What will the world be like when global population goes in decline?

[bilby]

WTF is "the pollution of man's attempted dominance" even supposed to mean, other than "arkirk doesn't like people because they make a mess"?

You are also missing the fact that there are elements in our environment today which had not existed on this earth before man made them. Many of them are toxic.

You would be surprised how little I am 'missing'. I know that Technetium and the trans-Uranic elements exist, and I am very glad of it. Many of them are toxic, but so what? Many naturally occurring elements are toxic. Lots of stuff is toxic, because life is fragile. That's no reason to stop doing anything.

Many of them actually cannot be made harmless by our current technology.

Don't be so silly. Any definition of 'harmless' either leads to this being true of EVERYTHING, or untrue of artificial elements. You can equivocate between meanings for the word 'harmless' if you like, but don't imagine you are fooling anyone. Plutonium is harmless when contained. Water is deadly - but completely natural. Harmlessness is not what defines whether something is or is not desirable.

The human population runs into all sorts of problems with everything from forgotten minefields, to forgotten waste piles to extreme natural reactions to our actions.

Lions, tigers, bears, snakes, sharks, cliff edges, earthquakes, hurricanes, tornadoes, landslides, drowning, lightning strikes - it's a dangerous world. Human activity and technology has made it dramatically safer in the past couple of centuries, and that trend is ongoing. If technology was harmful, we would see falling life expectancies since the Industrial Revolution. We see the exact opposite; therefore your implied hypothesis - that net harm, due to the use of technology, is increasing- is simply wrong.

There are not enough people at some point to do all this reprocessing you blithely tell us can be done.

Why do you think doing things requires a lot of people? This isn't the Middle Ages. We don't need more people to do more work. one man today, can do from his chair more work than a thousand men could achieve with hard labour as little as a century ago.

Also, we have barely begun our task on the easier ones to deal with.

Really? Compare pollution levels today with those of the 1950s. The clean-up has been remarkable.

Our baseline rad counts continue to climb.

Really? I think you will find that since the end of atmospheric nuclear testing in the 1950s they have been falling. From 'negligible' to 'even more negligible'.

Our daily bodily fraction of industrial chemicals in our blood is always on the rise.

Citation needed.

Our memory seems to get shorter and shorter in a world full of extraneous isms.

Perhaps yours does.

Greenpeace has it right. There is no away. Also there is no reason to assume you know enough to keep out of trouble in an environment full of various forms of dangerous pollution. Why must our species always learn every lesson THE HARD WAY? In my youth, it seemed there was some chance we could learn. It hurts me at this point in my life that we have chosen to be so adversarial on every front we have no energy left to learn anything.

In your youth, the world was a far worse and more unpleasant place than it is today. Your rose-coloured glasses are blinding you to that fact, but the information is there if you want to look.
http://demog.berkeley.edu/~andrew/1918/figure2.html

Life expectancy at birth for men in the USA:

Year	Life Expectancy
1900	46.3
1910	48.4
1920	53.6
1930	58.1
1940	60.8
1950	65.6
1960	66.6
1970	67.1
1980	70.0
1990	71.8

In your youth, there was less chance to learn, because you were likely going to die sooner than people today.

There were almost a million fewer deaths in the USA in 1990 than there would have been if technology was still at 1930 levels.

Your nostalgia, coupled with your fear, is bringing you to a conclusion that is the exact opposite of reality.

Does your rosy picture extend to Congo, to Somalia, to Ethiopia, to Syria, to Pakistan, India, China, Mexico, Guatamala, Haiti, Iraq?

Certainly to most of those places. Those that are active war zones tend to go backwards, but active war zones are less prevalent now than they used to be too.

Your stats are based on conditions at the center of your universe

Not at all. The stats I gave for life expectancy are from the US, which is thousands of km from here, and were chosen for the ease of finding them, and the fact that they refute your claims. Feel free to present stats that show my claims to be wrong... If you can.

