7 ms·

Mad Max Economics

43 points by breadbox 11y ago

wodenokoto 11y ago
with inflation, flat growth is negative growth, so at least there's that.
roymurdock 11y ago
Author confuses units from step 1 to step 2 of his arguments. 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.
- tormeh 11y ago
  It also ignores the question of what economic growth is. Infinite economic growth does not mean infinite potatoes. Infinite economic growth means infinite increase in perceived worth of stuff we make. That's eminently doable. I mean, growth has shifted to services long ago. We can't make infinite potatoes, but that's not required for infinite growth.
  - Retric 11y ago
    If potatoes have value, the total economy is expressible in in some number of potatoes. Unbound growth requires the relative value of potatoes to always decrease. However, the same must be said for every other physical good including gold and land etc. Thus, economic growth is only infinite when all physical goods have zero value. That might happen, but it seems really unlikely.
    - tormeh 11y ago
      As inflation-adjusted GDP approaches infinity the value of potatoes must approach zero, yes. Of course, were demand for potatoes to suddenly increase, the value of potatoes would too, so it does not imply any ability to buy an earth-sized ball of potatoes for a dollar in the near future. But the price of potatoes, at typical demand, must approach zero, yes. 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.
      - Retric 11y ago
        Self maintained automated farms are not going to be handing out beach front houses any time soon. Further, an economy where everyone get's their own complete copy of earth and can teleport anywhere is still finite.
  - tpeo 11y ago
    I see how the "perceived worth" if GDP is designed to be a measure of real economic variables e.g. tons of steel. Growth that isn't growth which isn't attributable to increases in quantity produced is just inflation as measured by the GDP deflator.
    - tormeh 11y ago
      You measure steel in tons of a given quality. GDP is not for measuring manufacturing output. Services do add to GDP despite needing no new resources per se.
- crpatino 11y ago
  Maybe a bit offtopic, but could you elaborate on why you think infinite growth in a finite world is possible? 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.
  - jobu 11y ago
    > Maybe a bit offtopic, but could you elaborate on why you think infinite growth in a finite world is possible? 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.
  - jevgeni 11y ago
    My problem with the "finite growth" narrative I see often, is the fact that they always assume that growth is strictly a function of natural, material resources. To paint a caricature: they almost seem to say "We had 100 people and 50 ingots of iron and we produced 200 forks and 30 novels. If we'd have 50 people and 25 ingots of iron, we'd only produce 100 forks and 15 novels." Which is retarded. One of the main (if not THE main) factors of growth is scientific progress - something that is mostly immaterial. The whole Internet revolution was made possible using machines that don't exactly run on steam and copious amount of coal. 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.
- avn2109 11y ago
  >> "Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist." 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-energy/ http://physics.ucsd.edu/do-the-math/2011/07/galactic-scale-e...
rorykoehler 11y ago
>Without growth, he says, economic life becomes a zero-sum game. “As Martin Wolf, the Financial Times commentator has noted, the option for everybody to become better off—where one person’s gain needn’t require another’s loss—was critical for the development and spread of the consensual politics that underpin democratic rule.” In other words, the function of economic growth is to blunt the force of envy in a world with highly skewed distributions of income and wealth. 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.
- lmm 11y ago
  > The ones who give in this scenario only lose on paper but they wouldn't notice any difference in their day to day. Not losing anything noticeable doesn't stop the super-rich avoiding taxes today. Why would that be different in the future?
  - deleted 11y ago
    [deleted]
  - rorykoehler 11y ago
    The system is designed by us. We can change it if there is the political will.
    - lmm 11y ago
      You seemed to be implying that there wouldn't be violent objections to such redistribution. There will be. And even assuming you succeed in that redistribution, the original point remains: in a zero-growth world, people who want to get ahead will try to do so by taking from others, ultimately through violence.
      - 11y ago
ucaetano 11y ago
Funny how this article would fit right in at the apex of the Roman Empire. Their "Mad Max" era was just the middle ages. 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.
oleganza 11y ago
Exponential growth is needed only for keynesian economists because it keeps their pyramid scheme called welfare state running. If you have a decent one-digit economy growth on non-inflatable money (bitcoin), then everything Just Works. Money does not suddenly lose all its value because no one is printing it to extend never-ending credit that leads to inevitable collapse of inflated expectations and reality of finite supply of resources.
