indeed, oil was going nowhere but up. I pointed out various examples of this type of thinking failing in the past. He pointed out that things can't continue on forever. Draw a trend line. There's no way that line can continue. Does this discussion sound familiar? We agreed to disagree, and I promised him that I would wait a few years and email him. We would revisit this discussion. Several years passed. Oil was not through the roof. In fact, IIRC, it was about in the same spot as it was before. So I emailed him. I asked him how he felt about his earlier assessment. I did not get a reply. Since then, of course, we have the advent of fracking, and the clear possibility that the U.S. is going to end up as a petroleum exporter, at least for a while. Faith is a fine thing. Heck, I'm a singularian, although I think we're looking at 300-500 years. But it's very important to be cognizant of those things you take on faith. Otherwise you end up having these long discussions in which your main defense is just repeating something along the lines of "science!" or "math!" over and over again.
- hrzn 11y ago
  I don't think that the author assumes the causation that you mention. He says that growth is composed of two parts. One part depends on energy production/consumption and the other part does not -- If you don't like the causation ''energy consumption implies growth'', his theory still holds if you assume that the second part is more important than the first. Because our ability to be energy-efficient is bounded (even if his numbers are imprecise it's difficult to argue against this -- as our stuff cannot be more than 100% efficient), it means that the part of growth that does not rely on energy must take a disproportionate share of the total growth if you look far enough into the future. It precisely seems to me that the assumptions he makes are remarkably minimal.
  - jevgeni 11y ago
    But then you can't make a statement that the growth is bounded, unless you assume that "everything else" is bounded as well. And that's a hefty assumption. I've understood the energy argument as central to the article. Hence the "causation" in my original comment.
- HiYaBarbie 11y ago
  > I'm always a bit weary, when people rely on physics or rigid math to derive economic conclusions. You'll be delighted by Austrian Economics then: http://mises.org http://mises.org They start from some axioms on how humans actually behave, and build everything on top of that.
- dsfsdfd 11y ago
  It blows my mind how far people will go in order to protect the schema which they use to interpret the world. Take a look at yourself, you are bending over backwards attempting to dispute something which is unbelievably obviously true. Unbelievably Obvious. Blows my mind.
  - jevgeni 11y ago
    So, why should I chose energy as a defining factor of global growth and not labour, or other resources?
- emodendroket 11y ago
  > In this case the author assumes causation between energy production/consumption and economic growth. Without increased energy use, vast swathes of the economy clearly could not exist. That is what he spends most of his time proving.
  - crimsonalucard 11y ago
    More like the entire economy wouldn't exist.
    - emodendroket 11y ago
      Some categories (the article mentions psychotherapy, for instance) use very little energy, although they also have output whose value is harder to measure.
- phkahler 11y ago
  >> I'm always a bit weary, when people rely on physics or rigid math to derive economic conclusions. In this case the author assumes causation between energy production/consumption and economic growth. No, the author assumes energy as a prerequisite for economic activity - not a cause. That much is true. There are no significant economic activities that do not depend on energy. The author even suggests that more non-energy activity will be required to sustain economic growth and has a hard time with that.
- crimsonalucard 11y ago
  You're right, except for your statement about the causality between energy and production is more of a Totally Obvious Fact then it is the "assumption" you make it out to be. Almost all of production in a modern economy comes from machines. Machines have been utilized to augment both manual and intellectual capacity. Machines require energy. Therefore our economy runs on energy. Think about it. Why do most people have jobs sitting on their asses typing on a computer instead of searching for food and doing other obvious things related to survival? Because machines are doing the work for us! Because Energy! Let's be real, it's really hard to find an occupation that doesn't involve an energy consuming machine. Take for example: Food. Factory farms, tractors, pesticides all guzzle gasoline like crazy. People assume that if gasoline disappears, you can just start biking to work. The reality is, if gasoline disappears, people will begin to starve. Another example: Big Data and IT. What do you think those servers are running on? Hopes and dreams or Energy? Take your pick. The cities of america are constructed in ways so that the laborer must get in a car and consume a bunch of energy just to get his ass to the location where he actually does work... Our entire infrastructure is built around energy. It goes further then that, our urban infrastructure is built on the assumption that energy is limitless; suburban infrastructure relies on gasoline, once that's gone, so is suburbia. Modern civilization and energy are intrinsically linked. The same way green house gasses and global warming are linked. There is no controversy. Period. In short economic growth is Bounded by an upper limit and that upper limit is indeed energy.
  - jevgeni 11y ago
    In Boolean terms yes. However, a software engineer who writes a hello world program in an hour and a software engineer who writes a ML based high frequency trading algorithm in an hour produce vastly different outputs, but consume the same amount of energy. Energy is a factor of production, just like labour, or commodities, or management. I can take another Totally Obvious Fact and say that growth is caused by the size of educated labour force... Assuming that energy is the defining factor of production either requires justification, or is just an assumption.
    - crimsonalucard 11y ago
skimpycompiler 11y ago
Very nice article, along the lines of The Limits to Growth. It is a big question if technology can solve all of our problems. Technology is definitely a part of the solution but human mentality has to change. Most of the people care about their preferences and standards of living, they do not care to look, nor are they interested in participating in solving the problems of the global scale. When this is the case, it's quite hard to shift to something more sustainable. Through my readings about sustainability I've always been left with a very weird feeling. I'm perfectly aware of what the subject is about, but I can't seem to find any solution that would divert us from the current path, and authors are mostly just commenting on the current situation, being themselves perplexed by the possible solutions.
deleted 11y ago
[deleted]
ClintEhrlich 11y ago
Despite my last name, I'm skeptical about predictions that growth will foreseeably slow down or cease entirely. I believe it was Jim Manzi who coined the concept of the "Icarus Fallacy," in which the experts of each decade invariably predict an energy crisis 30 years hence — just after they will die. Does this demonstrate that current, analogous predictions are false? Certainly lot. But Bayes theorem dictates that the similarity decreases the confidence that one should have in contemporary climate science. I have neither the time nor the inclination to remain current on cutting-edge climate science. Whenever I check in, I find that the critics seem to be getting the better of the argument. But I profess no expertise. I do, however, consider myself reasonably qualified to opine about the state of AGI research. And, despite more than a decade of trying, I have no idea when to forecast the emergence of AGI. I would not be shocked if it happened tomorrow, nor would I be surprised if it occurred 300 years from now — or not at all. I am, however, confident that the emergence of AGI will radically alter the state of the earth, thereby rendering virtually all pre-AGI predictions worthless. The population trends of Africa mean little if some Western nation unleashes a digital demi-god capable of reshaping the earth in its image. The IPCC's failure to account for this effect, which I believe in quite strongly, does not inspire confidence in the reliability of its other data. I do not, of course, mean to imply that it would be reasonable to expect an international panel on climate change to address the risks from artificial intelligence. But that is because there are so many different contingencies that it is silly to make projections so far into the future. It is not at all clear that an energy crisis is even the greatest existential threat that modern man faces.