...the center of empires that parasitize huge chunks of the world and take their resources, exploit their cheap (desperate) labor force, and indiscriminately dump their wastes on them.

You are describing things that were worse in the past. Imperialism has been on the wane since WWI. That you don't know this is rather strange and strongly suggests that you should do more listening and less talking on this subject

Conditions are not so rosy in most of the world and we are PART OF THE REASON.

On the whole, things are getting better most everywhere. Things are not so rosy in Africa as they are in North America or Western Europe, but things are far better, overall, in Africa in 2015 than they were in Africa in 1985.

It would pay for you to understand it is not wise to tell people like me they are full of fear.

I call it as I see it. You constantly express irrational beliefs that things are getting worse. Even if this is just ignorance, the constant harping on it is indicative of fear to me

I have no nostalgia.

Well you sure have a funny way of showing it

Your assumptions are just so much bullshit to me. You have no understanding of history or me or you would say what you are saying.

All I know of you is what you post here. All you know of me is what I post here. Comparing our posts to the facts suggests that it is your grasp of history that is more flawed than mine.

When a person doesn't understand or know too much about history as is the case with you, it is hard to recognize recurrent patterns of human pathos. It is hard to recognize political structures forming that are dangerous to society. I don't blame you. I do feel sorry there are so many who so arrogantly proffer their positions.

Frankly I don't care to hear your ill-informed opinion of me. It is as ill informed as your opinions of history and of reality. Perhaps you could spend more time researching and presenting facts, and less time trying to guess what I might or might not know about.

I don't have any personal problem with you. I simply won't remain silent while you continue to promote as fact, things that a cursory level of research would show to be false.

Your opinion is your own business, but you are not entitled to your own facts.

 

[DrZoidberg]

Nevertheless, both Jim and Bob are using natural resources in order to produce their respective products, animal hides, plastics, fabrics, etc, for making shoes, arable land, fertilizers, water, chemicals, vehicles, pipes, etc, for growing bananas....

I´m not sure what this is an argument for or against?

 

[DBT]

Nevertheless, both Jim and Bob are using natural resources in order to produce their respective products, animal hides, plastics, fabrics, etc, for making shoes, arable land, fertilizers, water, chemicals, vehicles, pipes, etc, for growing bananas....

I´m not sure what this is an argument for or against?

I wasn't arguing against your comment, just making a comment of my own: that economic activity is inseparable from the environment, hence having an impact on environment, regardless of the markets ability to create value out of thin air.

 

[DrZoidberg]

Moreover, the math for financial instruments wasn't actually all that hard. I didn't work in Wall Street, but I was in nestled in the supply chain during the run-up to the crash and it was patently obvious that the whole thing was sitting on quicksand. While there were some important regulations that were rolled back, I don't think it was so much a failure to legislate regulation as much as the people whose job it was to provide oversight were asleep at the switch.

The mathematical term is "complexity". Fairly simple mechanics can in combination give rise to an almost infinite array of outcomes. Which is what happened here. Nobody could do the maths. We still can´t. This is the same reason it´s hard to predict the weather. We all understand the physics of weather. There isn´t a singel step in the process that is mysterious or even hard to understand. It´s all real simple physics. We still can´t do the maths. It´s too complex. It´s too many dynamic systems interacting with each other. That´s the entire explanation to why we still argue about economic policy. Everybody is talking out of their ass about shit they don´t understand. Everybody is on all sides always.

http://en.wikipedia.org/wiki/Complexity

So basically. I think you´re wrong.

With that said, the primary consumers of the financial instruments were pretty insulated from the nitty gritty (as well as the suppliers) but isn't that a failure of the market? Free market economics' primary failure in my mind is the assumption that all parties have sufficient information to make rational choices, which rarely happens. I see a lot of good tech companies fail, not because they're not making good technology, but because the VCs don't have the chops to effectively understand the value. And at the same time, companies like they guys who made the 'Yo' app end up buying red Ferraris.

