Economics of Growth

If you want people to buy something, you can do one or both of two things. You can lower the price, or you can make it more attractive than the other choices. The amount that everyone wants to buy is called demand. But that's only half the story, because you need to have enough of it to sell them. That's called supply. The more supply you have, the more you can sell, and the more demand you can handle. Creating a supply of something takes a lot of work, whether it's digging something out of the ground or training yourself so you can teach someone. It also takes work to get what you're selling to the people who want it. Most people want some reward for the work they do, especially if it's something new and there's some risk involved, so they increase the price by the amount of reward they want. That increase is called profit.

In a community that doesn’t use money, people are expected to work, both taking care of themselves and helping the community. The work is the price they pay. What they “buy” are all the advantages of a group: mutual protection, help on projects too big for one person, and emotional support. But this only applies to communities that either can't or won't grow in size or wealth (the amount of resources each person can consume).

If a community does choose to grow, then the people working on the growth aren't buying the advantages of the group any more, they're buying the promise of having a more resources in the future. But it is a promise, not a sure thing. That's where risk comes in. The people developing new resources still need to survive, so the community pays them without knowing for sure that they'll get anything back. That's called “investment.” When and if the new resources become available, then the difference between the amount of new resources and the investment is the profit, which is equivalent to the amount of growth.

Revaluing the Free

It seems like everywhere you go these days, you’ve got to pay.

Natural areas are being bought up by neighborhood groups so that only residents can experience them. Almost all water is either owned or so polluted that we must fork over money to someone to drink it or use it (either by having it piped into our homes or buying filters for use in the woods). If we want to see the stars (more than the few commonly visible in urban areas), we must pay dearly for the gasoline it takes to find a public, unobstructed view. Even breathing the air isn’t free, as companies and governments pass on the cost of equipment that allows their vehicles and factories to conform to environmental regulations.

For most of human history, Nature supplied everything for free, provided that it remained reusable. Even people, when they died, were recycled into the system. Most estimates indicate that if we were to successfully replace Nature’s products and services today, we would need to more than double the size of the world economy; and the vast majority of what we produced would not be reusable and eventually become waste. If we ever do figure out how to make everything totally reusable, then we will very likely end up with something close to what we started with, namely Nature.

If Nature is so efficient, and everything except human labor is free, why do we insist on keeping people involved in producing what we use and therefore paying for it? The most probable answer is that Nature is trying to limit our growth. Over the last couple of centuries, thanks largely to science, technology, and increased access to both (due to social and economic development), life expectancy has roughly doubled and our population is more than six times larger. By displacing Nature, we’re buying more life in years and people.

Unfortunately we’re not necessarily getting happier in the process. Statistical studies of happiness, personal longevity, and resource consumption indicate that we have now reached what economists might call a “point of diminishing returns” where more consumption does not necessarily increase (and may actually decrease) one’s satisfaction with life. There are, however, some of us who have learned how to live well, long, and efficiently. So perhaps there’s a chance that the rest can compromise a bit with Nature, and recycle more of our stuff then ourselves.

Some of us actually like Nature at least as much as our artifacts, and would rather that it stick around a while longer without someone (like us) paying through the nose for the privilege. Those who are really fed up with the culture of perpetual payment tend to move closer to the object of their affection, and end up both paying and inadvertently destroying what they’re trying to reconnect with.

Like it or not, the only practical (if difficult) way to give Nature a chance and stop heading down the path of paying for everything is to convince everyone to stop trying to replace Nature with something else, while avoiding a decrease in how long we all live.

Connecting the Dots

Consider the following facts, and ask yourself: What do they collectively mean?

• Light pollution has grown so great that some people in the world can see fewer than 200 of the possible 1,900 visible stars.
• Nature provides free products and services that are likely worth at least as much as the entire world economy.
• The world uses at least 25% more natural resources than the planet can replace, and this fraction continues to increase (as does per capita consumption).
• People’s satisfaction with life does not necessarily correlate with economic success and ecological impact.
• About 6% of all the people who have ever lived are alive today.
• The world death rate has dropped by 7% since 2000, while the world birth rate has dropped by 9% over the same period.
• If everyone suddenly disappeared, the rest of Nature would totally reclaim our planet in less than 100,000 years.

I see these facts as dots on a picture of human history. When the dots are connected, they highlight a critical point in humanity’s ongoing effort to fill the Universe with people and artifacts.

What resources remain on this planet are now measurable in terms that individuals can grasp, economic and visual; yet inexplicably individuals continue to consume more resources each year, despite its questionable improvement of their lives. One response may be the decrease in birth rate: If there are fewer resources, then fewer people can have access to them (it should be noted that the more convention explanation for the reduced birth rate is more economically empowered women having children later in life, which does not appear to be tied to resources at all).