- skimpycompiler 11y ago
  > I do, however, consider myself reasonably qualified to opine about the state of AGI research. And, despite more than a decade of trying, I have no idea when to forecast the emergence of AGI. I would not be shocked if it happened tomorrow, nor would I be surprised if it occurred 300 years from now — or not at all. I'd be surprised if it comes tomorrow. The leading scientists have little belief that their current methods could be easily adjusted for AGI. All of the leads in AGI currently can't even simulate the problem solving skills of C. elegans. There's not a single AGI project that accomplishes the same skills of a specialized model.
nabla9 11y ago
If economy grows 3% per year and efficiency gains are 3% per year, energy consumption does not grow until we hit the floor where increasing energy efficiency takes too big investments. In practice demand and size of the markets limit potential for growth more than physical limits. Population is important factor both in supply and demand. Even if automation increases, people as the source of demand are important. Investing into microprocessor plant that supplies 10 billion people has different risk and profitability than building similar plant to supply demand from 5 billion.
barrkel 11y ago
So linear growth starves the economic beast, and would force us to abandon our current debt-based financial system of interest and loans. Debt, interest and loans are not dependent on economic growth. Debt is fundamentally about reducing the latency between consumption and production; rather than having to wait until after you've produced something of value, you can consume some of that future production today, in exchange for promising to divert some of that future production. There's nothing here that requires the whole pie to keep on growing.
- vannevar 11y ago
  If Fred and Ginger are an economic system whose total value at time t is $1000 (all of which is in Ginger's bank account), and Ginger loans Fred $500 on the promise that he'll pay her $600 at time t+1, then their agreement is predicated on the assumption that the Fred/Ginger economy will have grown 10% at time t+1.
  - amateurpolymath 11y ago
    No, it is predicated on the assumption that $500 at time t is worth $600 at time t+1.
    - vannevar 11y ago
      In that case Fred could simply pay her back the $500 and she would value it at $600 (ie, deflation). He has to pay her back $100 more in real value than he borrowed, so sometime between t and t+1, someone in the system must produce $100 in new wealth.
      - amateurpolymath 11y ago
        I don't see the problem. Fred can sell his time/labor to make up the difference. If that is not possible for some reason, Fred could also default on the debt. Then the lender takes what she can get and learns not to make loans that cannot be repaid.
cJ0th 11y ago
disclaimer: I haven't read the article very well. If you don't feel like reading some drivel don't read any further. My hunch is that this is the wrong question to ask. Tackling economical issues like this is like wanting to start working out and then spend all your time discussing the best(TM) fitness routine online. No amount of math will save us. After all those years of rapid economical and technological progress we have to acknowledge that it's the human factor we have to work on the most. Economic growth is a tool and we can not use it very wisely as we haven't figured out our society's real needs all that well. We lack collective tacit knowledge so to speak. That what we can codify (at least at the moment) isn't enough to solve our problems. But I think the author is right that a zero-growth economy should be the goal. Because only then resources of all kind could be perfectly allocated. However, this assumes that the perfect allocation of resources is a.) possible and b.) desirable.
dougabug 11y ago
A criticism which seems to be gaining traction is that many traditionally held economic beliefs were not sufficiently established by data, with their adherents often being satisfied with a (single) model, consistent with a limited set of observations. The rise of advanced statistical methods with vast amounts of data is a relatively recent phenomenon. A purported major factor in the collapse of Lehman Brothers was that their economical models failed to anticipate a dramatic drop in property prices because they didn't include data reaching far enough into the past. Much of the machinery for large scale data analysis was developed in the context of trying to understand complex physical systems. Even basic linear regression has its roots in the study of celestial mechanics by scientists such as Laplace and Gauss. Von Neumann was the co-creator of game theory, John Nash proved its foundational result. Economics is not beyond the analytical abilities of physicists and mathematicians to investigate, although certainly they benefit from collaboration with domain experts to resolve basic misunderstandings. Ignoring energy and entropy in a dynamical system does seem a bit curious. It's not really clear that GDP can be made both rigorous and meaningful in the sense of these thermodynamic terms. David Goodstein points out that oil companies haven't produced a drop of oil in their entire existence. They simply process the oil which biophysical forces produced over a hundred million years. This oil (and all other fossil fuels) will run out in something on the order of 100 years. After this, civilization will end. I find his prediction difficult to dismiss, although not a foregone conclusion. All the solutions to the problems Goodstein raises remain speculative.
- Retric 11y ago
  There is several hundred years worth of coal in the ground. Further civilization only started using oil very recently. It's loss mipay seem huge but it's not that important.
  - dougabug 11y ago
    Since our energy consumption has grown exponentially in modern industrial times, most of the energy consumed has been during the age of oil. Further energy is not the only dependency modern civilization has on oil. You can't glibly dismiss Goodstein's analysis. He addresses this belief (canard) that we have hundreds of years of coal in the ground, or that the resource limitations which restrict the future of oil do not also apply to coal. To replace the energy, fuel, industrial and agricultural uses of oil, coal consumption would have to increase by at least 5x, with catastrophic environmental consequences. Goodstein also points out the unreliability of estimated reserves, which in many cases are political rather than scientific.
kfk 11y ago
Yes, it can, if we keep being ambitious as a species. I believe we did not even touch the real potential so far. There is an entire Universe out there, incredibly hard problems not yet solved (i.e. aging), are we really saying that this is it? I believe not, so economic growth will not only last, but it will be even higher if keep pushing our limits.
- emodendroket 11y ago
  What makes you so confident? The author does address the idea that somehow technology might fix our problems.
  - kfk 11y ago
    The fact that growth is really the only way. If you think about it, everything we achieved has been through growth (i.e. how China managed to bring millions from below the poverty line in few decades). We face enormous challenges (i.e. 7 billion people on the planet), without growth we are pretty much doomed. So, it's not so much about confidence, I think is rather hope for us as a species.
    - emodendroket 11y ago
      Well if growth is both the only way and unsustainable then I guess we're in trouble.
keithwhor 11y ago
To answer the title: Yes, because population growth can, in theory, continue indefinitely. Assuming, of course, that we're not restricted to one planet. :)
- crimsonalucard 11y ago
  No theory states that population growth can continue indefinitely. Growth is not only bounded by space availability, but energy as well.
  - keithwhor 11y ago
    I mean --- sure, fair. "Indefinitely," was the wrong word if we're going to be pedantic. But there's certainly orders of magnitude more space and available energy in the Universe than on Earth alone, so we're not restricted to just growing on this planet.
Mikeb85 11y ago
