Is the economic growth model sustainable?

[steve_bank]

I watched NOVA last week. A 2 hour thorough review of the history of climste science and all the data and conclusions.

To make a long story short the future for huanity is screwed, at least in terms of modern unrestricted global capitaism which needs growth.

A UW study predicts thenColumbia River will go down due to reduced snowpacks.

The mid west aquifers watering oyur large scale agriculture are drawing down.

A govt study predicst the LA area within 40 years will have shortfalls of drinking water.

Even without drought California agriculture is in trouble already.

Even with large scale renewable energy food and water in the not too far futire may become issues. The govt study predicted the USA will become a net food importer instead of an exporter.

Deserts and wet areas vary in the long term in part due to orbital and solar variations. Add the rapid climate change and who knows what our mid west climate may be in 100-200 years.

From a basic thermodynamics view our current paradaigms are not sustainable. Econonomic growth requires population growth and water and food. India has reached the limit of its water and is resorting to micro irrigation techniques. Over here we tap the Colorado to water golf courses and lawns in the desert.

Economic growth requires population growth.

 

[DBT]

Perpetual economic growth (ever increasing consumption) is impossible given that the Earth and it's resources are finite. Economic development without increases in consumption (growth), improvement, innovation, etc, may well continue for a very long time.

 

[bilby]

I watched NOVA last week. A 2 hour thorough review of the history of climste science and all the data and conclusions.

To make a long story short the future for huanity is screwed, at least in terms of modern unrestricted global capitaism which needs growth.

A UW study predicts thenColumbia River will go down due to reduced snowpacks.

The mid west aquifers watering oyur large scale agriculture are drawing down.

A govt study predicst the LA area within 40 years will have shortfalls of drinking water.

Even without drought California agriculture is in trouble already.

Even with large scale renewable energy food and water in the not too far futire may become issues. The govt study predicted the USA will become a net food importer instead of an exporter.

Deserts and wet areas vary in the long term in part due to orbital and solar variations. Add the rapid climate change and who knows what our mid west climate may be in 100-200 years.

From a basic thermodynamics view our current paradaigms are not sustainable. Econonomic growth requires population growth and water and food. India has reached the limit of its water and is resorting to micro irrigation techniques. Over here we tap the Colorado to water golf courses and lawns in the desert.

Economic growth requires population growth.

No it doesn't. Economic growth is usually measured per capita, and so is unrelated to absolute population size. It's easy to have growth with a declining population - all that is needed is that the value of the economy shrinks more slowly than the population; or does not shrink at all.

Value is not reserved to physical entities - people value services as well as goods. There's no reason why you can't have economic growth simultaneously with both a decline in population and a decline in per capita resource use.

The idea that such a thing is impossible is just an indication of ignorance of the definitions of the terms being discussed, or of the mathematical relationships between them.

Even the Earth's physical resources are effectively infinite - nothing goes away, it just needs energy to recover and recycle it. As long as we have the ability to use energy to reverse entropy, we need never run out of anything. The limit to economic growth is the limit of available energy. Humanity will almost certainly not outlive the main sequence phase of the evolution of the Sun, so we have no need to worry on that score. There are dozens of things that will destroy us long before we hit a physical limit to economic growth.

Water is no problem at all - it's easy and (for people with the wealth that comes from centuries of economic growth) cheap to desalinate seawater, and that stuff covers most of the planet. A water shortage is an indicator of energy poverty - which is itself an indicator of insufficient economic growth.

Economic growth is not a problem; it's the solution. Population growth is largely unrelated to economic growth, and is already tapering off.

Famines have almost completely disappeared from human experience. Ethiopia has almost three times the population it had when Bob Geldof was singing about how they wouldn't get snow there at Christmas. And yet, today Ethiopia has no famine, nor any likelihood of famine. Because the per capita GDP of Ethiopia has grown to the point where famine is no longer a problem - they can buy food if they don't grow enough (which is exactly how all the richest places on Earth do it - New York City hasn't grown enough food to feed even one percent of its population in centuries, but famines there are infrequent too).

