Monday, January 26, 2015

Spaceship Finance

In its simplest form, personal financial planning is governed by one inescapable requirement: Total income over remaining lifetime must be greater than or equal to expenses over remaining lifetime. If you're lucky, "remaining lifetime" is the sum of working years and retirement years, where you are not physically working during retirement.

In practice, planning gets complicated by the many forms of income and expense, but even they can be simplified when you realize that there are basically only two types of each: constant and exponential. The exponential types, in particular, can get pretty tricky, since they depend on the ability to accelerate growth of money without limits, and that money can represent both physical things and non-physical things. As the constant types have been increasingly linked to the exponential types (for example, your "constant" salary is likely paid by an employer who relies on exponential growth in profits), they too have become harder to plan for.

Now that we face hard limits to the availability of quality ecological resources, upon which our economy and our physical survival is based, basic assumptions built into our economy are beginning to lose their usefulness, which is making successful planning by most individuals and many organizations even more difficult. In addition to reducing room for growth, which has been assumed to be infinite, we are degrading the ability of social and physical ecosystems to absorb or nullify the negative effects of our actions within a period of time that is meaningful to people. This results in decreasing exponential income and increasing exponential expense, as an average, for our whole population, which reduces our effective lifetime.

One positive aspect of our situation is that we are collectively becoming a global village, re-creating some important dynamics of near-isolated communities of the past. In an idealized version of such a community, the social and environmental impacts of economic activity were felt directly by both businesses and their customers. Since the number of prospective customers was practically limited, businesses had to focus on keeping them satisfied; and since resources were limited, their consumption had to be kept below the regeneration rate (such as the growth of new trees for wood) if the business along with the community was to survive over a long period of time. Businesses were rewarded with enough profit to create new products or services only if they could find more resources or efficiencies in the use of existing resources, and if it didn't result in harming the community. Exponential growth became possible as a community's territory expanded and its population grew to take advantage of the newly available resources. Combining of multiple communities also contributed to that growth, leading to our present situation. Enabled by multiple technologies that have also grown exponentially, we have turned much of our planet-sized spaceship into a giant community of communities, subject to rules of survival similar to the ones those early communities had to live with, but without most of the self-replenishing resources they had.

Our new community and the environment it occupies is much more complex than the ones we were naturally evolved to maintain, which is a big reason for our heavy dependence on technology. Our computers and communications enable us to share and mentally process experiences around our community, translating its complexity into much simpler forms we can comprehend, thus keeping us from being aware of all but the largest of the consequences of our actions, and, even then, not with the gut-level feedback we naturally depend upon for knowing and acting to change the status of our environment. Put another way: We have taken over Spaceship Earth by cannibalizing its parts for our pleasure and thereby sabotaging its life support systems, while knowing a lot about the small part we were supposed to operate before we went rogue, and knowing very little about the rest of it.

One thing we do know is that life tends to maintain habitability for itself, and there is still a chance that species we haven't destroyed could fix enough of the damage we've inflicted to keep our planet habitable (if still uncomfortable) for at least a few decades more than if we don't let them. To give them that chance, we will need to let them have more resources. From a personal finance point of view, I estimate will all need to learn to limit our individual expenses to under $12,000 per year, which, not surprisingly, is most easily done by reinforcing the necessary regrowth of natural ecosystems and their denizens so they can provide more replenishing resources like what we evolved to consume (of which we should use less than half). This should also help reduce our greenhouse gas emissions, one of our largest negative impacts on ecosystems both directly and indirectly (through climate change).

Ideally, the world community would eventually function like an isolated sustainable community, utilizing exponential income and expense only as necessary to deal with conditions that require swift growth or contraction to maintain survivability, instead of an ongoing expectation for personal gain. For most of us, our life focus would shift to favoring quality over quantity. The inevitable fraction of the population that found this impossible to live with would have the option, like generations of the past, to explore new environments – this time in space – and make them habitable for people, so long as those efforts did not degrade the lives of existing communities.

Friday, January 16, 2015

Year Of Validation

It is now a year since I made the first projections into the future using my population-consumption model. At that time, I had identified three representative scenarios of what would happen after 2008, when the model showed humanity using up all of the valuable ecological resources that weren't already enlisted in maintaining civilization (technically, the number of "environments" people had created equaled the number of possible environments using available resources). A newly published academic study indicates that consumption of major resources other than energy reached a peak around 2006, apparently corroborating this critical point in the model's projection (which was later refined to 2009).