- harryh 11y ago
  This isn't a story about money and/or inflation. It's a story about goods and services and our ability (or lack thereof) to make more and more of them.
  - oleganza 11y ago
    Yup. And my comment is about when it does and when it does not matter that you make more and more of them. If your society is in fiat credit bubble, then you are doomed into Mad Max Scenario when you slow down the exponential growth (bubble collapses). But if you do not have any bubble in the first place, then slow down is just a slow down. People make less people, consume less, wait for better days, "time slows down" so to speak if we are talking about technological progress. No Mad Max scenario at all.
    - harryh 11y ago
      No. That is wrong. People are much happier and get along much better with everyone else when they expect tomorrow to be better than yesterday.
Voloskaya 11y ago
Isn't the first graph erroneous (and subsequantly the others)? 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.
- lmm 11y ago
  The idea he's criticizing is that constant GDP, zero-growth, would result in a mad-max future even if that constant was the 2050 level.
  - Voloskaya 11y ago
    Thanks, that totally flied over me.
k__ 11y ago
I don't understand these problems. 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.
- crpatino 11y ago
  No. the amount each person produces does not increase, certainly not because scientific advance. 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.
11thEarlOfMar 11y ago
Humanity's ability to produce sufficient food is likely capable of outstripping population growth for a long, long time. For example, over the last 80 years, corn yields in bushels per acre have increased 6 fold in the US [0], where the population has less than tripled. Kansas wheat yields have tripled from 12 to 36 bushels over the same period [1]. Granted, we eat much more varied diet than corn and wheat, but we've also managed to bring the cost of feeding ourselves down as the population has increased. Per-capita spending (as a % of income) on food in the US has dropped 43% since 1960 [2], which may indicate that the productivity of the food industry is increasing relative to population growth. (have to factor in per-capita income, which I don't have time for...). 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-brief-history-of-u-s-corn-in-one-chart/ https://www.washingtonpost.com/news/wonk/wp/2012/08/16/a-bri... [1] http://www.nass.usda.gov/Statistics_by_State/Kansas/Publications/Crops/whthist.pdf http://www.nass.usda.gov/Statistics_by_State/Kansas/Publicat... [2] http://www.ers.usda.gov/data-products/chart-gallery/detail.aspx?chartId=52216 http://www.ers.usda.gov/data-products/chart-gallery/detail.a... [3] https://en.wikipedia.org/wiki/List_of_countries_by_population_growth_rate https://en.wikipedia.org/wiki/List_of_countries_by_populatio...
- Gravityloss 11y ago
  How much of that increased agricultural production is fueled by synthetic nitrogen fertilizers created with natural gas?
lumberjack 11y ago
If there is a problem with our economy it is much more likely that it is a case of suboptimal capital investment. 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-cash-pile-hits-record/ 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.
- jevgeni 11y ago
  It doesn't really matter how specialized they are, if they hold it in cash. 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.
  - pdonis 11y ago
    The banks are still extremely limited in the ways they can utilize that cash. 194 billion dollars held by a handful of banks will be far less optimally used than 194 billion dollars spread among, say, a million individual entrepreneurs.
  - ucaetano 11y ago
    That's not cash. From their 10K: Cash and cash equivalents: $14B Short-term marketable securities: $11B Long-term marketable securities: $130B
    - jevgeni 11y ago
      Even better. Most of the so called "cash pile" is hard at work.
stillsut 11y ago
Just remember next time you talk about the 'War on the middle class' who's trying to give it ALL away in Paris this week.
Gravityloss 11y ago
Let's get material. How long would an economist expect there to be exponential growth in electricity consumption? Steel production? Indium usage?
- pdonis 11y ago
  > How long would an economist expect there to be exponential growth in electricity consumption? Steel production? Indium usage? 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).
  - Gravityloss 11y ago
    I think it's a highly relevant distinction and leads to a very different view of the future.
nopinsight 11y ago
Economic growth does not strictly require specific raw materials and natural resources. With ingenuity and time, it is almost always possible to utilize alternative resources or recycle/reuse existing ones (e.g. seawater desalination). 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 http://www-formal.stanford.edu/jmc/progress/index.html

43 points by breadbox 11y ago

with inflation, flat growth is negative growth, so at least there's that.