California can easily afford to pay for all the water it needs. If Californians are stupid enough to refuse to pay for the infrastructure required, then they have only themselves to blame. I can buy a cubic metre of desalinated, purified, sanitised and certified fit to drink water, delivered on demand to my kitchen, bathroom or laundry, any time 24x7, for $1.54 Australian. And that's the small customer retail price - a cubic metre is (literally) a tonne of water, and is several weeks supply with profligate use. Water won't run out in California. What might run out is the idea that people can have all they want for no charge.

'Economic growth is unsustainable', in exactly the way that we cannot expect the sky to stay up forever. We should probably be worrying about that, too.

 

[barbos]

Sky is sustainable for the next half billion years. Economic model is not sustainable now.

 

[steve_bank]

Capitalism is based on growth. Period. If you do not know that then you do not understand how it works, going far back in history to early trading civilizations. Capital makes an investment gambling wealth will increase later. Columbus was financed as an investment with the expectation of getting the investment back plus profit.

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Increasing GDP under capitalism requires increasing population which increases demand. Then you are either a demad sider or supply sider as to whuch dominates growth.

Russia is in serious trouble. They have a decreasing population and a shrinking economy.
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Our current economy is not based on primarily filling needs. It is a consumer economy where people buy unneccesary goods. To increase GDP population must grow. That is why Trump's anti immigration views in the long run are a problem.

The alternative is a steady srate economy which most would wrongly assosciate with communism.

 

[skepticalbip]

Capitalism is based on growth. Period. If you do not know that then you do not understand how it works, going far back in history to early trading civilizations. Capital makes an investment gambling wealth will increase later. Columbus was financed as an investment with the expectation of getting the investment back plus profit.

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Capitalism is based on individual investors. Some win some lose. Capitalism doesn't mean that everyone's wealth has to increase

One auto manufacturer may grow and dominate the market for a while then decline or go out of business all together as another auto manufacturer moves into market dominance. Also someone can decide to start an auto manufacturing plant and have to close after a few years because their sales just fail to materialize.

The difference in a capitalistic economy is that individuals decide on what to manufacture and how to manage their company rather than in a centrally planned economy where those decisions are made by the nation's government.

There have historically been several examples of both systems so they can be examined to determine under which system the population does better. Venezuela is the latest example of a nation that tried switching from a capitalist economy (the wealthiest in South America) to a centrally planned economy.

 

[bilby]

Capitalism is based on growth. Period. If you do not know that then you do not understand how it works, going far back in history to early trading civilizations. Capital makes an investment gambling wealth will increase later. Columbus was financed as an investment with the expectation of getting the investment back plus profit.

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Increasing GDP under capitalism requires increasing population which increases demand. Then you are either a demad sider or supply sider as to whuch dominates growth.

No, it doesn't.

Imagine, if you would, a nation that had a population of 82.27 million people in 2007, but whose population declined to just 80.98 million by 2014. If that same nation had a GDP of US$3.44Trillion in 2007, and that that GDP had increased to US$3.88 Trillion in 2014, then the fact of an increase in both absolute GDP, and (necessarily) in GDP per capita, would show your founding premise to be false; Your conclusions drawn from that premise would be demonstrably worthless; And you would quite simply be wrong.

You may be entitled to your own opinions, but you are NOT entitled to your own facts. The existence of Germany between 2007 and 2014 is a factual and observable demonstration that your argument is based on an incorrect premise. Your argument fails.

Final Score: Facts, logic and mathematics 1 : steve bank 0

Facts. logic and mathematics win the cup.

 

[Horatio Parker]

Not all economic activity is producing consumer goods. With quality of life becoming easier to attain, i.e. higher productivity, the economy becomes more discretionary. We can have more lawyers, or teachers, social workers or soldiers whatever depending on what type of society we want.