We are at a point where we must either start replacing with human effort and artifacts the products and services that Nature has been providing us, or we must reduce our impact on the planet, letting other species partially reclaim what we have taken. We must either allow some of what we use to be “free,” or we must start paying dearly for it.

Hope

Our species is now at a point where it cannot continue its historical consumption of resources. What for years has been known as a mathematical certainty is now becoming obvious in our daily lives: Exponential growth is inherently unsustainable. The huge amount of waste we are generating is verifiably influencing our planet’s climate in potentially cataclysmic ways. Because of our overuse of land and water, species are becoming extinct at rates comparable to what we would expect from an asteroid collision. Our energy supplies may soon (if not already) be unable to keep up with the rapid increase in demand.

We have become so accustomed to exponential growth that we view any decrease in its rate as a sign of weakness in our economy and our culture. If we “hope” for a continuation, if not an acceleration, of such growth, then we are bound to be disappointed because the most fundamental natural laws will stop us in our tracks: We will simply be unable to reach resources fast enough. If we try to force the issue, as appears to be the world’s current strategy, then we risk total population collapse.

A healthier approach is to hope for something more general, which can be defined as a goal. I recommend maximizing population size and individual happiness and longevity, as far into the future as physically possible. Such a goal is practical by definition, and progress toward it (the “change” we achieve) can be easily measured. Any one of us could identify and test our contribution to meeting the goal, and hold each other accountable for working against it. Because the goal would include and depend on all of us, there would be no one left to fear.

Hope starts out as idealistic, and change is what we do to make it realistic. If a growing fraction of our population subscribes to a hope that is general enough for the rest to respect, then perhaps we can come close to creating a world we and future generations will both be able to, and want to, live in.

Change and Hope

If there are any two words that summarize this election cycle, they are “change” and “hope.” While presidential hopeful Barack Obama has done to most to frame the political discussion in these terms, we can thank President Bush and the conservative wing of the Republican Party for creating the demand for what they represent.

There can be no doubt except among the delusional among us that our country’s leaders have done great damage by systematically reconfiguring government to conform to their overly simplistic view of the world. People with their values and perceptions are good, and everyone else either needs to be converted, enslaved, or rendered powerless (if not dead). Ironically, many of these very same leaders claim to be followers of Jesus, whose philosophy of love and acceptance was the exact opposite of theirs.

The situation has gotten so bad that “change” is now synonymous with reaffirming the basic tenets of the Constitution and the rights that have been incrementally bestowed on people since that great document was written. That we have even debated the use of torture or the granting of immunity to companies and government agents for spying on American citizens is a testament to how low we have sunk.

Hope and fear are similar concepts with opposing outcomes. Both involve the creation of expectations, one good and the other bad. Hope attracts us toward something we want, while fear drives us away from something that threatens us. In practice, hope expands our freedom of action and fear constricts it. The destruction of people and cultures that we are unfamiliar with is a knee-jerk reaction to fear, which makes it an effective if blunt weapon for terrorists and cynical politicians alike. Hope, like its close cousin faith, enables us to act in the absence of certainty, thus optimizing our chances of success.

We have lived under a cloud of fear for several years now, with predictable results. Fortunately that cloud is lifting as the majority of us have become aware of its costs. We must however be careful, as the old saying warns, with what we hope for to take its place.

Inherent Error

My father used to tell the story of a meeting where, as an advocate for children with learning disabilities, he confronted a politician with evidence that a major law affecting the treatment of those children in the public schools wasn't working. The politician's solution was simply to tell the schools to follow the law. “How will you make sure they're following the law?” my father asked, incredulous. “I'll just tell them to,” the politician responded. For many years afterward, this exchange was used by my father as a prime example of how politicians, like many managers in industry, were more interested in appearing to do something than achieving verifiable results. In my first career as a test engineer, I came to refer to this phenomenon as “the appearance of functionality.”

In the personality cult that has become the Republican Party (to which I once proudly belonged with my father), I see the same dynamic at work regarding the assessment of new laws that grant the president vast new powers, the most recent example being the updated FISA law. If the president's intentions are good and the cause is right, which many Republicans in Congress seem to believe, then a law can be approved without any consideration of oversight. These politicians are unwilling or unable to accept any challenge to their beliefs, especially if the challenge comes from people of a different political persuasion. Any obvious red flags are ignored, such as the new FISA law's provision for retroactive immunity to telecom companies for unspecified actions.

Suppose, as in my father's example, the politicians who pass a law have honorable intentions; and fully intend to follow its provisions. Is oversight really necessary? The answer, I would argue, is still a resounding “Yes!”