Author confuses units from step 1 to step 2 of his arguments. 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.

tormeh 11y ago
It also ignores the question of what economic growth is. Infinite economic growth does not mean infinite potatoes. Infinite economic growth means infinite increase in perceived worth of stuff we make. That's eminently doable. I mean, growth has shifted to services long ago. We can't make infinite potatoes, but that's not required for infinite growth.
- Retric 11y ago
  If potatoes have value, the total economy is expressible in in some number of potatoes. Unbound growth requires the relative value of potatoes to always decrease. However, the same must be said for every other physical good including gold and land etc. Thus, economic growth is only infinite when all physical goods have zero value. That might happen, but it seems really unlikely.
  - tormeh 11y ago
    As inflation-adjusted GDP approaches infinity the value of potatoes must approach zero, yes. Of course, were demand for potatoes to suddenly increase, the value of potatoes would too, so it does not imply any ability to buy an earth-sized ball of potatoes for a dollar in the near future. But the price of potatoes, at typical demand, must approach zero, yes. 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.
    - Retric 11y ago
      Self maintained automated farms are not going to be handing out beach front houses any time soon. Further, an economy where everyone get's their own complete copy of earth and can teleport anywhere is still finite.
- tpeo 11y ago
  I see how the "perceived worth" if GDP is designed to be a measure of real economic variables e.g. tons of steel. Growth that isn't growth which isn't attributable to increases in quantity produced is just inflation as measured by the GDP deflator.
  - tormeh 11y ago
    You measure steel in tons of a given quality. GDP is not for measuring manufacturing output. Services do add to GDP despite needing no new resources per se.
crpatino 11y ago
Maybe a bit offtopic, but could you elaborate on why you think infinite growth in a finite world is possible? 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.
- jobu 11y ago
  > Maybe a bit offtopic, but could you elaborate on why you think infinite growth in a finite world is possible? 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.
- jevgeni 11y ago
  My problem with the "finite growth" narrative I see often, is the fact that they always assume that growth is strictly a function of natural, material resources. To paint a caricature: they almost seem to say "We had 100 people and 50 ingots of iron and we produced 200 forks and 30 novels. If we'd have 50 people and 25 ingots of iron, we'd only produce 100 forks and 15 novels." Which is retarded. One of the main (if not THE main) factors of growth is scientific progress - something that is mostly immaterial. The whole Internet revolution was made possible using machines that don't exactly run on steam and copious amount of coal. 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.
avn2109 11y ago
>> "Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist." 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-energy/ http://physics.ucsd.edu/do-the-math/2011/07/galactic-scale-e...

rorykoehler 11y ago

>Without growth, he says, economic life becomes a zero-sum game. “As Martin Wolf, the Financial Times commentator has noted, the option for everybody to become better off—where one person’s gain needn’t require another’s loss—was critical for the development and spread of the consensual politics that underpin democratic rule.” In other words, the function of economic growth is to blunt the force of envy in a world with highly skewed distributions of income and wealth. 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.

lmm 11y ago
> The ones who give in this scenario only lose on paper but they wouldn't notice any difference in their day to day. Not losing anything noticeable doesn't stop the super-rich avoiding taxes today. Why would that be different in the future?
- deleted 11y ago
  [deleted]
- rorykoehler 11y ago
  The system is designed by us. We can change it if there is the political will.
  - lmm 11y ago
    You seemed to be implying that there wouldn't be violent objections to such redistribution. There will be. And even assuming you succeed in that redistribution, the original point remains: in a zero-growth world, people who want to get ahead will try to do so by taking from others, ultimately through violence.
    - 11y ago

ucaetano 11y ago

Funny how this article would fit right in at the apex of the Roman Empire. Their "Mad Max" era was just the middle ages. 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.

oleganza 11y ago

Exponential growth is needed only for keynesian economists because it keeps their pyramid scheme called welfare state running. If you have a decent one-digit economy growth on non-inflatable money (bitcoin), then everything Just Works. Money does not suddenly lose all its value because no one is printing it to extend never-ending credit that leads to inevitable collapse of inflated expectations and reality of finite supply of resources.