Of course economic growth can last. GDP is just a number, in nominal currency, that measures not just sheer output, but also efficiency, technological progress, etc... In an idyllic future, when we're no longer extracting oil from the ground, no longer working manual labour jobs, etc..., economic output may reflect technology and ideas being created, the dollar will be worth much less (thus more nominal output), and as long as people are engaged in some form of economic activity (buying something, working in any form), we'll have measurable growth.
- slackson 11y ago
  Nominal GDP growth and real GDP growth are very different things, and it's the latter people are referring to. If it was only nominal that mattered, we could have a arbitrary economic growth through inflation.
  - Mikeb85 11y ago
    Even 'real' GDP numbers are boosted by inflation (ie. the price levels of everything rising over time, not just the devaluation of currency). Real GDP is still just a number to compare output between two points in time, still measured in nominal currency (albeit inflation adjusted for say, a 15 year difference). The calculation of 'Real' GDP still is limited, only useful for comparison purposes. Several generations ago, some of my ancestors (my great grandparents) came here and bought their farmland for $10. Now I can barely buy a beer for 10 dollars. Yet we don't measure GDP in 1900 dollars, or in year 3000BC shekels. Regardless, in many ways, my beer today IS worth more than a farm in 1900. My beer was made because of generations of farmers growing grain, building up their homesteads, brewers buying equipment and employed generations of employees, farming equipment improving efficiency, and everything else that goes into the supply chain. Simply put, the value of technological progress is built into current price levels.
- crimsonalucard 11y ago
  I can assure you Mike, Once we stop extracting oil from the ground, EVERYONE will be returning to life a manual labor. The only reason why you aren't doing manual labor on your job right now is because of oil.
bakhy 11y ago
i want to point out just one thing - the problem is not in banks per se, the problem is merely in the expectation that interest rates have to be positive ;)
jbert 11y ago
Is the "but at that kind of energy output we'll boil the planet" limiting case really a hard limit though? If we're at the stage of having super-dense energy sources and super-tech, couldn't we we use those to cool the planet effectively? Use a heat pump to move that heat off-planet? Drop some icy asteroids in the seas? Take compressed hot atmosphere off-planet in super-blimps, run it through a heat exchanger on Titan and then bring it back?
- Symmetry 11y ago
  In the end the resources available to a civilization can only expand as the third power of time due to the speed of light limit. That means that the laws of physics do prohibit an indefinite exponential increase in energy use, baring new discoveries that look pretty unlikely.
wahsd 11y ago
Economic growth could theoretically last, the problem is that the system is no where near properly structured to not cause deliberate bubbles and bust. It is odd that only very few people understand what the fundamental cause of economic growth, bubbles, and bursts is. They can all be tied back to deliberate manipulation to edge one group higher at the expense of another. The trite saying is true, economics is not a zero sum game, but besides that being totally irrelevant and a red herring to disperse challenge, the economy is very much not an infinite system and directly tied to the extraction of resources, whether natural or human.
amelius 11y ago
> Can Economic Growth Last? Not if a big chunk of the growth comes from the entertainment industry (Netflix et al.)
elcct 11y ago
Natural brake for economy is when scammers that call themselves "socialists" come into play. They prey on people's desire to get rewarded for doing nothing. They promise to rob hardworking people of their income in exchange for votes.
kaonashi 11y ago
Nominally, yes. The mistake here is to assume there is a hard link between nominal growth and energy use.
crimsonalucard 11y ago
The answer to this question is really simple. It's not complicated at all. Allow me to explain. Finance has abstracted economics from the real world into mathematical magic. People get into these complicated debates about concepts, acronyms, abstractions and GDP, when the reality is right in front of your face. Think about it: In what reality can economic growth continue indefinitely into infinity? In what reality is there an unlimited supply of goods to satisfy boundless demand? Let me say unequivocally the answer to the question: can economic growth last? NO.
- Retra 11y ago
  Economic value is not tied solely to natural resources. It is tied to abstractions. Economic growth is itself an abstraction. Most of the value that's produced in the world is a matter of language. Overcoming barriers to communication. That's not a finite resource, and we're nowhere near saturated in our ability to grow in this area.
- Mikeb85 11y ago
  > In what reality can economic growth continue indefinitely into infinity? In what reality is there an unlimited supply of goods to satisfy boundless demand? There doesn't need to be an unlimited supply of anything except economic activity. Economic activity is defined more or less as any exchange of goods and services (including labour). If I decide to go to the pub and recite poetry, and someone decides to give me money for reciting poetry, we have economic activity. Another example. Take a brand new model year 2015 automobile, and contrast to a 2014 model with the same badge. The 2015 will be priced higher. Why? Because we assume it's better - more technology, maybe more features. Even if both have never been driven off the lot. Another poster made the comparison between a 2010 and 2015 iPhone. Even if both are in the original packaging, there will be a price difference. It's in this way that technology is factored in to economic growth. In the future, as long as technology increases (which it likely will), even if the output of raw material decreases, even if we don't pull out as many resources, economic activity can still increase in value. > Finance has abstracted economics from the real world into mathematical magic. To a certain degree, yes. Much like computing has abstracted transistors and electronic circuits into something that allows us to write plain English into an abstraction (HTML and such) that's interpreted through another abstraction (browser) that's implemented on top of another abstraction (OS) that's implemented with another abstraction (compiled language) over a language (assembly) that's a nicer façade over what the hardware actually interprets (machine language). The language of Economics allows us to quantify what happens in the real world, and create abstractions to allow us to make sense of how it all works.
skybrian 11y ago
It might be interesting to think about the theoretical endpoint for farming. The number of workers needed went down dramatically when they were replaced by machines. In theory the machines could be made cheaper. What's left? The land and other physical resources like water. Land gets a certain amount of solar radiation that's converted into food. Available farmland goes down as it's built over, but that can't go on forever. Eventually, there's going to be an equilibrium since available sunlight is limited. Or we find another energy source (let's say nuclear) and need to figure out where to dump the heat. In the limit it's about global warming. Contrast with entertainment. What theoretical constraints are there preventing all the entertainment you could possibly want being available for free? In the end it's not going to take a big solar panel to power your entertainment center. I'd bet on entertainment getting cheaper faster than anything else once AI really kicks in. It might be a while before physics wins, though.
JamesBarney 11y ago
It seems to me like the TLDR of the article is 1. Energy use per capita cannot grow indefintely. - Agreed 2. The economy cannot grow without energy growth - Disagree (see chart in [0] shows that energy use per capita peaked in the 1970s and we most certainly have had growth since then) 3. Our current economic system is based on growth and would collapse if we didn't have growth. - Disagree (he just kind makes this assumption and doesn't go into details) 4. We should transition to a steady state economy - Disagree (Why should we stop growing now to avoid the potential problemof not growing in the future.) [0] - http://www.npr.org/sections/money/2013/04/10/176801719/two-centuries-of-energy-in-america-in-four-graphs http://www.npr.org/sections/money/2013/04/10/176801719/two-c...
zachrose 11y ago
For perspective, if could invest one cent in a fund that grew at 2% annually over the last 2000 years, you would have 1.58 quadrillion dollars today.

