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The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

50 points by ciconia 8y ago

cagenut 8y ago
I still personally believe that the real underlying truth of "peak oil" was that as lower EROEI sources replaced higher ones, even though we would be able to grow the total number of barrels per day, the net-energy provided to drive the economy from those barrels would(is) plateau(ing). Everyone who points to fracking (or even worse tar sands) as a disproof of peak oil never understood the underlying argument about how the "economy" is effectively our word for total/net energy consumption and a fracked barrel of oil provides vastly less energy to the system.
- deleted 8y ago
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- flavius29663 8y ago
  If you think about it, a lot of the arabian/russian/corupt oligarchs money from oil were spent in ludicrous ways, like luxury beyond belief. The economy is getting less value from a fracked barrel, but those money are spent more wisely, returning back into the industry. This is not just sticking a pipe in the ground anymore, we are advancing our tech by using fracking. This is a new economic engine, maybe it's not as big as the free oil, but it's something.
  - theptip 8y ago
    It's an interesting thought; I think you'd also have to look at the absolute dollar amounts of "luxury spend vs. capital/research reinvestment" to get the full picture. (Since the actual benefits accrued to society are proportional to the absolute spend on R&D). Also, is R&D in fracking transferable? Or is it just tech that will be irrelevant in 20-30 years? (I don't have a good picture on this one; I could see a reasonable argument that we will be using natural gas for a long time, even when we're a mostly-renewable economy, since it's a convenient-to-transport form of energy as LNG).
    - toomuchtodo 8y ago
      I can't imagine fracking is too transferable unless there's some other easily flowing substance you want to get out of the ground besides water, oil, or natural gas. EDIT: It might be useful for enabling greater storage density of CO2 in rock formations if we attempt to sequester CO2 out of the atmosphere at scale: https://phys.org/news/2018-11-co2-underground-curb-carbon-emissions.html https://phys.org/news/2018-11-co2-underground-curb-carbon-em...
      - ggm 8y ago
        Fracking is important in geothermal. An experimental form uses drilling to dry hot rocks and injection of water (even waste water or grey water) to produce steam. Destructive uses of aquifers may mean we need skills in underground water table remediation. I don't think fracking directly helps (I think it hinders) but we're going to need to understand how to use it to fix things as well as extract things.
  - Findeton 8y ago
    Well, too bad fracking in the US is on its way down. By the looks of it, it will last maybe 3 years before it peaks out. Then the barrels/day will crash. Not kidding though, and higher ups know... which is probably why the US is intervening in Venezuela, for example.
    - telchar 8y ago
      Source on that?
  - Spooky23 8y ago
    Most of it was stockpiled in US dollars. End of the day, the dollar will inflate away in the long run. We will have created more value with oil than the shieks and Russian mob bosses yielded in dollar terms.
- skybrian 8y ago
  Energy intensity is going down [1], so it seems like the economy is less about energy consumption than it used to be? But averages can be misleading. [1] https://en.wikipedia.org/wiki/Energy_intensity https://en.wikipedia.org/wiki/Energy_intensity
  - the8472 8y ago
    To some extent that's because, apart from construction, we're outsourcing the manipulating-atoms business to other countries which results in higher energy intensity abroad.
  - roenxi 8y ago
    There are two interpretations. The first is that energy doesn't matter, and the second is GDP doesn't matter. GDP was only important when it was a proxy for energy (for a long time, the correlation between energy /capita and gdp/capita was very strong). IF you assume that GDP is no longer a good measure of energy but that the people care about energy more, it provides an interesting interpretation of Trump's 2016 victory, the fracturing of politics and the widespread condemnation of politicians. People's lifestyles are no longer being buoyed by a rising quantity of cheap energy, and they are angry without quite understanding why their lives don't seem to be improving. It is easier to put tensions aside and work together when you are seeing an increase in your living standards each year - even if you don't agree, it obviously works. Harder to do when they are falling - even if you agree, something seems to be going wrong.
- roenxi 8y ago
  I tried to put together a case for this yesterday in a thread on Germany and coal. The comment is probably relevant here too, so I'll copy it with minor adjustments. The US-centric figures are because I was arguing about the US, but I think the picture actually covers a lot of countries. There is some evidence that we are either hitting peak oil, or rising competition from previously-developing countries is choking the West out of energy markets. Energy prices are not cheap at the moment (I'm not accounting for inflation, but according a back of the envelope check these numbers are all growing much faster than inflation). Crude oil prices went from $35 -> $70 around 2005 and have generally been floating around there since, with short periods of time (a year or two) where they drop down [0], coal did something similar from $50 -> $80 [1]. In the US, coal use for electricity immediately started dropping off, and Natural Gas has been replacing capacity but not overwhelmingly [2]. There was a 5 year period where gas (ie, car fuel) prices were just out of control, and a long period of time where