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The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

nytimes.com

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Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#61

Post by sonnyblarney »

dijit wrote: post #6

So, I have a question and it may seem like a childish or stupid one because I think I've missed something somewhere. Our society, and I think capitalism in general, seems to be pinned on the foundation of perpetual growth. The question for me is: how can we have infinite growth on a planet with limited resources?

Economic growth is not primarily derived through the extraction of resources, is why.

As we become more sophisticated, we learn how to make better and better use of resources.

Right now, we value some resources more than others. As we evolve, that dynamic shifts.

How valuable was Uranium ore 100 years ago? Well, it was just a kind of poisonous rock. Now it can power cities.

Freshwater was 'unlimited' 100 years ago, now it's a little more scarce so we have to put economic terms around it, meaning it'll be too costly for some industries which will adapt.

Etc. etc..

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#62

Post by zozbot123 »

jlarocco wrote: post #26

"That helps explain why American workers’ wages have been rising relatively slowly despite a low unemployment rate." Wouldn't surprise me if that's a big part of the problem. Despite tax cuts, low interest rates, and other corporate handouts, nothing's getting passed onto the people who do most of the spending. Inequality is higher than ever and the people making the most money need it the least.

Somewhat counter-intuitively, a low unemployment rate is a lot more important to workers' overall incomes than a rise in wages (given typical variation in both). This is also why high real wages are so damaging when they lead to higher involuntary unemployment: they actively rob those who are most in need of their rightful incomes! It's why recessions make people angry and anxious for "something to be done", whatever that might be.

And make no mistake, a combination of low inflation and low growth is already something very near to a recession. The Fed and other central banks are worryingly close to dropping the ball now, as they did in late 2008. Luckily though the circumstances are not nearly as bad now as they were back then - there's a fair chance that we'll muddle through.

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#63

Post by fallingfrog »

crazygringo wrote: post #44
stubbort wrote: post #12

Low grow is good. You can't sustain growth forever.

Can't you? Growth just means the human race getting smarter at being productive, so we can grow more food with less effort, get around in transportation with less cars and drivers, buy the things we need at lower prices and with less friction. You could argue that once literally everything is roboticized and automated with strong AI then there's no more growth... except humans will be looking for even better real-lif…

We’re upright walking apes. If productivity in every other sector goes to infinity, you’re still left with raising your kids, eating meals, socializing with friends, and a few other things that humans just do for the same reason that fish swim and birds fly. At some point you’ve got to ask the question, what does productivity actually mean, when you’re talking about those kinds of activities. What is there to optimize?

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#64

Post by vkou »

hevi_jos wrote: post #60

What the world can't escape is politicians and people in power always overspending. The overspending always must come to an end when for every additional monetary unit in debt you get very low improvement in the economy but you in debt the future. You are living from your children income. What usually comes after that is destruction of capital, either by war(you loose all what you have) or inflation, deflation or bot…

> The overspending always must come to an end when for every additional monetary unit in debt you get very low improvement in the economy but you in debt the future. You are living from your children income.

Borrowing from your children's future is perfectly fine if your borrowing lets you bring things like clean running water, electricity, working transportation systems, etc.

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#65

Post by fallingfrog »

sonnyblarney wrote: post #48
stubbort wrote: post #12

Low grow is good. You can't sustain growth forever.

"You can't sustain growth forever." Of course you can. We've been doing for most of the last 2000 years, we'll keep doing it. Mostly.

Wrong. Learn how exponential functions work. Plug in 1.03^2000 and multiply by current gdp per person, tell me if that result makes sense.

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#67

Post by marcosdumay »

cagenut wrote: post #2

I still personally believe that the real underlying truth of "peak oil" was that as lower EROEI sources replaced higher ones, even though we would be able to grow the total number of barrels per day, the net-energy provided to drive the economy from those barrels would(is) plateau(ing). Everyone who points to fracking (or even worse tar sands) as a disproof of peak oil never understood the underlying argument about h…

AFAIK, the well accepted theory was always that as EROEI of fossil fuels get lower, more and more of the economy would be targeted (directly or indirectly) into fossil fuel extraction, and less would be available to the end-goal wealth. Thus even with the GDP and total extraction growing, we would get poorer and poorer, until the fuel extraction business becomes so large that something breaks.