Very interesting article. In human history, we have always had periods where growth comes from expansion and then periods where growth comes from innovation. Globalization was an expansion-driven growth phase and we have reached the end of what it can do for global growth - yes there are regions that are still catching up with the rest of the wrold but barring Africa, their population is relatively small so their catch-up will not contribute to significant global growth. We have transitioned into an innovation driven growth-phase now. We'll have to wait for it to start to sputter before we know what kind of expansion-driven growth we will see next. I like the fact that the author thinks of "what comes after" because a lot of the green efforts that we are seeing are looking to prevent climate change/global warming and not enough of preparing for the eventuality that our preventive actions may fail and what would the world look like if we failed and how do we survive & benefit from that.

jevgeni 11y ago

I'm always a bit weary, when people rely on physics or rigid math to derive economic conclusions. In this case the author assumes causation between energy production/consumption and economic growth. The conclusion being that since we have a limited capacity to produce energy on Earth and a limited ability to increase efficiency of energy consumption, growth is therefore limited. Which is true, given the above assumption holds. Real world economics is known however for messing up assumptions, however reasonable.

skimpycompiler 11y ago
He obviously added the efficiency to the pot. But energy use is one of the main factors of growth. That is one of the reasons why newly emerging economies from the third world feel like their growth is mutilated by all the requests for reducing carbon emissions. Same reason why China decided to completely ignore the environmental effects, if they had fewer energy sources, their growth wouldn't be as gigantic. It's quite interesting what will happen with India and with countries of the African continent. When they start enjoying their increased standards of living, they might want to use more energy, currently they are just a tiny speck of the world energy use.
- matt4077 11y ago
  China has actually become quite concerned about the environmental effects of their energy use. Not global warming so much as pollution, but the effect is the same: they're investing heavily in alternative and nuclear energy. Independence from fuel suppliers, becoming the #1 manufacturer of solar arrays and the fact that alternatives are rapidly becoming cheaper are also factors. Maybe some of the now-emerging countries skip the oil/gas/coal phase entirely and go directly to renewables, in the same way that Africa skipped the landline and the traditional banking in favour of mobile phones and apps.
  - sa1 11y ago
    Alternative and nuclear energy use is still energy use. It may not create the same pollution as coal or oil, but that doesn't affect the arguments from the article. Growth of energy use is unsustainable, and that may mean economic growth is unsustainable.
jacobolus 11y ago
Friendly note: you probably meant wary.
- jevgeni 11y ago
  Oh, thanks. :)
danbruc 11y ago
So what does the size or growth of an economy fundamentally measure, i.e. how do you quantify the size or growth of an economy without resorting to money at any point? This should help seeing things way clearer than thinking about how to grow an abstract amount of money.
- icebraining 11y ago
  There are a few suggested alternatives, like https://en.wikipedia.org/wiki/Genuine_progress_indicator https://en.wikipedia.org/wiki/Genuine_progress_indicator
peterashford 11y ago
i'm always wary of the tendency of economists to assume that no laws of nature apply to economies.
- vixen99 11y ago
  Of course they apply but how and to what extent? CO2 is a GHG and we expect some warming in relation to its level. Where is the empirical data unambiguously linking CO2 production and levels to Anthropogenic global warming? Currently we are talking about endless massaged data from various sources generating a global composite temperature of +0.28 C (about 0.50 degrees Fahrenheit) above the 30-year average for August in an El Nino year. http://wattsupwiththat.com/2015/09/11/global-temperature-report-august-2015/ http://wattsupwiththat.com/2015/09/11/global-temperature-rep.... Moreover - http://notrickszone.com/2015/09/09/spiegel-slams-sorrowful-state-of-climate-science-communication-reports-hardly-trustworthy-arrogant-scientists/#sthash.yvfvJx9C.dpbs http://notrickszone.com/2015/09/09/spiegel-slams-sorrowful-s...
- jevgeni 11y ago
  Well, I find it difficult to imagine, what laws of nature would apply to economics? The best and most resilient example I know is the Black-Scholes equation - a framework to model option prices - based on a heat diffusion equation. Thing is, now it's never used with its original assumptions, but rather with a bunch of fixes. Oh, volatility isn't constant as we thought, let's add stochastic volatility. Oh, stock pricess are fat tailed and don't behave according to a geometric brownian motion, let's add discontinous jumps. Not to mention, that nobody uses historic volatility anymore. A hack of hack of a hack. So much, in fact, that the original elegant theory has just become a sort of convention, how everybody does their calculations. I really don't understand the argument that laws that have been proven to work in one domain should work in another. I think it's a kind of quantitative mysticism.
  - emodendroket 11y ago
    OK. Imagine there are no more fossil fuels tomorrow. Is the economy going to keep chugging along, unaffected by this change?
notahacker 11y ago
Several of the commenters below the article do a pretty good job of pulling the article apart because its assumptions simply aren't very good even when faced with today's data (and in the case of aircraft efficiency, are simply wrong). It's so well established that growth in energy use and population have slowed sharply in the industrialised world, and that energy use per unit of real GDP is falling sharply that any argument based on the assumption of constant, exponential rates of growth that doesn't address these points is utterly facile. His assumption that "a certain, finite fraction" of the population must be engaged in agriculture also seems to overlook the fact that this fraction has fallen sharply over time, and has plenty of scope to continue doing so. The assumptions fundamentally aren't reasonable; they're considerably less reasonable than Malthus' arguments that economic growth could never outpace population growth in the first place, which were at least written just before world per capita output started to accelerate. If economics isn't a hard enough science, then getting physicists to do the theorising instead doesn't seem to be helping ;-)
- danbruc 11y ago
  Then just view it from a different angle - there is only a finite number of people on the planet, they have finite lifespans, they can only consume a finite amount of stuff.
  - notahacker 11y ago
    A finite physical amount of stuff doesn't mean that people won't pay ever increasing amounts for stuff marketed as "better", which is all the growth that's needed for real economic growth patterns to continue, even if "better" requires the same or substantially less energy usage. It's probably a failure of imagination to assume that even the rich nearing the limits for stuff we want to consume too. The amount of GDP spent on healthcare is rocketing in developed nations, not all of that's all down to predatory companies and over-regulation, and it's perfectly rational for people to continue to spend ever-increasing amounts on factors which most significantly impact their quality of life. I also think we've barely scratched the service of what can be done there in future...
netcan 11y ago