they were just high. Most of the US's energy is sourced from petroleum and coal [3, 4]. I'd suggest that although cheap natural gas has absorbed some of the shock, there is evidence of cost pressure. This all seems like a pretty substantial problem (read: threat to political stability at a grand scale), I'm constantly surprised it doesn't get more press. [0] https://www.macrotrends.net/1369/crude-oil-price-history-chart https://www.macrotrends.net/1369/crude-oil-price-history-cha... [1] https://www.indexmundi.com/commodities/?commodity=coal-australian&months=360 https://www.indexmundi.com/commodities/?commodity=coal-austr... [2] https://en.wikipedia.org/wiki/File:US_Electricity_by_type.png https://en.wikipedia.org/wiki/File:US_Electricity_by_type.pn... [3] https://www.eia.gov/todayinenergy/detail.php?id=10 https://www.eia.gov/todayinenergy/detail.php?id=10 [4] https://en.wikipedia.org/wiki/File:Energy_Flow_US_2017.png https://en.wikipedia.org/wiki/File:Energy_Flow_US_2017.png [5] https://en.wikipedia.org/wiki/Energy_in_the_United_States#Summary https://en.wikipedia.org/wiki/Energy_in_the_United_States#Su...
- marcosdumay 8y ago
  AFAIK, the well accepted theory was always that as EROEI of fossil fuels get lower, more and more of the economy would be targeted (directly or indirectly) into fossil fuel extraction, and less would be available to the end-goal wealth. Thus even with the GDP and total extraction growing, we would get poorer and poorer, until the fuel extraction business becomes so large that something breaks. We seem to be experiencing that. But people have been great in avoiding the EROEI collapse that some expected, so it does not seem to be a large factor on the world's economy. It is very unlikely that the current stagnation can be attributed to peak oil.
ummonk 8y ago
Past Chinese growth has set expectations too high. It is ridiculous to point to a 6.6% growth rate and say it is low.
- seppin 8y ago
  Also ridiculous to think those numbers were accurate.
  - ggm 8y ago
    I don't think anyone thought they were accurate, what mattered was the fiscal policies the Chinese state bank enacted regarding the value of the renminbi.
  - polxiform 8y ago
    In a lecture to senior business executives on Dec. 16, Renmin University economics professor Xiang Songzuo, said that a “very important institute” in China estimated that China’s GDP growth for 2018 should be about 1.67 percent or even negative, and not the statistics bureau’s official figure of 6.5 percent. https://sinoinsider.com/2018/12/politics-watch-xis-reform-anniversary-speech-signals-political-crisis-in-china/ https://sinoinsider.com/2018/12/politics-watch-xis-reform-an...
  - outlace 8y ago
    The numbers may not be super accurate but if you've ever been to a big city in China in the past decade you would have witnessed circa 10% GDP growth with your own eyes.
- zipwitch 8y ago
  Perhaps a better read might be "too low for 'the 1%' to continue extract wealth from the global economy at the rate to which they have become accustomed without provoking destructive backlash"?
dijit 8y ago
So, I have a question and it may seem like a childish or stupid one because I think I've missed something somewhere. Our society, and I think capitalism in general, seems to be pinned on the foundation of perpetual growth. The question for me is: how can we have infinite growth on a planet with limited resources?
- mrfusion 8y ago
  Technology? Well not infinite but up to the point of a dyson sphere.
  - scottlocklin 8y ago
    What massive efficiencies have technology brought us lately? I count ... fracking as a real improvement. That's it!
    - toufiqbarhamov 8y ago
      Fracking as we know it today started in the 40’s, it’s just a matter of economics that it’s feasible to do on a wide scale today. Mind you, that only goes to further reinforce your point. Edit. Every example other people are posting have been around for longer than most of us have been alive. I’m not trying to take a dump on the notion of progress, but I feel the distinction between “new” and “maturing” is being lost.
    - xiphias2 8y ago
      Internet? You know you wouldn't be able to take part in this debate without it. I wasn't able to read so many interesting things 20 years ago, and I was behind in everything because I wasn't born at the right place in the world.
      - toufiqbarhamov 8y ago
        The internet is probably older than you are. A lot of the “exciting new tech” is a mature or market-ready form of technology that has been around since the Cold War or much earlier. There is also a lot of very old tech that is “new” only by virtue of having a microcontroller stuck in, much in the same way an IoT device is often just Device X + Network connection.
saveThePlanet 8y ago
In my opinion a deflation is what the world and especially the nature needs. People have to stop wasting our limited resources.
- genericone 8y ago
  Which people and which resources?
- devmunchies 8y ago
  I think this is a valid point of view. Has anyone ever stopped and asked if an ever-increasing GDP is sustainable?
  - deleted 8y ago
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  - wolfram74 8y ago
    This physicist has done a number of blogs on physical restraints on economic growth. https://dothemath.ucsd.edu/2012/04/economist-meets-physicist/ https://dothemath.ucsd.edu/2012/04/economist-meets-physicist... For example, if economic growth persists black body ration independent of power source raises the surface temperature of the earth to boiling in a few hundred years.
    - shoo 8y ago