As a test engineer, I saw over and over again how even with the strictest controls and most up-to-date technology, physics and humans (like it or not, just another part of Nature) could never get repeatedly closer than ten percent to any given goal. The obvious and best way to deal with this fact of life is to set one's goals at least ten percent higher than what is required (conversely, if someone loosens a specification rather than tightening it, then the error becomes ten percent of a larger number). I also noticed that quality tended to slip when the amount of testing was reduced, often in response to tight schedules; so I walked away with another important lesson: Don't take ANYTHING for granted.

Faith, I've concluded, is dangerous when applied to anything important. With the strictest oversight, a law, like a product specification, can be expected to be properly followed 90 percent of the time. Without oversight, that fraction may be as low as 50 percent. When evaluating a new law or a change to an existing one, we and our representatives must ask ourselves if we can live with the consequences of the inherent error, and adjust the law accordingly.

Confrontation or Appeasement?

It took a while, but Republicans finally have turned back to their most successful strategy for keeping power since 9/11: Framing the upcoming election as a choice between confrontation and appeasement in the so-called “war on terror.” If Democrats are elected, the argument goes, the U.S. will surrender to the terrorists by leaving Iraq, and invite more attacks on our soil. Put another way: If our leaders deviate from their aggressive stance in their response to the terrorist attacks, they will be showing weakness that our enemies can exploit. Even suggesting that we exercised poor judgment in invading Iraq would “embolden our enemies.”

There are several fundamental questions worth exploring here. First, is the threat we face being accurately characterized? Second, how reliable is the assertion that those who threaten us will react in the way we are told?

From the Pulitzer Prize winning history of Al-Qaeda, The Looming Tower: Al-Qaeda and the Road to 9/11, it is clear that the preeminent motivation of the people who attacked the United States was the perception that Muslim culture (as they defined it) was being marginalized by Western culture. They were deeply insulted and felt that the core of their identity was mortally threatened. In physical terms, the infidels were in person or by proxy stealing and defiling their holy land and artifacts, as well as corrupting their people.

If there was an underlying reality being created unconsciously before the attacks, it became a conscious crusade (literally and figuratively) afterwards, with the overthrow of the Taliban and occupation of Iraq serving as clear confirmation of the disenfranchised Muslims' worst fears. Recruitment of terrorists has un-surprisingly benefited from this, effectively increasing the threat they pose as demonstrated by the dramatic increase in attacks around the world since the Iraq occupation began.

Given these facts, the Republican version of the terrorist threat is tragically incomplete by refusing to admit our role in creating and amplifying the threat. We are not fighting an enemy who can be beaten through force or cultural imperialism, because these approaches are the source of the enemy's numbers and resolve. The enemy is not an entity that can uniformly surrender in any case; it is far more diffuse than the easily recognized groups with common characteristics that we are used to fighting.

On the other hand, the people we've already alienated are unlikely to interpret a reversal of course in our most blatant aggression or an admission of poor judgment as a true change of character or intent (even the aggression could be restarted by a close presidential election or another attack). There is also no reason to believe that our increasing cultural domination will voluntarily stop in any case; the world is far too interconnected and dependent on key elements of our culture for the continued growth of material wealth, the pursuit of which is in direct contradiction to the ascetic and spiritually dominated way of life promoted by the people we are fighting.

Perhaps the best we might hope for is a reduction of hostilities: a focus on eliminating the use of deadly force (murder by any other name), regardless of its provocation. This may require more of a criminal justice model than a military one. At the same time, we can work to preserve, as much as possible, every cultural group (subject to limits on hurtful and deadly behavior), much as DNA carries the building blocks for many traits not manifested throughout an organism, and available for more total activation when conditions radically change.

Ideal World Update

One of the first suggestions I made about how to create an ideal world was to get everyone in the world to support the goal of maximizing the size and welfare of the entire population over time. I later detailed how I thought we could evaluate our progress toward this goal: Multiply the population by ideality for every year and add these numbers (each an “Ideal World Index”) together as far into the future as possible, based on the best simulations we could create. Theoretically, every decision we make affects the actual result, which we would like to be very, very large.

I then spent a lot of time describing and refining my approach to simulating population and ideality, perhaps more time than my readers had patience for. The effort was driven by my need to understand the disturbing prediction of an earlier model (really, just a curve fit of cumulative consumption and population) that showed the population crashing rather abruptly early in this century after peaking in 2020. The current state of simulation, what I’ve been calling my “population-consumption model,” has achieved lower than 20 percent error in consumption (typically less than 10 percent), and less than 5 percent error in population over three types of resources: ecological, energy, and economic. As a consequence, the population was projected to peak a little bit later (between 2035 for ecological resources and 2049 for economic resources), and it dropped more gradually (though still to zero). There was also an added bonus: I could now anticipate non-zero populations with higher consumption (aside from the hand-waving argument that we would learn to eat rocks), and evaluate what it would take to achieve them.