 

[steve_bank]

Everybody has 2 cars a washing machine, and a motorcycle. If you want to sell more product population must increase. Population limits markets. The idea was China was seen as a vast market for US goods, the Chinese with foreign investment turned the table.

The emerging problem today is that capitalism free markets worked well, it improved efficiency and lowered demand for labor in pursuit of profits. For those of us pre PCs the Windows Office Suite reduced entire classes of skilled and semi skilled jobs.

The paradigm of population growth plus free market profit motivation providing high levels of employment is failing. New college grads are whining 'where are the jobs?'

But that is not the most serious problem. Future water and food supplies are threatened.

A cursory review of history shows the question is if the transition to something new will be preceded by collapse and anarchy or a reasoned transition. The OWS movement and the anarchists who will be in Seattle on May Day are symptoms.

 

[bilby]

Everybody has 2 cars a washing machine, and a motorcycle. If you want to sell more product population must increase. ...

No.

When you base your reasoning on a factually incorrect premise, your conclusions are valueless. Your premise is incorrect, as I showed above. So your arguments are worthless.

 

[steve_bank]

Imagine a fixed population of 1 million people who are all as adults completely occupied with productive work.

Someone wants to build a series of plants to manufacture a new product requiring 10,000 people, where does the labor come from if there are population controls and a fixed population?

China had a one child per family policy for a long time. There were several problems, one of which was being unable to support economic growth.

Russia is in trouble because few want to move there.

England's continued good economy is based on immigration. London is like NYC in terms of percent immigrant labor force.

I can say for certain the tech booms on the west coast could not have happened without immigrants ranging from low level to top engineering and mangement positions.

In western capitalist systems growth requires more people.

 

[bilby]

Imagine a fixed population of 1 million people who are all as adults completely occupied with productive work.

Someone wants to build a series of plants to manufacture a new product requiring 10,000 people, where does the labor come from if there are population controls and a fixed population?

They stop doing something less productive, and move to making the new product - IF the new product is more valuable than what they were making before, Then the economy will grow, with no change in population at all. Value is not a constrained commodity; You can increase the value of an economy indefinitely without requiring the use of either labour or resources (although obviously it is easier to increase the value of an economy when also increasing those things).

China had a one child per family policy for a long time. There were several problems, one of which was being unable to support economic growth.

That's not a refutation to my proof that your founding premise is false, and that your conclusions are therefore valueless. Nobody is arguing that a falling population cannot lead to recession; Just that it does not necessarily do so - as Germany demonstrates.

Only one counter example is needed to show your claim to be false. Your reasoning is valueless. That does not eliminate the possibility that you might occasionally reach a correct conclusion, by pure luck.

Russia is in trouble because few want to move there.

Or for other reasons. We cannot know; But we CAN know that your claim that falling population is necessary for growth is false, because we have an example of growth in a country with a falling population.

England's continued good economy is based on immigration. London is like NYC in terms of percent immigrant labor force.

Immigration is often good for an economy. That doesn't in any way change the fact that your assertion that population growth is necessary for economic growth is demonstrably false.

I can say for certain the tech booms on the west coast could not have happened without immigrants ranging from low level to top engineering and mangement positions.

Good for you. That certainty doesn't rescue your false claim though.

In western capitalist systems growth requires more people.

No, it doesn't. As the Germans have demonstrated.

You are wrong.

 

[repoman]

You are hopelessly full of unwarranted hope Bilby. Good for you I guess.

I don't think you really care what reality is, you just to have the feelings you are having now. You are a serious ideological axe grinder on this topic.

Interesting paper

https://www.sciencedirect.com/science/article/pii/S0160791X14000177

 

[bilby]

You are hopelessly full of unwarranted hope Bilby. Good for you I guess.

I don't think you really care what reality is, you just to have the feelings you are having now. You are a serious ideological axe grinder on this topic.