Markets don´t fail. Saying the markets fail is like saying that the rain has failed because it hasn´t rained in exactly the way you want it to. The market just is. Just like gravity it´s something we have to accept and deal with. We might have fairness and justice as a goal. But the market doesn´t have this as a goal.

The phrase "free market economics' primary failure" is so loaded that it is meaningless IMHO. All it tells me is that you have a political opinion somehow.

 

[DrZoidberg]

I generally usually get a kick out of your posts but I have to take exception with this one (above). The market is nothing but a collection of grasping traders who periodically panic and create problems for everybody....NOT SMART AT ALL.

I disagree. It´s really hard for a company to get their hands on cash if they want to expand, or reform, launch a new product or whatever. This has always been a problem, and is why the corporations were once upon a time was started. We (all of us) are now richer than we´ve ever been. Much thanks to the "grasping traders who periodically panic and create problems for everybody". They move money from people who don´t have the time or opportunity to invest it wisely on their own, to people with good ideas, but without capital. And they take a cut, for their efforts. Without these traders person A and person B, most likely, would never have met, and they both would have come off as poorer.

For our species we have an instinct for fairness. All primates do. We think it feels wrong when people get more than their fair share. And we have to respect our emotions. So I think it´s important that we make an effort to redistribute the disproportionate wealth that banks amass. But from there to claim that banks are only parasites is quite a leap. I don´t think so.

I´m sure the Internet will make banks increasingly redundant. But until that happens they are providing a valuable service.

It is NOT difficult to regulate what a bank ought to do. It is simply difficult to get a bank to do it under the current system. These "complex instruments" have been allowed to become complex because bankers through the medium of politics control the legislative bodies that should be controlling them. It is called "regulatory capture." Congress does what the bankers want...and screw the people. Elizabeth Warren came up with some ideas that could to some degree protect those who bank and invest. The bankers were so scared of her regulation and enforcement, they exerted great pressure on Obama and the Senate to not place her in charge of the agency she conceptualized. The complexity of all these alleged instruments is not necessary and in fact needs to be made illegal.

If you believe in democracy, you should not accept this so called legal system that allows the abuses we are seeing in corporate (banking in particular) actions.
In order to de-complicate things, there would be losers, and those losers would be those who have lobbied and pressured their way to extreme wealth. Most of their wealth they indeed created out of nothing...but shrewd and deceptive trading. This current system is not making everybody richer.
Our current system with all its "complexity" is little more than a nest of inordinately rich crooks.

History is full of regulation that only did more harm than good. There is simply no way of knowing whether Warrens regulation will be boon or bust. Stability for the sake of stability is NOT an argument. I have another solution to this problem. Just let the cat out of the bag and see what happens. The market will take care of this. Nobody wants a financial crash. None of the banks want. So we will eventually get a robust system.

Instead of regulating, just move money to welfare. Give them free education and whatever. Banks make an unfair amount of money. That´s established. Why not just tax banking? And move that money to the welfare system? It´s the only solution I´ve seen that doesn´t risk fucking up a perfectly good banking system (that nobody understands).

 

[DrZoidberg]

I´m not sure what this is an argument for or against?

I wasn't arguing against your comment, just making a comment of my own: that economic activity is inseparable from the environment, hence having an impact on environment, regardless of the markets ability to create value out of thin air.

So?

 

[Deepak]

The mathematical term is "complexity". Fairly simple mechanics can in combination give rise to an almost infinite array of outcomes. Which is what happened here. Nobody could do the maths. We still can´t. This is the same reason it´s hard to predict the weather. We all understand the physics of weather. There isn´t a singel step in the process that is mysterious or even hard to understand. It´s all real simple physics. We still can´t do the maths. It´s too complex. It´s too many dynamic systems interacting with each other. That´s the entire explanation to why we still argue about economic policy. Everybody is talking out of their ass about shit they don´t understand. Everybody is on all sides always.

http://en.wikipedia.org/wiki/Complexity

So basically. I think you´re wrong.

