Economic Growth - Are We Approaching A Limit?

[grumpy]

A lot of what I have been reading in the financial press talks about the slowing of economic growth. In light of the old adage that "trees don't grow to the sky" are we approaching the point where world economic growth simply can't continue?

That is, are we getting to the point where we simply cannot produce more goods and services (world wide) due to diminished natural resources, pollution, inability of organizations (both corporate and gov't) to manage operations on such a large scale efficiently?

Logically, economic growth cannot continue infinitely. Is it possible for economies to exist in a stable state, without the engine of continued growth? Or is economic collapse unavoidable if growth is not sustained?

Opinions please.

 

[REWahoo]

A lot of what I have been reading in the financial press...

I think we've identified the source of your problem.

 

[grumpy]

I think we've identified the source of your problem.

Your thoughtful reply is appreciated

 

[Retch The Grate]

Didn't somebody link these the other day?

Galactic-Scale Energy | Do the Math
Can Economic Growth Last? | Do the Math

No, exponential growth can't go on forever. Yes this means some very fundamental changes sometime in the next couple hundred years at most. It seems likely that societies can exist in stable states, because we've had periods where the growth was so small that exponential increases didn't mean any appreciable change in net economy. Of course we were pretty darn primitive back then. It isn't clear that we can glean a lot of lessons from those cultures.

 

[Ronstar]

I don't think growth can continue with baby boomers retiring and spending less. We represent such a large percentage of the population that our lifestyle changes can negatively affect economic growth. The GDP peaked in 2008 and is not going to reach that level for some time.

 

[clifp]

Didn't somebody link these the other day?

Galactic-Scale Energy | Do the Math
Can Economic Growth Last? | Do the Math

No, exponential growth can't go on forever. Yes this means some very fundamental changes sometime in the next couple hundred years at most. It seems likely that societies can exist in stable states, because we've had periods where the growth was so small that exponential increases didn't mean any appreciable change in net economy. Of course we were pretty darn primitive back then. It isn't clear that we can glean a lot of lessons from those cultures.

I disagree because so much of the future growth will be in the increased efficiency of delivering services and much of that will be in a virtual world.

For instance imagine how this process of discussing the limits of future growth would have happened a hundred of years ago. You and I would read an article in the local newspaper. We then pull out a pen and get or thoughts on paper. Perhaps if were very ambitious go to the local library to collect further data. The letter would have been carried by hand, horseback, or for the rich by motor car to the post office. The post office would turn use a similar means of transportation to deliver our letter to the editor to the local newspaper. A man would set type, ink and newsprint would consumed to print the letter. Than more energy would have be used to distribute the newspaper.

Now days these service/process only require us to spend tens of minutes typing on a keyboard and conducting a google search to back up our claims.

However, I predict in the not to distant future all of this typing and searching will be instead performed by our neural implanted computers. We will only have to think of a response, the computers will add additional depth and content to our response. Our response will be delivered to other person electronically. Where his neural implant computer will fact check and summarize the response and prioritize its delivery directly to your brain.

So a process that use to consume days, many man hours, lots of paper, and a significant energy consumption a 100 years ago now uses only a few minutes a fraction of kilowatt hour, will be done in seconds 50 or 100 years for now and only consume milliwatt hours.

I actually expect growth to accelerate over time.

 

[chinaco]

We have a number of interrelated and complicated problems. I know I do not understand them all.

One big issue that we are facing is stiff global competition. One one side we get the advantage of lower costs on certain goods... but we have also been losing high paying jobs in manufacturing and services as they are relocated to other countries.

We also have a large percentage of people that are older (aging population).... which is a cost to the rest of the working population (they are not productive in an economic sense.. they use resources and do not produce).

There are many more... I am sure others will chime in.

 

[Midpack]

It's an interesting question, but I don't know how to go about answering it.

There is no question resources will limit growth eventually, but I don't know when it happens. Interestingly running out of resources led to the decline of many former advanced civilizations on the planet. In those cases, resources were necessarily local (building materials, drinking water, soil without nutrients depleted to farm, etc,), but it's a small world now so we're capable of exhausting the resources anywhere, scary thought.

And the small world has given us international geopolitical issues that weren't even possible until the last century or less. I mention this only because more $ is being [-]wasted[/-] spent on these threats now instead of improving personal wealth.

Jeeeeeeez, now I'm depressed...

And a lot of the prosperity we've enjoyed in the past several centuries as been predicated on continued growth. I can't name a country that has done well without growing...

 

[slingshot]

Read here...

Mike Folkerth - King of Simple - Western Colorado

(Except that is the first time I have tried a link, and it doesn't look right)

 

[JOHNNIE36]

grumpy, I can't say I agree with you totally, but I know where you're coming from. Just thinking about the things that made our country great with respect to manufacturing, the things that have come and gone, the phases and cycles we go through. I'm not saying we invented all these things but we developed most and our people made a living off it. Take the automobile. I read that for every person employed by a car maker there are six outside jobs supporting that person. Look what aviation, the medical field, computers, energy, television, the military, space and farming have done. How many other have I missed?