Interesting paper

https://www.sciencedirect.com/science/article/pii/S0160791X14000177

WTF?

How is it 'uwarranted hope' to show that steve bank's claim is demonstrably false, using an example from the real world?

Germany's population and GDP figures in 2007 and 2014 are not my feelings; They are publicly available facts. They unequivocally show that the founding premise of the OP is false, and that the rest of the reasoning that is based on that premise is therefore of no value.

I am using mathematics, logic, and real world data. There's no room for feelings, or even opinions, here.

 

[Swammerdami]

Economic growth requires population growth.

No it doesn't. Economic growth is usually measured per capita, and so is unrelated to absolute population size.

Do you have a cite for this claim? My experience is opposite: Economic growth is almost always given in absolute (or inflation-adjusted) terms, NOT as per capita.

Note that I am NOT asking to debate whether growth per capita would be a more informative measure. I am questioning the simple claim that "Economic growth is usually measured per capita."

Capitalism is based on growth. Period. If you do not know that then you do not understand how it works, going far back in history to early trading civilizations. Capital makes an investment gambling wealth will increase later. Columbus was financed as an investment with the expectation of getting the investment back plus profit.....
.
Our current economy is not based on primarily filling needs. It is a consumer economy where people buy unneccesary goods. To increase GDP population must grow. That is why Trump's anti immigration views in the long run are a problem....

I'm not sure of ancient economies, but modern capitalism is certainly dependent on growth. When you buy a bond or a share of stock, you expect it to increase in value — how can this generally occur without general growth? (In olden days, the wealthy tended to be lenders. Now borrowing is key to wealth. Big oil companies are in big debt despite high profits: Obviously they are dependent on growth. GE has net debt in excess of $400 billion.)

So, yes, modern capitalism makes the assumption of continued growth in consumption; population growth is a way to fuel that growth. Increasingly, scarcity will be an obstacle. As just one example, feeding the huge number of human mouths has become dependent on a diminishing supply of phosphate rock.

 

[bilby]

Do you have a cite for this claim? My experience is opposite: Economic growth is almost always given in absolute (or inflation-adjusted) terms, NOT as per capita.

Note that I am NOT asking to debate whether growth per capita would be a more informative measure. I am questioning the simple claim that "Economic growth is usually measured per capita."

Perhaps it would be better to say 'more usefully measured per capita' - 'usually' is rather context dependent.

It's irrelevant to my refutation of the claim that population growth is necessary for economic growth though - both absolute and per capita GDP must grow during a period of declining population in order to refute that claim, and they both did in Germany from 2007 to 2014.

Capitalism is based on growth. Period. If you do not know that then you do not understand how it works, going far back in history to early trading civilizations. Capital makes an investment gambling wealth will increase later. Columbus was financed as an investment with the expectation of getting the investment back plus profit.....
.
Our current economy is not based on primarily filling needs. It is a consumer economy where people buy unneccesary goods. To increase GDP population must grow. That is why Trump's anti immigration views in the long run are a problem....

I'm not sure of ancient economies, but modern capitalism is certainly dependent on growth. When you buy a bond or a share of stock, you expect it to increase in value — how can this generally occur without general growth? (In olden days, the wealthy tended to be lenders. Now borrowing is key to wealth. Big oil companies are in big debt despite high profits: Obviously they are dependent on growth. GE has net debt in excess of $400 billion.)

So, yes, modern capitalism makes the assumption of continued growth in consumption; population growth is a way to fuel that growth. Increasingly, scarcity will be an obstacle. As just one example, feeding the huge number of human mouths has become dependent on a diminishing supply of phosphate rock.

There's no scarcity of phosphate. You are confusing a reserve with a resource.

https://www.theregister.co.uk/2015/05/31/rare_metals_mineral_reserves_talk_preamble/

Reserves grow according to demand. Only resources are finite - but they are both vast, and barely explored. Exploration turns resource into reserve - but nobody will pay to do that while the reserves that are already there are adequate.

