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Why Economic Growth Will Fall

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Re: Why Economic Growth Will Fall

#121

Post by skybrian »

tome wrote: post #111
allendoerfer wrote: post #108

Earlier quoted context omitted.

You buy a stock, create a company, build a house, because you expect it to increase in value and be a worthwhile investment. If growth stops it will be increasingly hard to do this, because all stocks that are still increasing in value will be bought up, until they cannot anymore. So you keep your money. Deflation. System collapse.

OK, that's a rough argument that needs fleshing out. Has the rigorous argument actually been made and is widely accepted by economists or is this just a meme that's accepted and repeated without much basis?

Here's an interesting theoretical argument that growth can't continue forever (not saying this applies now):

"[I]f energy became arbitrarily cheap, someone could buy all of it, and suddenly the activities that comprise the economy would grind to a halt. Food would stop arriving at the plate without energy for purchase, so people would pay attention to this. Someone would be willing to pay more for it. Everyone would. There will be a floor to how low energy prices can go as a fraction of GDP."

http://physics.ucsd.edu/do-the-math/2012

It seems like a similar argument could be made for land.

Re: Why Economic Growth Will Fall

#122

Post by tome »

skybrian wrote: post #121
tome wrote: post #111

Earlier quoted context omitted.

OK, that's a rough argument that needs fleshing out. Has the rigorous argument actually been made and is widely accepted by economists or is this just a meme that's accepted and repeated without much basis?

Here's an interesting theoretical argument that growth can't continue forever (not saying this applies now): "[I]f energy became arbitrarily cheap, someone could buy all of it, and suddenly the activities that comprise the economy would grind to a halt. Food would stop arriving at the plate without energy for purchase, so people would pay attention to this. Someone would be willing to pay more for it. Everyone would.…

That doesn't seem to have anything to say about growth.

Re: Why Economic Growth Will Fall

#123

Post by TheCoelacanth »

danbruc wrote: post #87
bryanlarsen wrote: post #79

Earlier quoted context omitted.

Malthus's arguments may have made some sense when he made them, the green revolution may have been difficult to predict back then. But any neo-Malthusian arguments don't pass the smell test today. 1) If we were running out of food it would be reflected in the price. The price of wheat in British pounds has stayed relatively constant for ~800 years, staying within the range of 1-5 pounds per bushel. That's right, we'v…

If you increased our energy consumption by 1 % per year, we would all be dead in less than 1000 years because at that point the surface temperature of the Earth would have reached the boiling point of water. EDIT: In case the down votes are for the numbers. The total emission of an ideal black body with surface area of 510.1 million km² at 373.15 K is 560,791 TW. The world total primary energy supply in 2012 is estim…

If we increased our energy production to 20000 times our current production (roughly 1000 years at 1% growth), I highly doubt we would still be stuck on Earth.

Re: Why Economic Growth Will Fall

#124

Post by crimsonalucard »

adrianN wrote: post #3
crimsonalucard wrote: post #2

This. Finally. People on HN think that startups, technology and economic growth have unlimited potential. This is pure stupidity at its finest. Observations of the natural world show a general trend: that everything, from physical resources to energy has limits. It is a mistake to believe that this general observation does not apply to technology and the human imagination. While we can comprehend what a limit in oil…

> Computing has shown dramatic improvements in the past decade but outside of having an app for everything in my phone, nothing has really changed in the past two decades. If you exclude making the Internet accessible to hundreds of millions of people, critical improvements in AI and robotics, and all the other stuff about which computer scientists write thousands of papers each year, then yes, nothing much has chang…

I did exclude those things. I said, nothing has really changed OUTSIDE of computing.

Actually you could make an argument for biology. Much has changed in the realm of genetics though so far it has had little impact on our daily lives.

Re: Why Economic Growth Will Fall

#125

Post by tome »

riskneural wrote: post #119
tome wrote: post #111

Earlier quoted context omitted.

OK, that's a rough argument that needs fleshing out. Has the rigorous argument actually been made and is widely accepted by economists or is this just a meme that's accepted and repeated without much basis?