This sounds like equivocation, though we might be simply be talking about different things. I'd agree that the global economy is a complex system, which is not to say that all components of that global economy are incalculable. Predicting, for example, that housing prices will not always increase does not require a total calculation of all dynamical systems, in quite the same way that I don't need an uber World-Simulator to know that the high temperature today will be in the 80s.

With that said, the primary consumers of the financial instruments were pretty insulated from the nitty gritty (as well as the suppliers) but isn't that a failure of the market? Free market economics' primary failure in my mind is the assumption that all parties have sufficient information to make rational choices, which rarely happens. I see a lot of good tech companies fail, not because they're not making good technology, but because the VCs don't have the chops to effectively understand the value. And at the same time, companies like they guys who made the 'Yo' app end up buying red Ferraris.

Markets don´t fail. Saying the markets fail is like saying that the rain has failed because it hasn´t rained in exactly the way you want it to. The market just is. Just like gravity it´s something we have to accept and deal with. We might have fairness and justice as a goal. But the market doesn´t have this as a goal.

The phrase "free market economics' primary failure" is so loaded that it is meaningless IMHO. All it tells me is that you have a political opinion somehow.

Market failure isn't a loaded term - and any basic econ book will tell you that market failure means a non-pareto-optimal outcome in a market. To deny that externalities exist, or that purposefully hidden information can affect allocation in a market is required to make the statement that market failure doesn't exist. We know that exchanges sometimes choose to stop trading because the stock market is deemed to behave irrationally. Something tells me that the reason for this isn't that Marxists invaded the stock market on that particular day.

I'd put the charge back to you and say you're making the political statement here.

 

[DrZoidberg]

This sounds like equivocation, though we might be simply be talking about different things. I'd agree that the global economy is a complex system, which is not to say that all components of that global economy are incalculable. Predicting, for example, that housing prices will not always increase does not require a total calculation of all dynamical systems, in quite the same way that I don't need an uber World-Simulator to know that the high temperature today will be in the 80s.

Yes, I think we are talking about different things, because in my context the above statement is lunacy. Not only do we need an uber world-simulator for exactly that, but we need one that is better than anything that has ever been built.

The knowledge that the housing prices won´t always increase is pretty much worthless knowledge. Knowing exactly when the housing prices have peaked is valuable knowledge. Nobody knows that and nobody can predict it. This is analogous to the weather. Knowing the average temperature for May does not help you figure out whether or not it´ll rain on your lovely picnic you have planned for Saturday. It is critical knowledge.

With that said, the primary consumers of the financial instruments were pretty insulated from the nitty gritty (as well as the suppliers) but isn't that a failure of the market? Free market economics' primary failure in my mind is the assumption that all parties have sufficient information to make rational choices, which rarely happens. I see a lot of good tech companies fail, not because they're not making good technology, but because the VCs don't have the chops to effectively understand the value. And at the same time, companies like they guys who made the 'Yo' app end up buying red Ferraris.

Markets don´t fail. Saying the markets fail is like saying that the rain has failed because it hasn´t rained in exactly the way you want it to. The market just is. Just like gravity it´s something we have to accept and deal with. We might have fairness and justice as a goal. But the market doesn´t have this as a goal.

The phrase "free market economics' primary failure" is so loaded that it is meaningless IMHO. All it tells me is that you have a political opinion somehow.

Market failure isn't a loaded term - and any basic econ book will tell you that market failure means a non-pareto-optimal outcome in a market. To deny that externalities exist, or that purposefully hidden information can affect allocation in a market is required to make the statement that market failure doesn't exist. We know that exchanges sometimes choose to stop trading because the stock market is deemed to behave irrationally. Something tells me that the reason for this isn't that Marxists invaded the stock market on that particular day.