      this link is _fantastic_ , thank you for sharing it, i haven't heard this argument before . First: For a given constant T > 0 there exists C > 0 such that Temp(earth) <= T implies Energy(earth) <= C > Right, if you plot the U.S. energy consumption in all forms from 1650 until > now, you see a phenomenally faithful exponential at about 3% per year over > that whole span. The situation for the whole world is similar. So how long > do you think we might be able to continue this trend? > Alright, the Earth has only one mechanism for releasing heat to space, and > that’s via (infrared) radiation. We understand the phenomenon perfectly > well, and can predict the surface temperature of the planet as a function of > how much energy the human race produces. The upshot is that at a 2.3% growth > rate (conveniently chosen to represent a 10× increase every century), we > would reach boiling temperature in about 400 years. [Pained expression from > economist.] And this statement is independent of technology. Even if we > don’t have a name for the energy source yet, as long as it obeys > thermodynamics, we cook ourselves with perpetual energy increase. > At that 2.3% growth rate [of global energy consumption], we would be using > energy at a rate corresponding to the total solar input striking Earth in a > little over 400 years. We would consume something comparable to the entire > sun in 1400 years from now. By 2500 years, we would use energy at the rate > of the entire Milky Way galaxy—100 billion stars! I think you can see the > absurdity of continued energy growth. 2500 years is not that long, from a > historical perspective. We know what we were doing 2500 years ago. I think > I know what we’re not going to be doing 2500 years hence. > If we tried to generate energy at a rate commensurate with that of the Sun > in 1400 years, and did this on Earth, physics demands that the surface of > the Earth must be hotter than the (much larger) surface of the Sun. Second: Energy(earth) / GDP(earth) >= K > 0 > Then in order to have real GDP growth on top of flat energy, the fractional > cost of energy goes down relative to the GDP as a whole. > How far do you imagine this can go? Will energy get to 1% of GDP? 0.1%? Is > there a limit? > if energy became arbitrarily cheap, someone could buy all of it, and > suddenly the activities that comprise the economy would grind to a halt That is, assuming we want Temp(earth) <= T for some constant temperature T, then there exist positive constants C > 0, K > 0 such that Energy(earth) <= C and Energy(earth) / GDP(earth) >= K > 0 . Therefore GDP(earth) <= C / K .
stubbort 8y ago
Low grow is good. You can't sustain growth forever.
- deleted 8y ago
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- killjoywashere 8y ago
  There's a "Talk at Google" about this. I think it's Douglas Rushkoff (1), who wrote Throwing Rocks at the Google Bus. Basicly, if you rethink the economy in terms of a global garden, where you're spatially bounded, you just have to accept that there's only so much carbon, silicon, water, etc. Paul Romer (Nobel Economics 2018, 2) has a similar point (again trying to recall a lecture here...): if you take all the copper in the world, you can only make so many circuits. So tech can only get you so far. There's some kind of upper bound on "just make more motors". Progress may well occur, but it will take innovations not yet foreseen. (1) https://www.youtube.com/watch?v=0EnmH95016w https://www.youtube.com/watch?v=0EnmH95016w (2) https://www.nobelprize.org/prizes/economic-sciences/2018/romer/lecture/ https://www.nobelprize.org/prizes/economic-sciences/2018/rom...
- ggm 8y ago
  The long-term rate of growth in financial investment is said to be 7% at best. For much of economic history the value of currency was so stable that agricultural workers pay as essentially unchanged across generations. Look at the chrts in http://www.econ.ucdavis.edu/faculty/gclark/papers/long_march_of_history.pdf http://www.econ.ucdavis.edu/faculty/gclark/papers/long_march...
- crazygringo 8y ago
  Can't you? Growth just means the human race getting smarter at being productive, so we can grow more food with less effort, get around in transportation with less cars and drivers, buy the things we need at lower prices and with less friction. You could argue that once literally everything is roboticized and automated with strong AI then there's no more growth... except humans will be looking for even better real-life experiences, better art, better teaching, better personal connections... and robots and technology will still evolve to be better designed, use less energy, use less resources... I'm not sure I can imagine a world in which people didn't want anything else to be improved that could possibly be improved, which is what a world with no growth would have to be.
deleted 8y ago
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peisistratos 8y ago
https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit...
petermcneeley 8y ago
Im guessing most of this is a measuring error due to incorrectly accounting for technologies impact on industry. In an extreme example: If we all spent 99.9% of our lives in VR then every single industry would basically implode.
jlarocco 8y ago
"That helps explain why American workers’ wages have been rising relatively slowly despite a low unemployment rate." Wouldn't surprise me if that's a big part of the problem. Despite tax cuts, low interest rates, and other corporate handouts, nothing's getting passed onto the people who do most of the spending. Inequality is higher than ever and the people making the most money need it the least.
- Spooky23 8y ago
  Seriously. My family is relatively well off and our home was purchased back in 2004. Still, the steady march of expenses has certainly increased faster than income.
  - killjoywashere 8y ago
    On a micro note, give YNAB a try. Diligent measurement has impressed on me how unconstrained our spending was. Cutting down the number of channels for payment goes a long way. There's a reason all the FAANG companies are happy to handle your credit cards.
    - mosiuerbarso 8y ago