All the time, I was aware how kooky the whole notion must be to the people I know, that there was even a tiny chance that the world’s population would start to crash in our lifetimes. Years ago, I read a great book called Limits to Growth: The 30-Year Update, which did a much more thorough job of simulating population and lifestyle than I could ever do. My own modeling began as a way of testing the book’s conclusions, including some population graphs which are eerily similar to the ones I am now generating (the book’s business-as-usual graph follows mine based on ecological resources for the next decade, then peaks about a decade sooner than mine; the book takes into account negative effects from waste, which may be responsible for much of the difference). The bottom line is that I convinced myself of the empirical plausibility of the book’s arguments, had fun exploring some related ideas in the process, and have practically decided to spend the rest of my life trying to keep the disaster from happening.

Perhaps to create an “ideal world” is to just create a world where the worst doesn’t happen. The need for global cooperation is still there: the problems are too huge for any group or even country to deal with on its own. As I say in my rapidly growing active Web site dedicated to this study, “With power comes responsibility, but far too many of us are in denial of our power and unwilling to accept the responsibility that comes with it. Unfortunately, we no longer have that option.”

The Politics of Global Survival

In this (U.S.) political season, it is easy to focus on the minutiae of policy and character differences between the various candidates for president and other offices. We should not, however, lose sight of the greatest issues that confront us; and we should evaluate our politicians based on how well they will deal with these issues.

Here, in no particular order, are the issues I think should take front-and-center stage in our deliberations:

• An economy awash in debt and headed for deep recession, if not depression
• The predations of neoconservative ideologues bent on accelerating consumption through economic exploitation of the world’s population
• A broken health care system whose costs could eventually overwhelm most citizens, as everyone seeks the best care possible, even at the expense of the most basic care for others
• A growing cadre of religious extremists, Christian and Muslim, engaged in a no-holds-barred war for the cultural domination of the planet
• Depletion of energy resources which could literally cause our global economy to sputter to a halt
• Massive changes in the natural systems that support Earth’s biosphere, brought on by our exponential generation of waste, which are contributing to species extinction rates that haven’t been seen in 65 million years

At the root of most of these issues is people’s desire to control or use everything – and everyone – they can get their hands on. Our prospective leaders will either serve this desire or attempt to rein it in. Those who serve it are promoting death; while those who don’t offer a chance to promote life.

From this lofty perspective, it’s hard to draw much of a distinction among the candidates and their parties. All appear to be pandering to our fatal desire, offering one set of quick fixes or another without appearing to grasp the core of the problem. If there is a distinction, it is that Democrats want to use government to even out the distribution of wealth throughout the population while Republicans want to focus on increasing the overall amount of wealth and let the economic equivalent of natural selection determine the distribution. Another, relatively minor distinction is the means by which the parties would prefer to increase per capita consumption, the physical manifestation of the desire that’s killing us: Republicans embrace predation, whereas Democrats would rather people work together to acquire what they want and need.

What is most likely to happen is that politicians will be elected with agendas that project current trends, and be forced to consider more rational ones as realization dawns that those trends must radically change, in ways they can now scarcely imagine. Which of the candidates will best adapt to this new knowledge and be most likely to turn it into effective action? This may be the most practical question to ask ourselves as we prepare to vote.

Sacred Cows

For readers who are interested in more down-and-dirty details about my population-consumption model, you can now find them along with updated projections and related information on the Web site Bigpicexplorer.com.

I now feel confident enough in the model to actively solicit feedback from people who have professionally studied the relevant issues. Of course, the opinions of anyone and everyone are important to me, but I mainly want to know if there are any major flaws in the model which need to be addressed. It is one thing to develop a theory and discuss its potential implications on an obscure blog, and quite another to vigorously and publicly challenge some of most basic notions that people organize their lives around.

Perhaps the most sacred of the “sacred cows” we hang onto is the idea that with ingenuity and hard work we can perpetually increase both our numbers and our standard of living. I am far from the first to challenge this view; indeed much of my recent work has simply involved testing its validity in my own terms. My conclusion, that with ingenuity and hard work we’ll be lucky to just maintain our numbers, is one I’ve come to reluctantly because I’m one of the people whose beliefs it offends.

My model threatens another sacred cow, one shared by subscribers to “sustainability”: that we can extend our collective lifetimes by reducing our consumption and maintaining only a replacement birth rate. For this strategy to work, the model projects that we would need to almost instantaneously cut our per capita consumption of ecological resources by nearly half so that we could use only the currently available renewable resources (capacity). If we only gradually decreased our per capita consumption, we would risk eroding the capacity before consumption dipped below it, thus setting the final per capita consumption below what we needed to survive. If we aggressively decreased our per capita growth rate as much as we could (by affecting its growth rate), we would need to keep a positive birth rate to avoid losing population from resource depletion; with historical natural population growth, we would end up with per capita consumption that was 40 percent of its current value by the time we could finally stabilize the population (at 9.5 billion people).