We are not going to run out of Phosphorus, any more than we are going to run out of bacon - despite world bacon reserves being barely sufficient to meet the next few days of demand.

 

[DBT]

Economic growth (increasing consumption) is possible within a stable population, but only to the point of market saturation. Once everybody owns several houses, cars, phones, computers and sundry goods -maintenance cost exceeding value- the market is saturated and naturally reverts (or should without stimulus) to replacement, updated technology, etc, rather than increased consumption, then we have a steady state economy, income stream rather than profit driven, development rather than growth. The emphasis or aim being on recycling and development rather than ever increasing recourse use and profit.

Market saturation;
Market saturation can be both microeconomic or macroeconomic. From a micro perspective, market saturation is the point when a specific market is no longer providing new demand for an individual firm. This is most often the case when a company faces fierce competition or has a reduction in the market's need for its product or service. From a macro perspective, market saturation occurs when an entire customer base has been serviced, and there are no new customer acquisition opportunities for any firm operating in the industry.


''Market saturation exists in a given industry when the available supply of goods equals or falls short of customer demand. A variety of factors, including more competition, lower market need and obsolescence, contribute to saturated conditions. The big drawback of operating in a saturated market is that it limits your profitability and growth potential.''

 

[bilby]

Economic growth (increasing consumption) is possible within a stable population, but only to the point of market saturation. Once everybody owns several houses, cars, phones, computers and sundry goods -maintenance cost exceeding value- the market is saturated and naturally reverts (or should without stimulus) to replacement, updated technology, etc, rather than increased consumption, then we have a steady state economy, income stream rather than profit driven, development rather than growth. The emphasis or aim being on recycling and development rather than ever increasing recourse use and profit.

Market saturation;
Market saturation can be both microeconomic or macroeconomic. From a micro perspective, market saturation is the point when a specific market is no longer providing new demand for an individual firm. This is most often the case when a company faces fierce competition or has a reduction in the market's need for its product or service. From a macro perspective, market saturation occurs when an entire customer base has been serviced, and there are no new customer acquisition opportunities for any firm operating in the industry.
Market saturation can be both microeconomic or macroeconomic. From a micro perspective, market saturation is the point when a specific market is no longer providing new demand for an individual firm. This is most often the case when a company faces fierce competition or has a reduction in the market's need for its product or service. From a macro perspective, market saturation occurs when an entire customer base has been serviced, and there are no new customer acquisition opportunities for any firm operating in the industry.
Market saturation can be both microeconomic or macroeconomic. From a micro perspective, market saturation is the point when a specific market is no longer providing new demand for an individual firm. This is most often the case when a company faces fierce competition or has a reduction in the market's need for its product or service. From a macro perspective, market saturation occurs when an entire customer base has been serviced, and there are no new customer acquisition opportunities for any firm operating in the industry.
'Market saturation can be both microeconomic or macroeconomic. From a micro perspective, market saturation is the point when a specific market is no longer providing new demand for an individual firm. This is most often the case when a company faces fierce competition or has a reduction in the market's need for its product or service. From a macro perspective, market saturation occurs when an entire customer base has been serviced, and there are no new customer acquisition opportunities for any firm operating in the industry.
Market saturation can be both microeconomic or macroeconomic. From a micro perspective, market saturation is the point when a specific market is no longer providing new demand for an individual firm. This is most often the case when a company faces fierce competition or has a reduction in the market's need for its product or service. From a macro perspective, market saturation occurs when an entire customer base has been serviced, and there are no new customer acquisition opportunities for any firm operating in the industry.
''Market saturation can be both microeconomic or macroeconomic. From a micro perspective, market saturation is the point when a specific market is no longer providing new demand for an individual firm. This is most often the case when a company faces fierce competition or has a reduction in the market's need for its product or service. From a macro perspective, market saturation occurs when an entire customer base has been serviced, and there are no new customer acquisition opportunities for any firm operating in the industry.''