      +1 on this. I was terrible with money till I started using it a few years ago. I was one of those people with a good job but nothing to show for it. Using YNAB made me realize i was frittering most of my money away on lots of little purchases here and there. YNAB enabled me to see this and I drastically altered my spending. Also, a few years ago I had to take over my fathers business. Subsequently, this involved me having to take a substantial pay cut. I wouldn't have been able to do this without YNAB and budgeting.
    - Spooky23 8y ago
      I agree this is great advice! For me the biggest things are that as the family grows, so has many expenses. We need two big cars now, which are like 150% more than they were in the early 2000s. For health reasons we need to really focus on fresh vegetables and meats and avoid most cheaper foods — which are very volitile price wise.
WhompingWindows 8y ago
You need an increase in worker population or an increase in productivity per worker to increase the output of your economy. If populations are stagnating and innovation is low, that would cause less growth overall. Consider that many countries have a lopsided age distribution, such as Japan, China, and some European countries. Immigration into those countries may in fact be useful if it balances their population pyramids.
hevi_jos 8y ago
What the world can't escape is politicians and people in power always overspending. The overspending always must come to an end when for every additional monetary unit in debt you get very low improvement in the economy but you in debt the future. You are living from your children income. What usually comes after that is destruction of capital, either by war(you loose all what you have) or inflation, deflation or both simultaneusly(terrible deflation in some things,terrible inflation in others). You can make the general population pay for it(raising inflation higher than incomes), or you can make the owners of capital pay for it(haircut of 30% or so of their worth). Of course the owners of capital, like the owners of the NewYorkTimes do not want to pay for it. So they will try to influence the population to do what is best for them basically with propaganda. In the past it was basically States and Church the only capable institutions for using propaganda. Right now there are also private institutions who control what people feel and think through PR, ownership of media, think tanks and Universities.
- vkou 8y ago
  > The overspending always must come to an end when for every additional monetary unit in debt you get very low improvement in the economy but you in debt the future. You are living from your children income. Borrowing from your children's future is perfectly fine if your borrowing lets you bring things like clean running water, electricity, working transportation systems, etc.
fallingfrog 8y ago
Stagnant real wages + increasing real expenses + a captured political system = revolution. Get ready, it’s coming.
lewis500 8y ago
It’s inaccurate to say that we “can’t” escape it. The federal reserve has been raising interest rates to slow inflation and growth in employment, and for years they have paid interest on bank reserves at the fed and constantly talked up plans to unwind their portfolio (selling off assets). If they had done less of all that we would have higher inflation. Same is true of some other central banks. I always am frustrated when I hear about japan not being able to raise inflation rates much. If their activities have no impact on inflation at all, why not buy up all the securities and foreign exchange in the world by printing yen? The Japanese could live entirely off the dividends because of this magical property of their central bank.
- deafcalculus 8y ago
  If the central banks sold off all the bonds they bought with QE, that'd cause deflation, not inflation. In fact, the japanese central bank is printing money and buying up ETFs. It's too soon to say if this is a success, but thus far, hardly any inflation!
Animats 8y ago
As is typical of such articles, this is written from the point of view of a central bank. Low inflation is only a problem to central banks. Central bankers are bothered by low inflation because they can't cut interest rates below zero. The US and Europe inject money into the economy by having the central banks loan it out to commercial banks, who then loan it out at a profit. That's not the only way to do things. Japan uses large government-funded infrastructure projects to pump money into the economy. The real problem is "secular stagnation". We just don't need that many people to make all the stuff. The US now has a huge population that's irrelevant, and acts as a dead weight dragging down wages. I've been saying this for over a decade, and it's now conventional wisdom, although it took way too long.
- avatar33 8y ago
  You mean a sensible reform like reduce immigration or link immigration to unemployment numbers or normalized wage growth?
- deafcalculus 8y ago
  Capitalism seems to be capable of producing far more than it can consume.
  - Animats 8y ago
    Production technology today is capable of producing far more than can be consumed. This is a change from most of history, and it's why classical economics doesn't have the answers. Capitalism is now market limited. There has to be buying power. People who are only marginal players in the economic system don't generate much discretionary buying power. As the CEO of WalMart has said, "Our customers are out of money".
crb002 8y ago
Homeostasis will become far more common as the economy further deversifies and education becomes more commodity.
peterwwillis 8y ago
I can see the appeal of being a Doomsday prepper now. Having your livelihood held hostage to fiscal policies of random nations feels a bit like an ant being played with by a bored child. You might as well gain some agency by stocking cans of beans and vitamin supplements in a concrete bunker.