I'd put the charge back to you and say you're making the political statement here.

We´re talking about different things. You said "free market". When you put "free" in it became a vacuous loaded term. I agree what you said about the market.

 

[Deepak]

Yes, I think we are talking about different things, because in my context the above statement is lunacy. Not only do we need an uber world-simulator for exactly that, but we need one that is better than anything that has ever been built.

The knowledge that the housing prices won´t always increase is pretty much worthless knowledge. Knowing exactly when the housing prices have peaked is valuable knowledge. Nobody knows that and nobody can predict it. This is analogous to the weather. Knowing the average temperature for May does not help you figure out whether or not it´ll rain on your lovely picnic you have planned for Saturday. It is critical knowledge.

Price isn't some intrinsic quality - it's a value that's determined by market forces weighing the supply side versus the demand side. I'd argue, and I think the downturn shows, that housing prices were actually well above what the equilibrant price would actually be, specifically because of information which was hidden from the demand side of the market (by all of the folks creating the financial products, the failure of regulators to do their due diligence, and by ratings agencies to realistically assess the risk of these securities).

The demand for, and the price of, a product would be affected by knowledge that, for example, buying it means there is a 30% chance that an orphan spontaneously combusts. If this knowledge is hidden from consumers then the market and price and demand will be distorted.

I saw personally that the credit being extended to many homebuyers would not have passed muster under normal circumstances. The vast number of uninhabited properties, and the lack of correlation to homelessness demonstrates that the market was distorted, and that the 'investment properties' were only investments due to financial instruments - which is to say the financial instruments became the primary demand side.

Imagine this happening on things like basic foodstuffs. What sort of mechanism would a free market economy have to offer to correct this before deleterious effects are felt by the most vulnerable people? As I see it, a free market would only feel the effect when it hit the primary demand side which would be the securities market after the externality already wreaked havoc elsewhere.

We´re talking about different things. You said "free market". When you put "free" in it became a vacuous loaded term. I agree what you said about the market.

It stands to reason, if market failures exist, that there needs to be some mechanism for correction - no? The Austrian School resolves the problem by stating that market failures don't exist, which I'm not willing to accept. Otherwise, if there is some regularitory mechanism in place then it would behoove us to not call such a market economy a free market economy.

 

[DrZoidberg]

Price isn't some intrinsic quality - it's a value that's determined by market forces weighing the supply side versus the demand side. I'd argue, and I think the downturn shows, that housing prices were actually well above what the equilibrant price would actually be, specifically because of information which was hidden from the demand side of the market (by all of the folks creating the financial products, the failure of regulators to do their due diligence, and by ratings agencies to realistically assess the risk of these securities).

The demand for, and the price of, a product would be affected by knowledge that, for example, buying it means there is a 30% chance that an orphan spontaneously combusts. If this knowledge is hidden from consumers then the market and price and demand will be distorted.

I saw personally that the credit being extended to many homebuyers would not have passed muster under normal circumstances. The vast number of uninhabited properties, and the lack of correlation to homelessness demonstrates that the market was distorted, and that the 'investment properties' were only investments due to financial instruments - which is to say the financial instruments became the primary demand side.

Imagine this happening on things like basic foodstuffs. What sort of mechanism would a free market economy have to offer to correct this before deleterious effects are felt by the most vulnerable people? As I see it, a free market would only feel the effect when it hit the primary demand side which would be the securities market after the externality already wreaked havoc elsewhere.

How aren´t you just arguing against yourself now? It looks to me that you as well are making the argument that the market is way too complex for us to be able to understand it?

We´re talking about different things. You said "free market". When you put "free" in it became a vacuous loaded term. I agree what you said about the market.

It stands to reason, if market failures exist, that there needs to be some mechanism for correction - no? The Austrian School resolves the problem by stating that market failures don't exist, which I'm not willing to accept. Otherwise, if there is some regularitory mechanism in place then it would behoove us to not call such a market economy a free market economy.