Physical goods are not the only things of value that are traded in an economy.

Currently available goods and services are not the only goods and services that will be available in the future.

So you are wrong.

 

[DBT]

Economic growth (increasing consumption) is possible within a stable population, but only to the point of market saturation. Once everybody owns several houses, cars, phones, computers and sundry goods -maintenance cost exceeding value- the market is saturated and naturally reverts (or should without stimulus) to replacement, updated technology, etc, rather than increased consumption, then we have a steady state economy, income stream rather than profit driven, development rather than growth. The emphasis or aim being on recycling and development rather than ever increasing recourse use and profit.

Market saturation;
Market saturation can be both microeconomic or macroeconomic. From a micro perspective, market saturation is the point when a specific market is no longer providing new demand for an individual firm. This is most often the case when a company faces fierce competition or has a reduction in the market's need for its product or service. From a macro perspective, market saturation occurs when an entire customer base has been serviced, and there are no new customer acquisition opportunities for any firm operating in the industry.
Market saturation can be both microeconomic or macroeconomic. From a micro perspective, market saturation is the point when a specific market is no longer providing new demand for an individual firm. This is most often the case when a company faces fierce competition or has a reduction in the market's need for its product or service. From a macro perspective, market saturation occurs when an entire customer base has been serviced, and there are no new customer acquisition opportunities for any firm operating in the industry.
Market saturation can be both microeconomic or macroeconomic. From a micro perspective, market saturation is the point when a specific market is no longer providing new demand for an individual firm. This is most often the case when a company faces fierce competition or has a reduction in the market's need for its product or service. From a macro perspective, market saturation occurs when an entire customer base has been serviced, and there are no new customer acquisition opportunities for any firm operating in the industry.
'Market saturation can be both microeconomic or macroeconomic. From a micro perspective, market saturation is the point when a specific market is no longer providing new demand for an individual firm. This is most often the case when a company faces fierce competition or has a reduction in the market's need for its product or service. From a macro perspective, market saturation occurs when an entire customer base has been serviced, and there are no new customer acquisition opportunities for any firm operating in the industry.
Market saturation can be both microeconomic or macroeconomic. From a micro perspective, market saturation is the point when a specific market is no longer providing new demand for an individual firm. This is most often the case when a company faces fierce competition or has a reduction in the market's need for its product or service. From a macro perspective, market saturation occurs when an entire customer base has been serviced, and there are no new customer acquisition opportunities for any firm operating in the industry.
''Market saturation can be both microeconomic or macroeconomic. From a micro perspective, market saturation is the point when a specific market is no longer providing new demand for an individual firm. This is most often the case when a company faces fierce competition or has a reduction in the market's need for its product or service. From a macro perspective, market saturation occurs when an entire customer base has been serviced, and there are no new customer acquisition opportunities for any firm operating in the industry.''

Physical goods are not the only things of value that are traded in an economy.

Currently available goods and services are not the only goods and services that will be available in the future.

So you are wrong.

Not wrong, just focusing on the basics. The same principle applies to new technology. I mentioned development, economic development (improvement, innovation, efficiency, etc) can be separated from economic growth (ever increasing consumption and use of resources).

Unlike growth (as defined), there is probably no limit to development, improvement, innovation, efficiency, etc, without ever increasing non renewable resource use, which includes arable land.

 

[steve_bank]

I zee bilby's disconnect.

Many things are evaluated per capita. It is a common term. Rape per capita says nothing about causes of rape.

Growth per capita is just that, a metric of growth. It says nothing about what growth is based on.

Market saturation as DBT put it. That is the reason Microsoft periodically finds a way to obsolter Windows versions. If not the company dies. Same with Apple getting caught slowing down older devices.

In the 80s and 90s computer market saturation reduced prices for computers. IBM sold off its PC.