50 points by ciconia 8y ago

I still personally believe that the real underlying truth of "peak oil" was that as lower EROEI sources replaced higher ones, even though we would be able to grow the total number of barrels per day, the net-energy provided to drive the economy from those barrels would(is) plateau(ing). Everyone who points to fracking (or even worse tar sands) as a disproof of peak oil never understood the underlying argument about how the "economy" is effectively our word for total/net energy consumption and a fracked barrel of oil provides vastly less energy to the system.

deleted 8y ago
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flavius29663 8y ago
If you think about it, a lot of the arabian/russian/corupt oligarchs money from oil were spent in ludicrous ways, like luxury beyond belief. The economy is getting less value from a fracked barrel, but those money are spent more wisely, returning back into the industry. This is not just sticking a pipe in the ground anymore, we are advancing our tech by using fracking. This is a new economic engine, maybe it's not as big as the free oil, but it's something.
- theptip 8y ago
  It's an interesting thought; I think you'd also have to look at the absolute dollar amounts of "luxury spend vs. capital/research reinvestment" to get the full picture. (Since the actual benefits accrued to society are proportional to the absolute spend on R&D). Also, is R&D in fracking transferable? Or is it just tech that will be irrelevant in 20-30 years? (I don't have a good picture on this one; I could see a reasonable argument that we will be using natural gas for a long time, even when we're a mostly-renewable economy, since it's a convenient-to-transport form of energy as LNG).
  - toomuchtodo 8y ago
    I can't imagine fracking is too transferable unless there's some other easily flowing substance you want to get out of the ground besides water, oil, or natural gas. EDIT: It might be useful for enabling greater storage density of CO2 in rock formations if we attempt to sequester CO2 out of the atmosphere at scale: https://phys.org/news/2018-11-co2-underground-curb-carbon-emissions.html https://phys.org/news/2018-11-co2-underground-curb-carbon-em...
    - ggm 8y ago
      Fracking is important in geothermal. An experimental form uses drilling to dry hot rocks and injection of water (even waste water or grey water) to produce steam. Destructive uses of aquifers may mean we need skills in underground water table remediation. I don't think fracking directly helps (I think it hinders) but we're going to need to understand how to use it to fix things as well as extract things.
- Findeton 8y ago
  Well, too bad fracking in the US is on its way down. By the looks of it, it will last maybe 3 years before it peaks out. Then the barrels/day will crash. Not kidding though, and higher ups know... which is probably why the US is intervening in Venezuela, for example.
  - telchar 8y ago
    Source on that?
- Spooky23 8y ago
  Most of it was stockpiled in US dollars. End of the day, the dollar will inflate away in the long run. We will have created more value with oil than the shieks and Russian mob bosses yielded in dollar terms.
skybrian 8y ago
Energy intensity is going down [1], so it seems like the economy is less about energy consumption than it used to be? But averages can be misleading. [1] https://en.wikipedia.org/wiki/Energy_intensity https://en.wikipedia.org/wiki/Energy_intensity
- the8472 8y ago
  To some extent that's because, apart from construction, we're outsourcing the manipulating-atoms business to other countries which results in higher energy intensity abroad.
- roenxi 8y ago
  There are two interpretations. The first is that energy doesn't matter, and the second is GDP doesn't matter. GDP was only important when it was a proxy for energy (for a long time, the correlation between energy /capita and gdp/capita was very strong). IF you assume that GDP is no longer a good measure of energy but that the people care about energy more, it provides an interesting interpretation of Trump's 2016 victory, the fracturing of politics and the widespread condemnation of politicians. People's lifestyles are no longer being buoyed by a rising quantity of cheap energy, and they are angry without quite understanding why their lives don't seem to be improving. It is easier to put tensions aside and work together when you are seeing an increase in your living standards each year - even if you don't agree, it obviously works. Harder to do when they are falling - even if you agree, something seems to be going wrong.
roenxi 8y ago
I tried to put together a case for this yesterday in a thread on Germany and coal. The comment is probably relevant here too, so I'll copy it with minor adjustments. The US-centric figures are because I was arguing about the US, but I think the picture actually covers a lot of countries. There is some evidence that we are either hitting peak oil, or rising competition from previously-developing countries is choking the West out of energy markets. Energy prices are not cheap at the moment (I'm not accounting for inflation, but according a back of the envelope check these numbers are all growing much faster than inflation). Crude oil prices went from $35 -> $70 around 2005 and have generally been floating around there since, with short periods of time (a year or two) where they drop down [0], coal did something similar from $50 -> $80 [1]. In the US, coal use for electricity immediately started dropping off, and Natural Gas has been replacing capacity but not overwhelmingly [2]. There was a 5 year period where gas (ie, car fuel) prices were just out of control, and a long period of time where they were just high. Most of the US's energy is sourced from petroleum and coal [3, 4]. I'd suggest that although cheap natural gas has absorbed some of the shock, there is evidence of cost pressure. This all seems like a pretty substantial problem (read: threat to political stability at a grand scale), I'm constantly surprised it doesn't get more press. [0] https://www.macrotrends.net/1369/crude-oil-price-history-chart https://www.macrotrends.net/1369/crude-oil-price-history-cha... [1] https://www.indexmundi.com/commodities/?commodity=coal-australian&months=360 https://www.indexmundi.com/commodities/?commodity=coal-austr... [2] https://en.wikipedia.org/wiki/File:US_Electricity_by_type.png https://en.wikipedia.org/wiki/File:US_Electricity_by_type.pn... [3] https://www.eia.gov/todayinenergy/detail.php?id=10 https://www.eia.gov/todayinenergy/detail.php?id=10 [4] https://en.wikipedia.org/wiki/File:Energy_Flow_US_2017.png https://en.wikipedia.org/wiki/File:Energy_Flow_US_2017.png [5] https://en.wikipedia.org/wiki/Energy_in_the_United_States#Summary https://en.wikipedia.org/wiki/Energy_in_the_United_States#Su...
marcosdumay 8y ago
AFAIK, the well accepted theory was always that as EROEI of fossil fuels get lower, more and more of the economy would be targeted (directly or indirectly) into fossil fuel extraction, and less would be available to the end-goal wealth. Thus even with the GDP and total extraction growing, we would get poorer and poorer, until the fuel extraction business becomes so large that something breaks. We seem to be experiencing that. But people have been great in avoiding the EROEI collapse that some expected, so it does not seem to be a large factor on the world's economy. It is very unlikely that the current stagnation can be attributed to peak oil.