harryh 11y ago
This isn't a story about money and/or inflation. It's a story about goods and services and our ability (or lack thereof) to make more and more of them.
- oleganza 11y ago
  Yup. And my comment is about when it does and when it does not matter that you make more and more of them. If your society is in fiat credit bubble, then you are doomed into Mad Max Scenario when you slow down the exponential growth (bubble collapses). But if you do not have any bubble in the first place, then slow down is just a slow down. People make less people, consume less, wait for better days, "time slows down" so to speak if we are talking about technological progress. No Mad Max scenario at all.
  - harryh 11y ago
    No. That is wrong. People are much happier and get along much better with everyone else when they expect tomorrow to be better than yesterday.

Voloskaya 11y ago

Isn't the first graph erroneous (and subsequantly the others)? 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.

lmm 11y ago
The idea he's criticizing is that constant GDP, zero-growth, would result in a mad-max future even if that constant was the 2050 level.
- Voloskaya 11y ago
  Thanks, that totally flied over me.

k__ 11y ago

I don't understand these problems. 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.

crpatino 11y ago
No. the amount each person produces does not increase, certainly not because scientific advance. 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.

11thEarlOfMar 11y ago

Humanity's ability to produce sufficient food is likely capable of outstripping population growth for a long, long time. For example, over the last 80 years, corn yields in bushels per acre have increased 6 fold in the US [0], where the population has less than tripled. Kansas wheat yields have tripled from 12 to 36 bushels over the same period [1]. Granted, we eat much more varied diet than corn and wheat, but we've also managed to bring the cost of feeding ourselves down as the population has increased. Per-capita spending (as a % of income) on food in the US has dropped 43% since 1960 [2], which may indicate that the productivity of the food industry is increasing relative to population growth. (have to factor in per-capita income, which I don't have time for...). 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-brief-history-of-u-s-corn-in-one-chart/ https://www.washingtonpost.com/news/wonk/wp/2012/08/16/a-bri... [1] http://www.nass.usda.gov/Statistics_by_State/Kansas/Publications/Crops/whthist.pdf http://www.nass.usda.gov/Statistics_by_State/Kansas/Publicat... [2] http://www.ers.usda.gov/data-products/chart-gallery/detail.aspx?chartId=52216 http://www.ers.usda.gov/data-products/chart-gallery/detail.a... [3] https://en.wikipedia.org/wiki/List_of_countries_by_population_growth_rate https://en.wikipedia.org/wiki/List_of_countries_by_populatio...

Gravityloss 11y ago
How much of that increased agricultural production is fueled by synthetic nitrogen fertilizers created with natural gas?

lumberjack 11y ago

If there is a problem with our economy it is much more likely that it is a case of suboptimal capital investment. 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-cash-pile-hits-record/ 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.

jevgeni 11y ago
It doesn't really matter how specialized they are, if they hold it in cash. 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.
- pdonis 11y ago
  The banks are still extremely limited in the ways they can utilize that cash. 194 billion dollars held by a handful of banks will be far less optimally used than 194 billion dollars spread among, say, a million individual entrepreneurs.
- ucaetano 11y ago
  That's not cash. From their 10K: Cash and cash equivalents: $14B Short-term marketable securities: $11B Long-term marketable securities: $130B
  - jevgeni 11y ago
    Even better. Most of the so called "cash pile" is hard at work.

stillsut 11y ago

Just remember next time you talk about the 'War on the middle class' who's trying to give it ALL away in Paris this week.

Gravityloss 11y ago

Let's get material. How long would an economist expect there to be exponential growth in electricity consumption? Steel production? Indium usage?

pdonis 11y ago
> How long would an economist expect there to be exponential growth in electricity consumption? Steel production? Indium usage? 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).
- Gravityloss 11y ago
  I think it's a highly relevant distinction and leads to a very different view of the future.

nopinsight 11y ago

Economic growth does not strictly require specific raw materials and natural resources. With ingenuity and time, it is almost always possible to utilize alternative resources or recycle/reuse existing ones (e.g. seawater desalination). 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 http://www-formal.stanford.edu/jmc/progress/index.html