That's the nail on the head. Once you start getting into these sorts of assumptions about trends and correlations, you really have to have a good understanding of all these inputs. They are all suspect to different degrees across different time horizons and scenarios. What you really have when you put together these predictions is "Given A,B,C & D, this Y is likely to be whatever." That only works when you understand A,B,C & D quite well and keep them in your head. It's also bait for our biases and grand worldviews. I had this massive argument 10 years ago with a politically active friend on the left. He was/is a sort of modern socialist-environmetalist. He brought up exactly this energy-gdp correlation and was extrapolating a log way into the future. It also played into his general sense that GDP growth is an unbecoming central goal for a society and that economic progress is at odds with the environment. It's not a nonsensical perpective. That correlation is relevant. But, you need to get into the subtleties. Even the concept of "economic growth" is an abstract thing. GDP as a measure of economic output is becoming less and less useful metric. Wikipedia consumption contributes nothing to GDP. Some kid torrenting game of thrones contributes nothing to GDP. These things have value, but monetary exchanges are not good proxies for them. Even within the "energy intensive manufacturing" paradigm, an iphone's utility-to-energy cost ratio is a funky thing to try and fit in to the GDP concept which ultimately uses money to measure value. A 2015 iphone is worth more than a 2010 iphone. You can see this if you try to sell one and if you could go back to 2010 in time with a box of 2015 iphones you would see it as well. But beyond that, trying to do price adjustments (which are the basis of "keeping interest rate constant") on a rapidly developing technological product puts you in the weeds. This complexity is exactly why these correlations and trends are interesting They cut through the messiness. I think we should still do this. But… you need to treat these in the same way you'd treat Kurzweil's theories. Interesting, but built on a lot of unknowns. Too many to make you too confident.
- DanielBMarkham 11y ago
  Yep. Kurzweil's theories are very similar. Also the Drake Equation. Great for late-night BS sessions, and maybe a fine thing to put some faith in -- but it ain't science or logic. "...I had this massive argument 10 years ago with a politically active friend..." Reminds me of a similar story. Worked with a guy many years ago who was a double major, math and physics, I think. Brilliant guy. At the time, he assured me that now was the time to get in the market and bet on oil prices going higher. Peak oil was here! Shortages and chaos were upon us. I pointed out that peak oil had been called many times over the years. It was doubtful we were on that exact spot. In fact, some economists have even said that anything you can dig out of the ground is bound to go down in prices as extraction technology continues to mature. He countered by showing me a study from the U.S. Defense Department (I believe), it showed that yes, indeed, oil was going nowhere but up. I pointed out various examples of this type of thinking failing in the past. He pointed out that things can't continue on forever. Draw a trend line. There's no way that line can continue. Does this discussion sound familiar? We agreed to disagree, and I promised him that I would wait a few years and email him. We would revisit this discussion. Several years passed. Oil was not through the roof. In fact, IIRC, it was about in the same spot as it was before. So I emailed him. I asked him how he felt about his earlier assessment. I did not get a reply. Since then, of course, we have the advent of fracking, and the clear possibility that the U.S. is going to end up as a petroleum exporter, at least for a while. Faith is a fine thing. Heck, I'm a singularian, although I think we're looking at 300-500 years. But it's very important to be cognizant of those things you take on faith. Otherwise you end up having these long discussions in which your main defense is just repeating something along the lines of "science!" or "math!" over and over again.
hrzn 11y ago
I don't think that the author assumes the causation that you mention. He says that growth is composed of two parts. One part depends on energy production/consumption and the other part does not -- If you don't like the causation ''energy consumption implies growth'', his theory still holds if you assume that the second part is more important than the first. Because our ability to be energy-efficient is bounded (even if his numbers are imprecise it's difficult to argue against this -- as our stuff cannot be more than 100% efficient), it means that the part of growth that does not rely on energy must take a disproportionate share of the total growth if you look far enough into the future. It precisely seems to me that the assumptions he makes are remarkably minimal.
- jevgeni 11y ago
  But then you can't make a statement that the growth is bounded, unless you assume that "everything else" is bounded as well. And that's a hefty assumption. I've understood the energy argument as central to the article. Hence the "causation" in my original comment.
HiYaBarbie 11y ago
> I'm always a bit weary, when people rely on physics or rigid math to derive economic conclusions. You'll be delighted by Austrian Economics then: http://mises.org http://mises.org They start from some axioms on how humans actually behave, and build everything on top of that.
dsfsdfd 11y ago
It blows my mind how far people will go in order to protect the schema which they use to interpret the world. Take a look at yourself, you are bending over backwards attempting to dispute something which is unbelievably obviously true. Unbelievably Obvious. Blows my mind.
- jevgeni 11y ago
  So, why should I chose energy as a defining factor of global growth and not labour, or other resources?
emodendroket 11y ago
> In this case the author assumes causation between energy production/consumption and economic growth. Without increased energy use, vast swathes of the economy clearly could not exist. That is what he spends most of his time proving.
- crimsonalucard 11y ago
  More like the entire economy wouldn't exist.
  - emodendroket 11y ago
    Some categories (the article mentions psychotherapy, for instance) use very little energy, although they also have output whose value is harder to measure.
phkahler 11y ago
>> I'm always a bit weary, when people rely on physics or rigid math to derive economic conclusions. In this case the author assumes causation between energy production/consumption and economic growth. No, the author assumes energy as a prerequisite for economic activity - not a cause. That much is true. There are no significant economic activities that do not depend on energy. The author even suggests that more non-energy activity will be required to sustain economic growth and has a hard time with that.
crimsonalucard 11y ago
You're right, except for your statement about the causality between energy and production is more of a Totally Obvious Fact then it is the "assumption" you make it out to be. Almost all of production in a modern economy comes from machines. Machines have been utilized to augment both manual and intellectual capacity. Machines require energy. Therefore our economy runs on energy. Think about it. Why do most people have jobs sitting on their asses typing on a computer instead of searching for food and doing other obvious things related to survival? Because machines are doing the work for us! Because Energy! Let's be real, it's really hard to find an occupation that doesn't involve an energy consuming machine. Take for example: Food. Factory farms, tractors, pesticides all guzzle gasoline like crazy. People assume that if gasoline disappears, you can just start biking to work. The reality is, if gasoline disappears, people will begin to starve. Another example: Big Data and IT. What do you think those servers are running on? Hopes and dreams or Energy? Take your pick. The cities of america are constructed in ways so that the laborer must get in a car and consume a bunch of energy just to get his ass to the location where he actually does work... Our entire infrastructure is built around energy. It goes further then that, our urban infrastructure is built on the assumption that energy is limitless; suburban infrastructure relies on gasoline, once that's gone, so is suburbia. Modern civilization and energy are intrinsically linked. The same way green house gasses and global warming are linked. There is no controversy. Period. In short economic growth is Bounded by an upper limit and that upper limit is indeed energy.
- jevgeni 11y ago
  In Boolean terms yes. However, a software engineer who writes a hello world program in an hour and a software engineer who writes a ML based high frequency trading algorithm in an hour produce vastly different outputs, but consume the same amount of energy. Energy is a factor of production, just like labour, or commodities, or management. I can take another Totally Obvious Fact and say that growth is caused by the size of educated labour force... Assuming that energy is the defining factor of production either requires justification, or is just an assumption.
  - crimsonalucard 11y ago