ummonk 8y ago

Past Chinese growth has set expectations too high. It is ridiculous to point to a 6.6% growth rate and say it is low.

seppin 8y ago
Also ridiculous to think those numbers were accurate.
- ggm 8y ago
  I don't think anyone thought they were accurate, what mattered was the fiscal policies the Chinese state bank enacted regarding the value of the renminbi.
- polxiform 8y ago
  In a lecture to senior business executives on Dec. 16, Renmin University economics professor Xiang Songzuo, said that a “very important institute” in China estimated that China’s GDP growth for 2018 should be about 1.67 percent or even negative, and not the statistics bureau’s official figure of 6.5 percent. https://sinoinsider.com/2018/12/politics-watch-xis-reform-anniversary-speech-signals-political-crisis-in-china/ https://sinoinsider.com/2018/12/politics-watch-xis-reform-an...
- outlace 8y ago
  The numbers may not be super accurate but if you've ever been to a big city in China in the past decade you would have witnessed circa 10% GDP growth with your own eyes.
zipwitch 8y ago
Perhaps a better read might be "too low for 'the 1%' to continue extract wealth from the global economy at the rate to which they have become accustomed without provoking destructive backlash"?

dijit 8y ago

So, I have a question and it may seem like a childish or stupid one because I think I've missed something somewhere. Our society, and I think capitalism in general, seems to be pinned on the foundation of perpetual growth. The question for me is: how can we have infinite growth on a planet with limited resources?

mrfusion 8y ago
Technology? Well not infinite but up to the point of a dyson sphere.
- scottlocklin 8y ago
  What massive efficiencies have technology brought us lately? I count ... fracking as a real improvement. That's it!
  - toufiqbarhamov 8y ago
    Fracking as we know it today started in the 40’s, it’s just a matter of economics that it’s feasible to do on a wide scale today. Mind you, that only goes to further reinforce your point. Edit. Every example other people are posting have been around for longer than most of us have been alive. I’m not trying to take a dump on the notion of progress, but I feel the distinction between “new” and “maturing” is being lost.
  - xiphias2 8y ago
    Internet? You know you wouldn't be able to take part in this debate without it. I wasn't able to read so many interesting things 20 years ago, and I was behind in everything because I wasn't born at the right place in the world.
    - toufiqbarhamov 8y ago
      The internet is probably older than you are. A lot of the “exciting new tech” is a mature or market-ready form of technology that has been around since the Cold War or much earlier. There is also a lot of very old tech that is “new” only by virtue of having a microcontroller stuck in, much in the same way an IoT device is often just Device X + Network connection.

saveThePlanet 8y ago

In my opinion a deflation is what the world and especially the nature needs. People have to stop wasting our limited resources.