It's time to think outside the box. How about this. I can't believe what is happening in Africa. With all the resources in the world, why is anyone on this planet starving. We have so much food we are converting it to energy or throwing it away. Oh, I know that a big part of the problem is the political factions and corruption. Don't tell me someone couldn't devise a plan to irrigate that country and teach them to farm. You know the old saying, "give a man a fish and feed him for a day, but teach him to fish and feed him for the rest of his life."

Sorry, just venting in a way. Hoping and praying something or someone, someday will find a solution by thinking outside the box.

 

[GregLee]

I disagree because so much of the future growth will be in the increased efficiency of delivering services and much of that will be in a virtual world.

I agree with your disagreement. As I understand it, the argument that there are necessarily limits to growth, assumes that the demands of growth on resources are exponential, while the mitigating factors of increased efficiency and increasing resources are merely linear. Given those assumptions, perhaps it does follow that growth necessarily has limits, but why should we assume that the mitigating factors grow only linearly?

 

[donheff]

Don't be pessimistic. All we need is something like cold fusion and we will be off to the races. Do you really think we are at the end of history?

 

[samclem]

However, I predict in the not to distant future all of this typing and searching will be instead performed by our neural implanted computers. We will only have to think of a response, the computers will add additional depth and content to our response. Our response will be delivered to other person electronically. Where his neural implant computer will fact check and summarize the response and prioritize its delivery directly to your brain.

Hmm . . .why keep the slowest, most error-prone and unreliable component, the human brain, in this lash-up? I sense some anthrocentrism.

We'll all be sitting on our sofas, hyped up on Soma, watching animations designed by the megacyber. Our robots will tell us anything we need to know, and throw bon-bons into our mouths at frequent intervals.

 

[GregLee]

I sense some anthrocentrism.

Well, of course. How can we not be anthrocentric (being, uh, anthro)? Even if we envision a future with machines only, and no biological remnants of ourselves, still, it will be we who designed the machines, and they will consequently be our intellectual descendants.

 

[kumquat]

Sooner or later, something has to give. When is sooner or later, that is the question.

In 1972, the Club of Rome published "The Limits to Growth" which was a computer simulation of population growth vs. economic/food-supply/energy supply growth. It suggested that we'd be in the stone age by now. Didn't happen.

Then came, among other things, the "Green Revolution" . The world manages to feed more people than predicted. Why?

I think we're good for a few years yet:

• Running out of energy? Maybe we'll find more fuel. Maybe we'll learn fusion.
• Running out of food? Maybe we won't waste so much (another topic for another day), Maybe we'll have a second "Green Revolution".
• Running out of oil/iron/whatever? We keep finding more.

Sooner or later, though, if things continue as they are, the there will be more people on earth than there is space for them. That day is a long way away and may never happen. If it does, I don't know how we will feed or house them.

Traditionally, economic growth came with population growth. Expanding families mean expanding labour supplies and demand. Sooner or later (just how much later, we don't know) population growth must cease. That doesn't mean economic growth must. Look at China. While their 1-child policy has slowed population growth, it hasn't hurt their economy. Why can't economic growth be based on a much better standard of living for the people here rather than a small increase for many more people?

What the future holds is unknowable. Unfortunately (or fortunately) most of us who are ER'd or RE'd won't live long enough to see the outcome.

 

[samclem]

Traditionally, economic growth came with population growth. Expanding families mean expanding labour supplies and demand.

Wouldn't you agree that the main factor producing economic growth was increased productivity? There are plenty of countries that stayed dirt poor despite large and growing populations. As long as we can continue to improve productivity, given the growing constraints of resource availability, we'll continue to have economic growth.

Can stable societies exist without economic growth? I'd say it's more a question of sociology or psychology or politics than economics. In recent history (not ancient history) there have been uprisings and turmoil when people saw no hope for improvement in their lot. And more prosperous neighboring countries overtake (sometimes with military force) weaker countries.

 

[kumquat]

You certainly have a point. I'd suggest that the fastest growing economies in the last 100 years were sustained by a growing population but IANAE (I am not an economist). I also agree that, today at least, some of the places where the standard of living is not growing, have a fast growing population.

Demographics also fits in. Us old pharts just don't require the amount of goods and services that a young family does, regardless of our ability to pay for it. I think, rightly or wrongly, that part of the "prosperity" of the 50's was brought on by demand created by the baby boom.

Am I right? Who knows, who cares, and what can one do about it if they are too old to reproduce?

 

[kyounge1956]

(snip)Running out of energy? Maybe we'll find more fuel. Maybe we'll learn fusion.

