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The problem here is the time value of money. If the world is based on a production function of compound interest then in a world of finite resources what become

The problem here is the time value of money. If the world is based on a production function of compound interest then in a world of finite resources what becomes cheaper over time are cell phones and what becomes more expensive are people's time, because the per unit cost of clean water and housing goes up and technology makes virtualizable goods cheaper. This also has the added benefit of screwing with the Gini coefficient as returns to capital are always compounded where worker productivity at best goes up linearly. So people mortgage their future in a bad Nash equilibrium in a competition to increase their productivity at a slightly faster linear rate than other workers, by taking money from financiers. The same financiers that see an exponential return and are incentivized to shrink labor costs to keep maximizing compound returns. So students are stuck in a system in which they're borrowing from their ideological competition. It's not that universities are inherently evil or administrators are bad. It's a natural extension of how returns to investment work. Now I'm not a Marxist, but that's the way the math works. The only solution I can see is a social system in which the wealthy form investment vehicles that run as cooperatives owned by the workers and flatten the Gini coefficient as much as possible. If students bought shares in a university that they then owned for life similar to bonds, then the university system itself would self correct. Say you go to graduate school or had tenure - then you would have a higher share of bonds. You would no longer be paid in a linear way, but a compound one. If the returns didn't align with expected earnings the university would fail. Linear payments are essentially just an admittance of failure to believe that inflation won't destroy someone's earning potential unless they're able to become a shareholder faster than someone else. Which causes intergenerational disequilibria as we've seen where the old are incredibly wealthy and the young are too poor to start families. Unless economics is willing to confront the social problem of compound interest in a finite world accelerationist capitalism will end up destroying society. No, the solution is not to burn down academia. Ask the Cambodians how killing everyone with glasses worked out for them.

imtringued 2y ago
Silvio Gesell essentially makes the argument that the return on mere ownership of real capital is negative in the real world. Positive interest can only exist in a world where demand for capital exceeds supply. Since capital produces capital, we reach the excess capital "regime" eventually. The holding costs of excess capital are negatively therefore people destroy the excess capital. In the positive interest range there is a tendency for the interest rate to drop. In the negative interest rate range there is a tendency for the interest rate to rise. Both lead to the equilibrium real interest rate being exactly 0% in the long run. But a 0% interest rate has some quite significant implications. The value of non-extracted rock in earth's crust and the mild steel it eventually becomes are equivalent, despite being separated in time. Capital requires energy to operate, which also comes from the earth's crust. In other words, everything that exists today is just a long winded transformation of one chunk of the universe into another. Nothing is ever "produced". All wealth is based on the direct or indirect ownership of land and its resources playing out over the ages. Mind you, in this framework, owning an expensive machine is equivalent to having the mining rights to dig out the materials and energy sources. It is not literal ownership of land that is important, but the access to its benefits. Basically, we will never escape feudalism.
- peterweyand38 2y ago
  My position is that global GDP is a compounding function on interest. So you if you take the sum total of the world's GDP you can take out (x - m). You can simplify the equation further to goods produced today and investment, which is similar to your argument. So you have a total stock of raw resources, the current production function based on technological transformation, and computed interest in the future (which is a compound function). The resource stock is finite no matter its size (like all resources on earth), and the future expected return to transform those resources is expected to go up exponentially. Competition doesn't matter under these circumstances. So long as investment has a compound function you run out of resources quite quickly or reach a point where whoever owns the most raw resources is the person that wins under the condition of a complicated game of musical chairs. At 3.5 percent GDP growth rate at a compounded return you have to double the real return of goods in twenty years. Or you have inflation. In a generation the system collapses. You have to massively redistribute wealth and flatten the gini coefficient almost immediately while assuming that GDP can no longer increase. Or you don't believe in math. There isn't a middle ground. Giving people bonds based on what they do that are nontradeable would be a start, although how you forbid resale is legally difficult. Forming investment vehicles that do what Benjamin Franklin did with the college in philedelphia might help. But the math doesn't work if you have a finite set of resources and a compound function of return. Technological transformation of raw resources into goods isn't a guaranteed exponential function. Or we'll see more of what's come before. We can afford fancy computers but not homes because cell phones are cheap to produce and land is expensive to own. Compound interest is a massive problem.

imtringued 2y ago

Silvio Gesell essentially makes the argument that the return on mere ownership of real capital is negative in the real world. Positive interest can only exist in a world where demand for capital exceeds supply. Since capital produces capital, we reach the excess capital "regime" eventually. The holding costs of excess capital are negatively therefore people destroy the excess capital. In the positive interest range there is a tendency for the interest rate to drop. In the negative interest rate range there is a tendency for the interest rate to rise. Both lead to the equilibrium real interest rate being exactly 0% in the long run. But a 0% interest rate has some quite significant implications. The value of non-extracted rock in earth's crust and the mild steel it eventually becomes are equivalent, despite being separated in time. Capital requires energy to operate, which also comes from the earth's crust. In other words, everything that exists today is just a long winded transformation of one chunk of the universe into another. Nothing is ever "produced". All wealth is based on the direct or indirect ownership of land and its resources playing out over the ages. Mind you, in this framework, owning an expensive machine is equivalent to having the mining rights to dig out the materials and energy sources. It is not literal ownership of land that is important, but the access to its benefits. Basically, we will never escape feudalism.

peterweyand38 2y ago
My position is that global GDP is a compounding function on interest. So you if you take the sum total of the world's GDP you can take out (x - m). You can simplify the equation further to goods produced today and investment, which is similar to your argument. So you have a total stock of raw resources, the current production function based on technological transformation, and computed interest in the future (which is a compound function). The resource stock is finite no matter its size (like all resources on earth), and the future expected return to transform those resources is expected to go up exponentially. Competition doesn't matter under these circumstances. So long as investment has a compound function you run out of resources quite quickly or reach a point where whoever owns the most raw resources is the person that wins under the condition of a complicated game of musical chairs. At 3.5 percent GDP growth rate at a compounded return you have to double the real return of goods in twenty years. Or you have inflation. In a generation the system collapses. You have to massively redistribute wealth and flatten the gini coefficient almost immediately while assuming that GDP can no longer increase. Or you don't believe in math. There isn't a middle ground. Giving people bonds based on what they do that are nontradeable would be a start, although how you forbid resale is legally difficult. Forming investment vehicles that do what Benjamin Franklin did with the college in philedelphia might help. But the math doesn't work if you have a finite set of resources and a compound function of return. Technological transformation of raw resources into goods isn't a guaranteed exponential function. Or we'll see more of what's come before. We can afford fancy computers but not homes because cell phones are cheap to produce and land is expensive to own. Compound interest is a massive problem.