genericone 8y ago
Which people and which resources?
devmunchies 8y ago
I think this is a valid point of view. Has anyone ever stopped and asked if an ever-increasing GDP is sustainable?
- deleted 8y ago
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- wolfram74 8y ago
  This physicist has done a number of blogs on physical restraints on economic growth. https://dothemath.ucsd.edu/2012/04/economist-meets-physicist/ https://dothemath.ucsd.edu/2012/04/economist-meets-physicist... For example, if economic growth persists black body ration independent of power source raises the surface temperature of the earth to boiling in a few hundred years.
  - shoo 8y ago
    this link is _fantastic_ , thank you for sharing it, i haven't heard this argument before . First: For a given constant T > 0 there exists C > 0 such that Temp(earth) <= T implies Energy(earth) <= C > Right, if you plot the U.S. energy consumption in all forms from 1650 until > now, you see a phenomenally faithful exponential at about 3% per year over > that whole span. The situation for the whole world is similar. So how long > do you think we might be able to continue this trend? > Alright, the Earth has only one mechanism for releasing heat to space, and > that’s via (infrared) radiation. We understand the phenomenon perfectly > well, and can predict the surface temperature of the planet as a function of > how much energy the human race produces. The upshot is that at a 2.3% growth > rate (conveniently chosen to represent a 10× increase every century), we > would reach boiling temperature in about 400 years. [Pained expression from > economist.] And this statement is independent of technology. Even if we > don’t have a name for the energy source yet, as long as it obeys > thermodynamics, we cook ourselves with perpetual energy increase. > At that 2.3% growth rate [of global energy consumption], we would be using > energy at a rate corresponding to the total solar input striking Earth in a > little over 400 years. We would consume something comparable to the entire > sun in 1400 years from now. By 2500 years, we would use energy at the rate > of the entire Milky Way galaxy—100 billion stars! I think you can see the > absurdity of continued energy growth. 2500 years is not that long, from a > historical perspective. We know what we were doing 2500 years ago. I think > I know what we’re not going to be doing 2500 years hence. > If we tried to generate energy at a rate commensurate with that of the Sun > in 1400 years, and did this on Earth, physics demands that the surface of > the Earth must be hotter than the (much larger) surface of the Sun. Second: Energy(earth) / GDP(earth) >= K > 0 > Then in order to have real GDP growth on top of flat energy, the fractional > cost of energy goes down relative to the GDP as a whole. > How far do you imagine this can go? Will energy get to 1% of GDP? 0.1%? Is > there a limit? > if energy became arbitrarily cheap, someone could buy all of it, and > suddenly the activities that comprise the economy would grind to a halt That is, assuming we want Temp(earth) <= T for some constant temperature T, then there exist positive constants C > 0, K > 0 such that Energy(earth) <= C and Energy(earth) / GDP(earth) >= K > 0 . Therefore GDP(earth) <= C / K .

stubbort 8y ago

Low grow is good. You can't sustain growth forever.

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killjoywashere 8y ago
There's a "Talk at Google" about this. I think it's Douglas Rushkoff (1), who wrote Throwing Rocks at the Google Bus. Basicly, if you rethink the economy in terms of a global garden, where you're spatially bounded, you just have to accept that there's only so much carbon, silicon, water, etc. Paul Romer (Nobel Economics 2018, 2) has a similar point (again trying to recall a lecture here...): if you take all the copper in the world, you can only make so many circuits. So tech can only get you so far. There's some kind of upper bound on "just make more motors". Progress may well occur, but it will take innovations not yet foreseen. (1) https://www.youtube.com/watch?v=0EnmH95016w https://www.youtube.com/watch?v=0EnmH95016w (2) https://www.nobelprize.org/prizes/economic-sciences/2018/romer/lecture/ https://www.nobelprize.org/prizes/economic-sciences/2018/rom...
ggm 8y ago
The long-term rate of growth in financial investment is said to be 7% at best. For much of economic history the value of currency was so stable that agricultural workers pay as essentially unchanged across generations. Look at the chrts in http://www.econ.ucdavis.edu/faculty/gclark/papers/long_march_of_history.pdf http://www.econ.ucdavis.edu/faculty/gclark/papers/long_march...
crazygringo 8y ago
Can't you? Growth just means the human race getting smarter at being productive, so we can grow more food with less effort, get around in transportation with less cars and drivers, buy the things we need at lower prices and with less friction. You could argue that once literally everything is roboticized and automated with strong AI then there's no more growth... except humans will be looking for even better real-life experiences, better art, better teaching, better personal connections... and robots and technology will still evolve to be better designed, use less energy, use less resources... I'm not sure I can imagine a world in which people didn't want anything else to be improved that could possibly be improved, which is what a world with no growth would have to be.

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peisistratos 8y ago

https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit...

petermcneeley 8y ago

Im guessing most of this is a measuring error due to incorrectly accounting for technologies impact on industry. In an extreme example: If we all spent 99.9% of our lives in VR then every single industry would basically implode.

jlarocco 8y ago

"That helps explain why American workers’ wages have been rising relatively slowly despite a low unemployment rate." Wouldn't surprise me if that's a big part of the problem. Despite tax cuts, low interest rates, and other corporate handouts, nothing's getting passed onto the people who do most of the spending. Inequality is higher than ever and the people making the most money need it the least.

