2 ms·

Predicting the economy is like predicting the weather. Sure, you can get the short term right very often, but longer term the number of factors and the relation

by jqm 12y ago

Predicting the economy is like predicting the weather. Sure, you can get the short term right very often, but longer term the number of factors and the relationships between them becomes very complex. I would guess "this time it really is different" with supporting reasons has been sung plenty of times before. I'm not convinced. War, plague, drought, social unrest... these things come along and their effects are far reaching. To say nothing of financial disasters (maybe those who control the levers have the machine figured out... then again, maybe not. I don't know). In the long long term yes... I would guess technology is going to be important and there will be profits. Shorter- long term.... it does seem a bit frothy right now. Short-Short term? Ride the trend until it ends. Pullbacks happen. Sometimes they are bigger, sometimes smaller. They serve an important function. To separate what is important and deserving of capital from that which isn't. Just don't believe they won't happen because yes... they will. That is never different.

dredmorbius 12y ago
I'd actually argue almost entirely the opposite. Near-term economic forecasting is difficult (though there may be some accuracy in the very near term). Long-term, you can accurately forecast economic trends based on overall resource availability. See the Limits to Growth baseline model.
- jqm 12y ago
  Resource availability is a very important component to economic growth. But I might point out... they had more resources than we do now in the 1700's. So there are other components. Technology being one of them. Can anyone predict what we will be able to do in 50 or 100 or 200 years? Or what else might happen between now and then?
  - dredmorbius 12y ago
    Gregory Clarke's an economic historian at UC Davis. Among his online lectures is an interesting bit on why the Industrial Revolution was delayed 100,000 years: http://www.youtube.com/watch?v=aalpFYIdqEo http://www.youtube.com/watch?v=aalpFYIdqEo Among factors you might want to consider: Britain is built on coal. It was washing up on the beaches (the early name for it was "seacoal"). Coal, oil, and gas were known to the ancients. What they lacked was a decent means to haul it any distance. Easier to grow your own hydrocarbons locally than dig them out of some smelly pit a few hundred, or thousand, miles away. So unless you happened to sit right next to a coal pit, tar seep, oil well, or gas jet, you burned wood. England turned to coal as it was burning through its forests. We've been prospecting for other resources. We've got a pretty good idea of what there is, and an even better idea of what there isn't. Joseph Tainter writes on collapse and complexity. Among his points: societies don't adopt complexity unless there's a compelling need (and benefit). It's better to survive at a simple level, much of the time. You'll even see this today in IT. And by your own statement: we've fewer resources now than humanity had in the 1700s, by virtue of burning our way through them.
    - jqm 12y ago
      Interesting. For the record I agree with you. Resource scarcity is a looming issue and a game changer. And yet here we are... happily driving our SUV's 50 miles each way to sit at a computer. (Presumably the Easter Islander that cut down the last tree didn't stop and think "gee, maybe I should have a tiny fire tonight" either.) So from the point of view of our current way of doing things I do have to say... the long term economic outlook doesn't appear so great. But there are things the "could" happen to change this. A breakthrough in energy (unlikely). A sudden loss of 2-3 billion people from the planet (sadly, more likely). A war resulting in an entirely new social order which is more efficient (or less efficient). Just a lot of factors make it hard to say what will happen.
      - dredmorbius 12y ago
        And the timeline is much shorter than most people think. Oil production is already contracting (conventional certainly, net of unconventional "tight" sources such as fracked oil, possibly). Exponential consumption rate exhaustion based on GP's Annual Review 2013 is 2048-2049. Which suggests that flow rates (which sustain modern civilization) will start falling precipitously well before then.

by jqm 12y ago

dredmorbius 12y ago

I'd actually argue almost entirely the opposite. Near-term economic forecasting is difficult (though there may be some accuracy in the very near term). Long-term, you can accurately forecast economic trends based on overall resource availability. See the Limits to Growth baseline model.

jqm 12y ago
Resource availability is a very important component to economic growth. But I might point out... they had more resources than we do now in the 1700's. So there are other components. Technology being one of them. Can anyone predict what we will be able to do in 50 or 100 or 200 years? Or what else might happen between now and then?
- dredmorbius 12y ago
  Gregory Clarke's an economic historian at UC Davis. Among his online lectures is an interesting bit on why the Industrial Revolution was delayed 100,000 years: http://www.youtube.com/watch?v=aalpFYIdqEo http://www.youtube.com/watch?v=aalpFYIdqEo Among factors you might want to consider: Britain is built on coal. It was washing up on the beaches (the early name for it was "seacoal"). Coal, oil, and gas were known to the ancients. What they lacked was a decent means to haul it any distance. Easier to grow your own hydrocarbons locally than dig them out of some smelly pit a few hundred, or thousand, miles away. So unless you happened to sit right next to a coal pit, tar seep, oil well, or gas jet, you burned wood. England turned to coal as it was burning through its forests. We've been prospecting for other resources. We've got a pretty good idea of what there is, and an even better idea of what there isn't. Joseph Tainter writes on collapse and complexity. Among his points: societies don't adopt complexity unless there's a compelling need (and benefit). It's better to survive at a simple level, much of the time. You'll even see this today in IT. And by your own statement: we've fewer resources now than humanity had in the 1700s, by virtue of burning our way through them.
  - jqm 12y ago
    Interesting. For the record I agree with you. Resource scarcity is a looming issue and a game changer. And yet here we are... happily driving our SUV's 50 miles each way to sit at a computer. (Presumably the Easter Islander that cut down the last tree didn't stop and think "gee, maybe I should have a tiny fire tonight" either.) So from the point of view of our current way of doing things I do have to say... the long term economic outlook doesn't appear so great. But there are things the "could" happen to change this. A breakthrough in energy (unlikely). A sudden loss of 2-3 billion people from the planet (sadly, more likely). A war resulting in an entirely new social order which is more efficient (or less efficient). Just a lot of factors make it hard to say what will happen.
    - dredmorbius 12y ago
      And the timeline is much shorter than most people think. Oil production is already contracting (conventional certainly, net of unconventional "tight" sources such as fracked oil, possibly). Exponential consumption rate exhaustion based on GP's Annual Review 2013 is 2048-2049. Which suggests that flow rates (which sustain modern civilization) will start falling precipitously well before then.