skimpycompiler 11y ago

Very nice article, along the lines of The Limits to Growth. It is a big question if technology can solve all of our problems. Technology is definitely a part of the solution but human mentality has to change. Most of the people care about their preferences and standards of living, they do not care to look, nor are they interested in participating in solving the problems of the global scale. When this is the case, it's quite hard to shift to something more sustainable. Through my readings about sustainability I've always been left with a very weird feeling. I'm perfectly aware of what the subject is about, but I can't seem to find any solution that would divert us from the current path, and authors are mostly just commenting on the current situation, being themselves perplexed by the possible solutions.

deleted 11y ago

[deleted]

ClintEhrlich 11y ago

Despite my last name, I'm skeptical about predictions that growth will foreseeably slow down or cease entirely. I believe it was Jim Manzi who coined the concept of the "Icarus Fallacy," in which the experts of each decade invariably predict an energy crisis 30 years hence — just after they will die. Does this demonstrate that current, analogous predictions are false? Certainly lot. But Bayes theorem dictates that the similarity decreases the confidence that one should have in contemporary climate science. I have neither the time nor the inclination to remain current on cutting-edge climate science. Whenever I check in, I find that the critics seem to be getting the better of the argument. But I profess no expertise. I do, however, consider myself reasonably qualified to opine about the state of AGI research. And, despite more than a decade of trying, I have no idea when to forecast the emergence of AGI. I would not be shocked if it happened tomorrow, nor would I be surprised if it occurred 300 years from now — or not at all. I am, however, confident that the emergence of AGI will radically alter the state of the earth, thereby rendering virtually all pre-AGI predictions worthless. The population trends of Africa mean little if some Western nation unleashes a digital demi-god capable of reshaping the earth in its image. The IPCC's failure to account for this effect, which I believe in quite strongly, does not inspire confidence in the reliability of its other data. I do not, of course, mean to imply that it would be reasonable to expect an international panel on climate change to address the risks from artificial intelligence. But that is because there are so many different contingencies that it is silly to make projections so far into the future. It is not at all clear that an energy crisis is even the greatest existential threat that modern man faces.

skimpycompiler 11y ago
> I do, however, consider myself reasonably qualified to opine about the state of AGI research. And, despite more than a decade of trying, I have no idea when to forecast the emergence of AGI. I would not be shocked if it happened tomorrow, nor would I be surprised if it occurred 300 years from now — or not at all. I'd be surprised if it comes tomorrow. The leading scientists have little belief that their current methods could be easily adjusted for AGI. All of the leads in AGI currently can't even simulate the problem solving skills of C. elegans. There's not a single AGI project that accomplishes the same skills of a specialized model.

nabla9 11y ago

If economy grows 3% per year and efficiency gains are 3% per year, energy consumption does not grow until we hit the floor where increasing energy efficiency takes too big investments. In practice demand and size of the markets limit potential for growth more than physical limits. Population is important factor both in supply and demand. Even if automation increases, people as the source of demand are important. Investing into microprocessor plant that supplies 10 billion people has different risk and profitability than building similar plant to supply demand from 5 billion.