Spooky23 8y ago
Seriously. My family is relatively well off and our home was purchased back in 2004. Still, the steady march of expenses has certainly increased faster than income.
- killjoywashere 8y ago
  On a micro note, give YNAB a try. Diligent measurement has impressed on me how unconstrained our spending was. Cutting down the number of channels for payment goes a long way. There's a reason all the FAANG companies are happy to handle your credit cards.
  - mosiuerbarso 8y ago
    +1 on this. I was terrible with money till I started using it a few years ago. I was one of those people with a good job but nothing to show for it. Using YNAB made me realize i was frittering most of my money away on lots of little purchases here and there. YNAB enabled me to see this and I drastically altered my spending. Also, a few years ago I had to take over my fathers business. Subsequently, this involved me having to take a substantial pay cut. I wouldn't have been able to do this without YNAB and budgeting.
  - Spooky23 8y ago
    I agree this is great advice! For me the biggest things are that as the family grows, so has many expenses. We need two big cars now, which are like 150% more than they were in the early 2000s. For health reasons we need to really focus on fresh vegetables and meats and avoid most cheaper foods — which are very volitile price wise.

WhompingWindows 8y ago

You need an increase in worker population or an increase in productivity per worker to increase the output of your economy. If populations are stagnating and innovation is low, that would cause less growth overall. Consider that many countries have a lopsided age distribution, such as Japan, China, and some European countries. Immigration into those countries may in fact be useful if it balances their population pyramids.

hevi_jos 8y ago

What the world can't escape is politicians and people in power always overspending. The overspending always must come to an end when for every additional monetary unit in debt you get very low improvement in the economy but you in debt the future. You are living from your children income. What usually comes after that is destruction of capital, either by war(you loose all what you have) or inflation, deflation or both simultaneusly(terrible deflation in some things,terrible inflation in others). You can make the general population pay for it(raising inflation higher than incomes), or you can make the owners of capital pay for it(haircut of 30% or so of their worth). Of course the owners of capital, like the owners of the NewYorkTimes do not want to pay for it. So they will try to influence the population to do what is best for them basically with propaganda. In the past it was basically States and Church the only capable institutions for using propaganda. Right now there are also private institutions who control what people feel and think through PR, ownership of media, think tanks and Universities.

vkou 8y ago
> The overspending always must come to an end when for every additional monetary unit in debt you get very low improvement in the economy but you in debt the future. You are living from your children income. Borrowing from your children's future is perfectly fine if your borrowing lets you bring things like clean running water, electricity, working transportation systems, etc.

fallingfrog 8y ago

Stagnant real wages + increasing real expenses + a captured political system = revolution. Get ready, it’s coming.

lewis500 8y ago

It’s inaccurate to say that we “can’t” escape it. The federal reserve has been raising interest rates to slow inflation and growth in employment, and for years they have paid interest on bank reserves at the fed and constantly talked up plans to unwind their portfolio (selling off assets). If they had done less of all that we would have higher inflation. Same is true of some other central banks. I always am frustrated when I hear about japan not being able to raise inflation rates much. If their activities have no impact on inflation at all, why not buy up all the securities and foreign exchange in the world by printing yen? The Japanese could live entirely off the dividends because of this magical property of their central bank.

deafcalculus 8y ago
If the central banks sold off all the bonds they bought with QE, that'd cause deflation, not inflation. In fact, the japanese central bank is printing money and buying up ETFs. It's too soon to say if this is a success, but thus far, hardly any inflation!

Animats 8y ago

As is typical of such articles, this is written from the point of view of a central bank. Low inflation is only a problem to central banks. Central bankers are bothered by low inflation because they can't cut interest rates below zero. The US and Europe inject money into the economy by having the central banks loan it out to commercial banks, who then loan it out at a profit. That's not the only way to do things. Japan uses large government-funded infrastructure projects to pump money into the economy. The real problem is "secular stagnation". We just don't need that many people to make all the stuff. The US now has a huge population that's irrelevant, and acts as a dead weight dragging down wages. I've been saying this for over a decade, and it's now conventional wisdom, although it took way too long.

avatar33 8y ago
You mean a sensible reform like reduce immigration or link immigration to unemployment numbers or normalized wage growth?
deafcalculus 8y ago
Capitalism seems to be capable of producing far more than it can consume.
- Animats 8y ago
  Production technology today is capable of producing far more than can be consumed. This is a change from most of history, and it's why classical economics doesn't have the answers. Capitalism is now market limited. There has to be buying power. People who are only marginal players in the economic system don't generate much discretionary buying power. As the CEO of WalMart has said, "Our customers are out of money".

crb002 8y ago

Homeostasis will become far more common as the economy further deversifies and education becomes more commodity.

peterwwillis 8y ago

I can see the appeal of being a Doomsday prepper now. Having your livelihood held hostage to fiscal policies of random nations feels a bit like an ant being played with by a bored child. You might as well gain some agency by stocking cans of beans and vitamin supplements in a concrete bunker.