We seem to be experiencing that. But people have been great in avoiding the EROEI collapse that some expected, so it does not seem to be a large factor on the world's economy. It is very unlikely that the current stagnation can be attributed to peak oil.

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#68

Post by [deleted] »

jlarocco wrote: post #26

"That helps explain why American workers’ wages have been rising relatively slowly despite a low unemployment rate." Wouldn't surprise me if that's a big part of the problem. Despite tax cuts, low interest rates, and other corporate handouts, nothing's getting passed onto the people who do most of the spending. Inequality is higher than ever and the people making the most money need it the least.

[deleted]

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#69

Post by sonnyblarney »

fallingfrog wrote: post #65
sonnyblarney wrote: post #48

Earlier quoted context omitted.

"You can't sustain growth forever." Of course you can. We've been doing for most of the last 2000 years, we'll keep doing it. Mostly.

Wrong. Learn how exponential functions work. Plug in 1.03^2000 and multiply by current gdp per person, tell me if that result makes sense.

The question of 'finite resources' comes up a lot when it comes to growth, and the question essentially betrays a lack of understanding of what growth is.

We can definitely grow by 3% per year forever, it's easy if you first consider we don't need any real material change for that to happen - it could just mean the 'numbers on our money change' i.e. just inflation.

But more likely, there will be material progress and 'growth' for the next 2000 years, just as there was for the last 2000 years. (Mind you, most of it has been since the dawn of the industrial revolution).

If you open your mind just a shade and consider how vastly the world has changed over the last 100 years alone, it's not hard to imagine how things could change in the next 100. I was alive when the internet went from nothing to 'world changing' and nobody - I mean nobody really guessed at the profound changes it would mean. There were a few thinkers who got a few things right, but nobody had the faintest idea. The same can be said for the dawn of the automobile/airplane one century ago.

There are a few technologies on the horizon which could shatter our world view, namely quantum computing and fusion. Just to name two that we know of.

We don't know if they will fly, but if they do, it will change everything.

Quantum computing may imply de-facto near unlimited computing for everyone. Consider that Deep Learning was only on the chalkboard until we had cloud computing, imagine what we will be able to do when it takes 0.1 seconds for insanely complicated neural networks to 'learn'?

If fission flies, it could mean unlimited energy for everyone. Imagine if the cost of electricity went to 0.0001 cents/kwh? What does that mean? It sounds crazy, but remember that 200 years ago, before the dawn of the industrial revolution, you did it 'by hand, or by horse' hence 'horsepower' as a unit of measure. When coal and machines came around it would be comparable to fission happening now - the world literally came out of the dark.

Vast changes are afoot, and will be for a very long time as long as we wipe ourselves out by some series of stupid acts.

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#70

Post by fallingfrog »

sonnyblarney wrote: post #69
fallingfrog wrote: post #65

Earlier quoted context omitted.

Wrong. Learn how exponential functions work. Plug in 1.03^2000 and multiply by current gdp per person, tell me if that result makes sense.

The question of 'finite resources' comes up a lot when it comes to growth, and the question essentially betrays a lack of understanding of what growth is. We can definitely grow by 3% per year forever, it's easy if you first consider we don't need any real material change for that to happen - it could just mean the 'numbers on our money change' i.e. just inflation. But more likely, there will be material progress and…

Everything you just said is a point of ideology, not reality. The answer to the math problem is: 2.36 x 10^30 power, roughly 16 orders of magnitude larger than the current gdp of the world. One person is going to write as much code, raise as many kids, build as many homes, as 30 quadrillion planet earths?
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