I was going to make a separate thread for this, but it seems to fit in with the discussion already going on.

With a little help from genetic engineering, researchers at one Massachusetts company say they've created an organism that takes sunlight, water and carbon dioxide and creates liquid fuel.

​

 

[clifp]

Hmm . . .why keep the slowest, most error-prone and unreliable component, the human brain, in this lash-up? I sense some anthrocentrism.

We'll all be sitting on our sofas, hyped up on Soma, watching animations designed by the megacyber. Our robots will tell us anything we need to know, and throw bon-bons into our mouths at frequent intervals.

Humm, sound a lot like the cruise ship from Wall-E. I figured it was ok in the future to let the human do useless stuff like engage in political and philosophical debates (hmm very much like ER now that I think about it) while letting the machines do all of the important things.

I should add I've never understood the boards excitement about bacon, but bon-bons yum!

 

[eytonxav]

The current trend we are on right now makes me question whether our kids will enjoy the same prosperity that I had growing up. However, when I look back at all the great things technology has brought us over time in terms of goods/services and productivity, it would be hard not to be optomistic for the future.

 

[Lisa99]

If we were able to take a peak back 100 - 200 years from now we wouldn't recognize our surroundings. Just think of all the technology that didn't exist even 20 years ago.

I like to think that if human kind hasn't managed to irrevocably damage the planet that some of today's most vexing problems will have been solved.

 

[ziggy29]

Part of the problem is that increased demand for labor no longer scales with the demand for goods.

If demand for automobiles doubles, for example, you will have to pretty nearly double the number of workers to produce twice as many vehicles. But in an information-based economy where products are ethereal zeroes and ones, if demand for a piece of software doubles, you don't need to hire anywhere near twice as many people. You don't need any additional developers to "build" more units of the same software program; you may need a small number of additional sales and support staff but that's about it. Revenues can grow fivefold and barely require hiring at all.

So the real question, IMO, is: How do we adapt to the increased irrelevance of labor in today's economy?

 

[samclem]

Part of the problem is that increased demand for labor no longer scales with the demand for goods.

A refinement. How about: "Part of the problem is that the subset of our economy that is based on information does not require a lot more labor to produce a lot more goods." We tend to focus on the "new" economy (software, electronic information sharing hardware and services, etc). Yes, this is important, but all the same old stuff will still be there and still needs to be done: designing, building, and servicing everything from houses to cars to dishwashers, etc. Providing services from neurosurgery to drain clearing, etc. We'll probably find ways to do much of it with fewer people (as was the case with farming), but there will be more new areas for the displaced people to spend their time producing useful goods and services.

 

[sheehs1]

A lot of what I have been reading in the financial press talks about the slowing of economic growth. In light of the old adage that "trees don't grow to the sky" are we approaching the point where world economic growth simply can't continue?

That is, are we getting to the point where we simply cannot produce more goods and services (world wide) due to diminished natural resources, pollution, inability of organizations (both corporate and gov't) to manage operations on such a large scale efficiently?

I don't see capacity to produce or the running out of natural resources as the problem. If we run out of one natural resource there will be improvisation of some sort. It will create a new business opportunity for someone.

Logically, economic growth cannot continue infinitely. Is it possible for economies to exist in a stable state, without the engine of continued growth? Or is economic collapse unavoidable if growth is not sustained?

Just as businesses have business cycles, economies have their cycles. There are ups and there are downs. Replenishment and growth happen during those cycles. I understand your question and concern...but don't think it is a straight line to implosion. In theory a business that does not grow implodes. Same for economies. But...there are so many variables with economies that affect growth and all would have to happen at the same time for implosion to happen so it seems unlikely. But as Midpack pointed out...it has happened...so...

Opinions please.

Everyone have lots of babies or grandchildren.....because a key to demand to fuel growth is population growth!

 

[MasterBlaster]

The end is near !

< from Wikipedia>

A Malthusian catastrophe (also phrased Malthusian check, Malthusian crisis, Malthusian disaster, Malthusian fallacy, Malthusian nightmare, or Malthusian theory of population) was originally foreseen to be a forced return to subsistence-level conditions once population growth had outpaced agricultural production. Later formulations consider economic growth limits as well. The term is also commonly used in discussions of oil depletion. Based on the work of political economist Thomas Malthus (1766–1834), theories of Malthusian catastrophe are very similar to the Iron Law of Wages. The main difference is that the Malthusian theories predict what will happen over several generations or centuries, whereas the Iron Law of Wages predicts what will happen in a matter of years and decades.
An August 2007 science review in The New York Times raised the claim that the Industrial Revolution had enabled the modern world to break out of the Malthusian growth model,[1] while a front page Wall Street Journal article in March 2008 pointed out various limited resources which may soon limit human population growth because of a widespread belief in the importance of prosperity for every individual and the rising consumption trends of large developing nations such as China and India.[2]