barrkel 11y ago

So linear growth starves the economic beast, and would force us to abandon our current debt-based financial system of interest and loans. Debt, interest and loans are not dependent on economic growth. Debt is fundamentally about reducing the latency between consumption and production; rather than having to wait until after you've produced something of value, you can consume some of that future production today, in exchange for promising to divert some of that future production. There's nothing here that requires the whole pie to keep on growing.

vannevar 11y ago
If Fred and Ginger are an economic system whose total value at time t is $1000 (all of which is in Ginger's bank account), and Ginger loans Fred $500 on the promise that he'll pay her $600 at time t+1, then their agreement is predicated on the assumption that the Fred/Ginger economy will have grown 10% at time t+1.
- amateurpolymath 11y ago
  No, it is predicated on the assumption that $500 at time t is worth $600 at time t+1.
  - vannevar 11y ago
    In that case Fred could simply pay her back the $500 and she would value it at $600 (ie, deflation). He has to pay her back $100 more in real value than he borrowed, so sometime between t and t+1, someone in the system must produce $100 in new wealth.
    - amateurpolymath 11y ago
      I don't see the problem. Fred can sell his time/labor to make up the difference. If that is not possible for some reason, Fred could also default on the debt. Then the lender takes what she can get and learns not to make loans that cannot be repaid.

cJ0th 11y ago

disclaimer: I haven't read the article very well. If you don't feel like reading some drivel don't read any further. My hunch is that this is the wrong question to ask. Tackling economical issues like this is like wanting to start working out and then spend all your time discussing the best(TM) fitness routine online. No amount of math will save us. After all those years of rapid economical and technological progress we have to acknowledge that it's the human factor we have to work on the most. Economic growth is a tool and we can not use it very wisely as we haven't figured out our society's real needs all that well. We lack collective tacit knowledge so to speak. That what we can codify (at least at the moment) isn't enough to solve our problems. But I think the author is right that a zero-growth economy should be the goal. Because only then resources of all kind could be perfectly allocated. However, this assumes that the perfect allocation of resources is a.) possible and b.) desirable.

dougabug 11y ago

A criticism which seems to be gaining traction is that many traditionally held economic beliefs were not sufficiently established by data, with their adherents often being satisfied with a (single) model, consistent with a limited set of observations. The rise of advanced statistical methods with vast amounts of data is a relatively recent phenomenon. A purported major factor in the collapse of Lehman Brothers was that their economical models failed to anticipate a dramatic drop in property prices because they didn't include data reaching far enough into the past. Much of the machinery for large scale data analysis was developed in the context of trying to understand complex physical systems. Even basic linear regression has its roots in the study of celestial mechanics by scientists such as Laplace and Gauss. Von Neumann was the co-creator of game theory, John Nash proved its foundational result. Economics is not beyond the analytical abilities of physicists and mathematicians to investigate, although certainly they benefit from collaboration with domain experts to resolve basic misunderstandings. Ignoring energy and entropy in a dynamical system does seem a bit curious. It's not really clear that GDP can be made both rigorous and meaningful in the sense of these thermodynamic terms. David Goodstein points out that oil companies haven't produced a drop of oil in their entire existence. They simply process the oil which biophysical forces produced over a hundred million years. This oil (and all other fossil fuels) will run out in something on the order of 100 years. After this, civilization will end. I find his prediction difficult to dismiss, although not a foregone conclusion. All the solutions to the problems Goodstein raises remain speculative.

Retric 11y ago
There is several hundred years worth of coal in the ground. Further civilization only started using oil very recently. It's loss mipay seem huge but it's not that important.
- dougabug 11y ago
  Since our energy consumption has grown exponentially in modern industrial times, most of the energy consumed has been during the age of oil. Further energy is not the only dependency modern civilization has on oil. You can't glibly dismiss Goodstein's analysis. He addresses this belief (canard) that we have hundreds of years of coal in the ground, or that the resource limitations which restrict the future of oil do not also apply to coal. To replace the energy, fuel, industrial and agricultural uses of oil, coal consumption would have to increase by at least 5x, with catastrophic environmental consequences. Goodstein also points out the unreliability of estimated reserves, which in many cases are political rather than scientific.

kfk 11y ago

Yes, it can, if we keep being ambitious as a species. I believe we did not even touch the real potential so far. There is an entire Universe out there, incredibly hard problems not yet solved (i.e. aging), are we really saying that this is it? I believe not, so economic growth will not only last, but it will be even higher if keep pushing our limits.

emodendroket 11y ago
What makes you so confident? The author does address the idea that somehow technology might fix our problems.
- kfk 11y ago
  The fact that growth is really the only way. If you think about it, everything we achieved has been through growth (i.e. how China managed to bring millions from below the poverty line in few decades). We face enormous challenges (i.e. 7 billion people on the planet), without growth we are pretty much doomed. So, it's not so much about confidence, I think is rather hope for us as a species.
  - emodendroket 11y ago
    Well if growth is both the only way and unsustainable then I guess we're in trouble.

keithwhor 11y ago

To answer the title: Yes, because population growth can, in theory, continue indefinitely. Assuming, of course, that we're not restricted to one planet. :)

crimsonalucard 11y ago
No theory states that population growth can continue indefinitely. Growth is not only bounded by space availability, but energy as well.
- keithwhor 11y ago
  I mean --- sure, fair. "Indefinitely," was the wrong word if we're going to be pedantic. But there's certainly orders of magnitude more space and available energy in the Universe than on Earth alone, so we're not restricted to just growing on this planet.