A few months ago, the WWF's latest Living Planet Report famously highlighted the fact that animal populations dropped by little more than half between 1970 and 2010. This too is consistent with my model, which in its last iteration showed a 55% drop in the Living Planet Index (LPI) over the same period. The model uses the LPI as a proxy for the amount of available ecological resources, and the amount of resources we are using as proportional to the global ecological footprint, so this and the consumption study are significant data points in validation of the model.

One other aspect of the model appears to have been partly validated over the past year, which I referred to in a previous blog post. As happiness increases, it takes more resources to become happier; and above a certain threshold (82%), consumption (of ecological resources) becomes negative, which I interpret as the consumption of virtual resources. My model includes the observation that our economy is based on the valuation of environments that theoretically would provide maximum happiness, and in one of its first validation exercises, reproduced our unequal distribution of wealth as a result of the economy's positive valuation of the excessive happiness of a few people. Since money is used to trade real things, that money is expected to represent real resources (even though they are in fact virtual) and therefore it appears that the rich are hoarding a lot of resources and effectively stealing from everyone else. It is logical to assume that the excessive happiness is likely met by using other people rather than other parts of Nature, and this would manifest as what the rest of us would consider antisocial behavior, with an associated reduction in conscience and empathy that enables people to be treated as things to be used for gratification (what I've called the root of all evil). The studies I learned about seem to verify this assessment. For me, the scariest part of this analysis has been the capacity of a few people to own everything, especially given the complexity of the systems we all operate under and the physical limitations we all have in comprehending, much less managing, what's around us; that they would become sociopaths makes it even worse.

The three projection scenarios I started with a year ago were based on simple extrapolations of happiness over time, and its effects on population and consumption. Those with the most physical credibility resulted in a catastrophic decrease in population, starting soon. I followed those projections with a series of simulations, producing theoretical versions of the world using random values of variables my model had identified based on research into the past, and then generalized the results which I have since considered more reliable and used as the basis for the projections and recommendations that I've presented since then. Given how sensitive the projections are over the next two to five years, we should know soon whether the model is truly valid. As a scientist, I can't wait. As a person, I wish I could wait forever.

Wednesday, January 14, 2015

Spaceship Logic

We are the latest of many generations of astronauts on an intricately complex spaceship that is orbiting the Galaxy every 200 million years or so. Like other astronauts, we have a set of jobs to do in order to keep the spaceship functioning and its passengers alive. Unlike other astronauts, most of us have abandoned our jobs, and have been tearing apart the spaceship to create and maintain playgrounds so more of us can have more fun. We have been doing this without understanding or caring about how it affects how the spaceship works.

There are now many of us who have grown up in the playgrounds and know nothing else, including what our original jobs were. This is unfortunate, because we have now done so much damage to the spaceship that its life support systems are breaking down. The other astronauts have worked valiantly to repair the damage since they depend on the spaceship for survival too; but we have treated them like the rest of the spaceship, without regard for their value as fellow astronauts, what their jobs are, and what will happen when they can't do their jobs.

The lives of all aboard the spaceship depend upon using and reusing almost everything, preferably during the lifetimes of its passengers. It has many mechanisms for ensuring this, including passengers eating other passengers and converting them into forms that others can use, as well as producing more passengers. We have disrupted these processes, which is a large part of the damage we've done, by either hoarding a lot of what we take, or turning it into forms that others can't use within the time they need for survival.

Conditions have grown so bad that our playgrounds are in danger and people are becoming sick enough to notice. A growing number of us are realizing in horror that it may soon be too late to repair the damage before it kills our generation of fellow astronauts, and they are raising alarms. The alarms are muted, however, because the majority have grown up depending on the playgrounds and the people who manage them for their survival and fulfillment, and they are trapped, at least psychologically, in the patterns of living they know there. They continue to plan their lives so they can work for only part of the time, and enjoy a few of their later years without working; in part through saving, and in part by subsidizing the growth of activity by others, using abstractions that shield them from the real effects of what they do. The alarms make little sense, because the rest of the spaceship has no meaning except as a source of material for food and construction, and as a dumping ground for what we don't use.

Based on the logic of the playground, our best response is to make better playgrounds, isolated from the threat. This is, of course, the worst thing we can do, because it will cause more damage, amplifying the threat. We will be essentially fighting ourselves until we lose, and sadly most of us may never understand why. Our best hope is to keep that from happening by replacing the logic of the playground with the logic of the spaceship, and gaining more knowledge about how everything works by experiencing it with an open mind and respect grounded in our identity as part of the spaceship, instead of something apart.