You´re talking about the market as a farmer talks about rain. For the farmer the rains can fail. But the rain doesn´t give a shit about the farmer.

The market provides plenty of services that are in conflict. It produces food, products, innovation, security, sense of meaning, entertainment, income equality and so on and so forth. When you get more of one you get less of another. Which one we value more is largely arbitrary, ie the success of the market is non-objective.

What Milton Friedman/libertarianism has going for him/it is that it his model works well regardless if one understands market forces or not. That´s the beauty of it. On the opposite extreme we have Stalin type planned economy, which demands that all factors of the market are understood. Which is the only reason why the USSR (and other Socialist countries) failed. And that´s still pretty much where we are right now. I´m all for regulation. Income equality is important to me. But not at any price. If we´re going to regulate we need to know wtf we´re doing. And we don´t really.

 

[DBT]

I wasn't arguing against your comment, just making a comment of my own: that economic activity is inseparable from the environment, hence having an impact on environment, regardless of the markets ability to create value out of thin air.

So?

So, given that practically all of our economic activity is based on our use of natural resources, the fact that the market can create value out of thin air doesn't really help reduce our impact on natural resources. As I said, my comment was related to this specific point, consequently it's not related to your post as a whole...and the reason why I didn't do a quote from your post.

Given the economists and politicians apparent love affair with growth, and that we have an economic structure that appears to demand it, an end to population growth, the major driver of economic growth, would be considered by economists(neoclassical) and their political acolytes as being a cause of economic hardship...yet perpetual growth is impossible within a finite system.

 

[DrZoidberg]

So?

So, given that practically all of our economic activity is based on our use of natural resources, the fact that the market can create value out of thin air doesn't really help reduce our impact on natural resources. As I said, my comment was related to this specific point, consequently it's not related to your post as a whole...and the reason why I didn't do a quote from your post.

I´d say it completely unrelated. We can use natural resources without depleting them. The fact that we are anyway is just down to bad or too lax regulation. It´s not that we can´t do it. We just lack the political will.

Given the economists and politicians apparent love affair with growth, and that we have an economic structure that appears to demand it, an end to population growth, the major driver of economic growth, would be considered by economists(neoclassical) and their political acolytes as being a cause of economic hardship...yet perpetual growth is impossible within a finite system.

Sure, but it assumes the cessation of technological innovation. Not to point out the obvious, but the last couple of centuries, the rate of technological innovation has only been increasing. That doesn´t seem to be slowing down one iota. Rather the opposite. The rate at which new fangled contraptions are entering the market is only increasing. While this is still happening growth, right across the board is to be expected and a reasonable demand. But most importantly, growth doesn´t have to take place at the cost of the environment. It´s not a zero sum game. We can sustain the same rate of growth today even if we regulate for environmental sustainability. This is not science fiction. It´s simply a question of political will.

 

[Valjean]

DrZoidberg
I´d say it completely unrelated. We can use natural resources without depleting them. The fact that we are anyway is just down to bad or too lax regulation. It´s not that we can´t do it. We just lack the political will.

A few resources we can use without depletion. With others we might be able to technologically enhance replacement rates, but at a cost we're unlikely to undertake. Many others have recharge rates in the thousands of millions of years and are essentially irreplaceable.

But even this is moot. Just look at our history. When has mankind ever used a resource sustainably? When have we ever been able to restrain ourselves when the possibility of short-term abundance existed? It's just not in us.

Are petroleum reserves recharging? Aquifers? Topsoil? Forests? Is demand decreasing or increasing? How about the number of people living on < a dollar a day? How about total population?
Get real!

 

[DrZoidberg]

DrZoidberg
I´d say it completely unrelated. We can use natural resources without depleting them. The fact that we are anyway is just down to bad or too lax regulation. It´s not that we can´t do it. We just lack the political will.