Mikeb85 11y ago

Of course economic growth can last. GDP is just a number, in nominal currency, that measures not just sheer output, but also efficiency, technological progress, etc... In an idyllic future, when we're no longer extracting oil from the ground, no longer working manual labour jobs, etc..., economic output may reflect technology and ideas being created, the dollar will be worth much less (thus more nominal output), and as long as people are engaged in some form of economic activity (buying something, working in any form), we'll have measurable growth.

slackson 11y ago
Nominal GDP growth and real GDP growth are very different things, and it's the latter people are referring to. If it was only nominal that mattered, we could have a arbitrary economic growth through inflation.
- Mikeb85 11y ago
  Even 'real' GDP numbers are boosted by inflation (ie. the price levels of everything rising over time, not just the devaluation of currency). Real GDP is still just a number to compare output between two points in time, still measured in nominal currency (albeit inflation adjusted for say, a 15 year difference). The calculation of 'Real' GDP still is limited, only useful for comparison purposes. Several generations ago, some of my ancestors (my great grandparents) came here and bought their farmland for $10. Now I can barely buy a beer for 10 dollars. Yet we don't measure GDP in 1900 dollars, or in year 3000BC shekels. Regardless, in many ways, my beer today IS worth more than a farm in 1900. My beer was made because of generations of farmers growing grain, building up their homesteads, brewers buying equipment and employed generations of employees, farming equipment improving efficiency, and everything else that goes into the supply chain. Simply put, the value of technological progress is built into current price levels.
crimsonalucard 11y ago
I can assure you Mike, Once we stop extracting oil from the ground, EVERYONE will be returning to life a manual labor. The only reason why you aren't doing manual labor on your job right now is because of oil.

bakhy 11y ago

i want to point out just one thing - the problem is not in banks per se, the problem is merely in the expectation that interest rates have to be positive ;)

jbert 11y ago

Is the "but at that kind of energy output we'll boil the planet" limiting case really a hard limit though? If we're at the stage of having super-dense energy sources and super-tech, couldn't we we use those to cool the planet effectively? Use a heat pump to move that heat off-planet? Drop some icy asteroids in the seas? Take compressed hot atmosphere off-planet in super-blimps, run it through a heat exchanger on Titan and then bring it back?

Symmetry 11y ago
In the end the resources available to a civilization can only expand as the third power of time due to the speed of light limit. That means that the laws of physics do prohibit an indefinite exponential increase in energy use, baring new discoveries that look pretty unlikely.

wahsd 11y ago

Economic growth could theoretically last, the problem is that the system is no where near properly structured to not cause deliberate bubbles and bust. It is odd that only very few people understand what the fundamental cause of economic growth, bubbles, and bursts is. They can all be tied back to deliberate manipulation to edge one group higher at the expense of another. The trite saying is true, economics is not a zero sum game, but besides that being totally irrelevant and a red herring to disperse challenge, the economy is very much not an infinite system and directly tied to the extraction of resources, whether natural or human.

amelius 11y ago

> Can Economic Growth Last? Not if a big chunk of the growth comes from the entertainment industry (Netflix et al.)

elcct 11y ago

Natural brake for economy is when scammers that call themselves "socialists" come into play. They prey on people's desire to get rewarded for doing nothing. They promise to rob hardworking people of their income in exchange for votes.

kaonashi 11y ago

Nominally, yes. The mistake here is to assume there is a hard link between nominal growth and energy use.

crimsonalucard 11y ago

The answer to this question is really simple. It's not complicated at all. Allow me to explain. Finance has abstracted economics from the real world into mathematical magic. People get into these complicated debates about concepts, acronyms, abstractions and GDP, when the reality is right in front of your face. Think about it: In what reality can economic growth continue indefinitely into infinity? In what reality is there an unlimited supply of goods to satisfy boundless demand? Let me say unequivocally the answer to the question: can economic growth last? NO.

Retra 11y ago
Economic value is not tied solely to natural resources. It is tied to abstractions. Economic growth is itself an abstraction. Most of the value that's produced in the world is a matter of language. Overcoming barriers to communication. That's not a finite resource, and we're nowhere near saturated in our ability to grow in this area.
Mikeb85 11y ago
> In what reality can economic growth continue indefinitely into infinity? In what reality is there an unlimited supply of goods to satisfy boundless demand? There doesn't need to be an unlimited supply of anything except economic activity. Economic activity is defined more or less as any exchange of goods and services (including labour). If I decide to go to the pub and recite poetry, and someone decides to give me money for reciting poetry, we have economic activity. Another example. Take a brand new model year 2015 automobile, and contrast to a 2014 model with the same badge. The 2015 will be priced higher. Why? Because we assume it's better - more technology, maybe more features. Even if both have never been driven off the lot. Another poster made the comparison between a 2010 and 2015 iPhone. Even if both are in the original packaging, there will be a price difference. It's in this way that technology is factored in to economic growth. In the future, as long as technology increases (which it likely will), even if the output of raw material decreases, even if we don't pull out as many resources, economic activity can still increase in value. > Finance has abstracted economics from the real world into mathematical magic. To a certain degree, yes. Much like computing has abstracted transistors and electronic circuits into something that allows us to write plain English into an abstraction (HTML and such) that's interpreted through another abstraction (browser) that's implemented on top of another abstraction (OS) that's implemented with another abstraction (compiled language) over a language (assembly) that's a nicer façade over what the hardware actually interprets (machine language). The language of Economics allows us to quantify what happens in the real world, and create abstractions to allow us to make sense of how it all works.

skybrian 11y ago

It might be interesting to think about the theoretical endpoint for farming. The number of workers needed went down dramatically when they were replaced by machines. In theory the machines could be made cheaper. What's left? The land and other physical resources like water. Land gets a certain amount of solar radiation that's converted into food. Available farmland goes down as it's built over, but that can't go on forever. Eventually, there's going to be an equilibrium since available sunlight is limited. Or we find another energy source (let's say nuclear) and need to figure out where to dump the heat. In the limit it's about global warming. Contrast with entertainment. What theoretical constraints are there preventing all the entertainment you could possibly want being available for free? In the end it's not going to take a big solar panel to power your entertainment center. I'd bet on entertainment getting cheaper faster than anything else once AI really kicks in. It might be a while before physics wins, though.

JamesBarney 11y ago

It seems to me like the TLDR of the article is 1. Energy use per capita cannot grow indefintely. - Agreed 2. The economy cannot grow without energy growth - Disagree (see chart in [0] shows that energy use per capita peaked in the 1970s and we most certainly have had growth since then) 3. Our current economic system is based on growth and would collapse if we didn't have growth. - Disagree (he just kind makes this assumption and doesn't go into details) 4. We should transition to a steady state economy - Disagree (Why should we stop growing now to avoid the potential problemof not growing in the future.) [0] - http://www.npr.org/sections/money/2013/04/10/176801719/two-centuries-of-energy-in-america-in-four-graphs http://www.npr.org/sections/money/2013/04/10/176801719/two-c...

zachrose 11y ago

For perspective, if could invest one cent in a fund that grew at 2% annually over the last 2000 years, you would have 1.58 quadrillion dollars today.