Adam Smith makes the argument well in A Wealth of Nations. Essentially, the only reason to invest is that you expect to earn something above on top of the risk. Then add that up over everybody in the system. They cannot all get something extra, unless there is growth. That growth is spread over everybody as return on investment. So, if there is no growth, then investment stops earning that extra, so there no point in…

But surely people invest for "maintenance" purposes too, where nothing extra is expected. I invest in maintaining my house. I don't expect any "return" from that investment, besides the roof not collapsing.

Re: Why Economic Growth Will Fall

#126

Post by crimsonalucard »

jsmith0295 wrote: post #53
crimsonalucard wrote: post #2

This. Finally. People on HN think that startups, technology and economic growth have unlimited potential. This is pure stupidity at its finest. Observations of the natural world show a general trend: that everything, from physical resources to energy has limits. It is a mistake to believe that this general observation does not apply to technology and the human imagination. While we can comprehend what a limit in oil…

Except that the technology itself can be used to create technology. That's the whole point. If we were talking about raw human creativity, we already surpassed that capability a long time ago. And it seems likely that we can get the technology to a place where it can improve itself with little enough human effort that growth can be kept up for longer than any of our life times.

Having technology recursively create technology does not lead to unlimited potential. Such infinite structures lead to stack overflow and do not exist in the natural world without limits.

Re: Why Economic Growth Will Fall

#127

Post by edoceo »

Growth at scale, to bubble up to the oligarchs maybe fails.

Sustainable Growth for the local business, small market business keeps going.

Small business employs more people than the "big guys" and is a real core economic driver.

Re: Why Economic Growth Will Fall

#128

Post by allendoerfer »

tome wrote: post #125
riskneural wrote: post #119

Earlier quoted context omitted.

Adam Smith makes the argument well in A Wealth of Nations. Essentially, the only reason to invest is that you expect to earn something above on top of the risk. Then add that up over everybody in the system. They cannot all get something extra, unless there is growth. That growth is spread over everybody as return on investment. So, if there is no growth, then investment stops earning that extra, so there no point in…

But surely people invest for "maintenance" purposes too, where nothing extra is expected. I invest in maintaining my house. I don't expect any "return" from that investment, besides the roof not collapsing.

Maintenance is obviously limited to the number of things maintained and cannot stop deflation, because costs will be approaching zero due to innovation and competition.

Edit: And you do expect a return. You maintain your house, because it has a value and rent costs money, so you have more house in the future if you maintain it now. Imagine a world were rent and the value of your house is approaching zero, would you maintain it? You would have more house if you just kept your money and rented a house.

Re: Why Economic Growth Will Fall

#129

Post by tome »

allendoerfer wrote: post #128
tome wrote: post #125

Earlier quoted context omitted.

But surely people invest for "maintenance" purposes too, where nothing extra is expected. I invest in maintaining my house. I don't expect any "return" from that investment, besides the roof not collapsing.

Maintenance is obviously limited to the number of things maintained and cannot stop deflation, because costs will be approaching zero due to innovation and competition. Edit: And you do expect a return. You maintain your house, because it has a value and rent costs money, so you have more house in the future if you maintain it now. Imagine a world were rent and the value of your house is approaching zero, would you m…

OK, so that raises the next question: why do we need to stop deflation?

Re: Why Economic Growth Will Fall

#130

Post by allendoerfer »

tome wrote: post #129
allendoerfer wrote: post #128

Earlier quoted context omitted.

Maintenance is obviously limited to the number of things maintained and cannot stop deflation, because costs will be approaching zero due to innovation and competition. Edit: And you do expect a return. You maintain your house, because it has a value and rent costs money, so you have more house in the future if you maintain it now. Imagine a world were rent and the value of your house is approaching zero, would you m…

OK, so that raises the next question: why do we need to stop deflation?

Because you liquidate all your assets if there is deflation. No companies, no jobs, no food.

Edit: Obviously I am speaking in very extreme terms and ignoring the fact that there is a government acting and that not everything will happen instantly. These are just long-term forces.

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