A few resources we can use without depletion. With others we might be able to technologically enhance replacement rates, but at a cost we're unlikely to undertake. Many others have recharge rates in the thousands of millions of years and are essentially irreplaceable.

I didn´t say all resources. There are plenty of natural resources we can use sustainably.

But even this is moot. Just look at our history. When has mankind ever used a resource sustainably? When have we ever been able to restrain ourselves when the possibility of short-term abundance existed? It's just not in us.

We actually use most resources sustainably. It´s just that we tend to take them for granted so we forget they´re there. Water is one such resource. Which is the most important one. The wood industry could be done sustainably quite easily at low cost.

 

[SimpleDon]

Free market and banking. I wrote a lot as I am prone to do. I hid much of the explanatory material.

Whether or not we have a free market is a matter of definition. IMHO whenever anybody takes the phrase "free market" in their mouth, whatever follows is bullshit. No matter what "side" they're on. It's a hopelessly abused term by all political players, to the point that its meaningless.

Yes, I suppose that everyone can define the "free market" to mean whatever they want it to mean. But it does cut down on our ability to communicate with each other. It will slow discussions like these to a crawl if we have define what we mean by every term that we use.

I believe the term is pretty well defined. I use the term to mean what investopedia defines it as, more is hidden...

Show

A market economy based on supply and demand with little or no government control. A completely free market is an idealized form of a market economy where buyers and sellers are allowed to transact freely (i.e. buy/sell/trade) based on a mutual agreement on price without state intervention in the form of taxes, subsidies or regulation.

Read more: http://www.investopedia.com/terms/f/freemarket.asp#ixzz3a11xsuLA

This was the first attributed definition in a Google search I just did for the question, "what is the free market?"

The remaining definitions that are on that first page of my Google search pretty much agreed with the above. I think that the term is fairly well defined. But you disagree.

I don't doubt you when you say that it is not well defined in your mind, how could I? But you are the one who introduced the term into the discussion, without telling us what it means to you. Now we know that it is meaningless to you.

Are there other meaningless terms that you are fond of using besides "free market?"

So where do disagree with the above definition? What makes it meaningless to you?

I have given up trying to fit economics to a political agenda. It is what it is. No matter what your political agenda is, which "side" you are on, the economy will eventually defeat you, it will require actions that violate your firmly held political beliefs. It is the nature of the beast.

We should be trying to set policies to first of all to achieve stability in the economy, to smooth out its highs and its lows. Next we should try to try to achieve a balance in the economy, to balance the supply side with the demand side, the capital share with the labor share, etc. Only then should we try to achieve political ends, eliminate poverty for example.

Banks are hard to regulate because financial instruments are so complex today that nobody can do the maths. That was the only and entire reason for the 2008 bank collapse.

Banks are not hard to regulate. We did it pretty successfully in the US for seventy years or so after the Great Depression. Then free market enthusiasts started to deregulate the banks.

Show

They canceled regulations that prevented banks from investing in stocks and other speculative financial instruments. Before deregulation you could be a bank that could create money out of thin air, you are wrong that banks don't do this, or you could be an investment bank that invests their client's money in financial instruments but can't create money out of thin air.

The free market enthusiasts canceled federal regulations that prevented a single bank from operating in multiple states and state regulations that limited branch banking within the states. Regulations that prevented the concentration of the business into what we have today after deregulation, just a few large national banks doing the vast majority of the banking business. Banks that are too big to fail, especially if you are looking at situation like we saw in 2008, where all of the big banks could have failed.

Yes, today's financial instruments are in many cases so complex that even the people who created them don't fully understand how they work. But these instruments are allowed to exist because of the failures of the free market enthusiasts, the failure to regulate in this case. There is no good reason for this degree of complexity. There is no reason that risk can't be successfully hedged against with much simpler and more transparent instruments.

The financial institutions turned instruments intended to hedge off risk into lottery type gambling. A low cost buy in with long odds on a huge pay off on the downside, the risk hedging side. An investment like pay off to the speculators on the upside betting that the hedged against event won't happen. The financial institution balanced the upside with what they consider the odds of the downside by the use of leverage, debt. Either the upside or the downside is borrowing money to increase the bang for the buck that they get.

All is fine if the financial institution correctly identified the odds of the hedged against event occurring. But the odds were dramatically shortened on mortgage based instruments when the value of homes decreased causing the number of mortgage defaults to increase and dramatically increasing the losses from the defaults without the possibility of covering the losses by selling the now lower value, repossessed house. Suddenly nearly everyone was able to collect on their long shot hedge. The financial institutions now had to cover the bets and they couldn't. (More accurately the financial institutions had hedged off this risk in the form of credit default swaps, CDSs. The financial institutions and the speculators backing the CDSs were unable to cover their bets.)

Nobody saw that coming. But nobody could have seen that coming.

There were people who saw this coming. Warren Buffet, a widely quoted investor in the US, famously said in 2003 that these types of derivatives were ticking time bombs in the economy, waiting to go off.

The economist Hyman Minsky of Washington University showed us in the 1970's that the financial markets are inherently unstable, that left on their own, unregulated, that the pursuit of every increasing returns will always lead to financial instability and crises. The free market enthusiasts believed that the financial markets had learned to self-regulate. Who do think that events proved was right, Minsky or the FMEs?

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The FBI warned everyone who would pay attention starting in 2004 that the bank executives were doing the exact same things that the Savings and Loan executives did leading up to the previous deregulation fiasco in the 1980's. They testified to Congress, they went to the Fed and the SEC.

A thousand S&L executives had gone to prison for their actions in the S&L crisis. Congress' answer to the S&L crisis was to repeal the law that made the executives personally liable for their decisions to break the law. It is the corporation as a person who is now liable, not the executives who made the decisions. Therefore the FBI couldn't act. But the Fed and the SEC could have ordered the banks to stop but both were run by free market enthusiasts who felt that the financial markets and the banks could self-regulate. They did nothing.

Post Keynesians, heterodoxical economists, understood the role of ever increasing amounts of private debt in producing a certain recession like we had, even including pretty accurate estimates of when it would occur, all starting in 2003. Keynes himself saw that private debt could either boost the economy or dampen it. He never followed through with the idea that he expressed in about 1928, hence the need for the Post Keynesians to pursue it.

Orthodox economists weren't able to see the crisis and recession coming because their economics ignores the effects of money and private debt on the economy. They assume that the impact of money and private debt is neutral in the economy, which it obviously isn't, while obsessing endlessly over the public debt which is much more benign and misunderstood.

There's no point in regulating if there isn't a clear desirable result and we have a way of measuring how well we're doing.

There is a certain cart before the horse view of regulation here. Governments are reactive in writing regulations. They write them usually to prevent previously observed bad behavior. Governments don't write regulations proactively, they don't sit around and dream up regulations to slap on businesses to prevent the magical appearance of the meaningless free market.

Since they do by and large write regulations to correct observed problems it makes "a clear desirable result" easy. If the regulation helps to solve the observed problems then we are seeing how well we are doing. If you have a pollution problem and you introduce regulations to force industry to clean up the air and water, then if the air and water slowly become cleaner then that is a pretty clear and desirable result, isn't it?

I'm personally all for regulation where it's applicable. I'm a lefty. But I dislike regulations that merely shift unfairness to another part of the market. Regulations have a way of creating unforeseen consequences.

And yes, there are bad regulations written, regulations that favor one company over its competitors for example. But this is an argument to write better regulations, not an argument to get rid of regulations.

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There is no evidence even that a bad regulation is worse than no regulation at all. Regulations are usually written as a response to observed bad behaviors, as we established above. Economic regulation very much parallels criminal law. Laws against robbery were written because people robbed other people. And while you might disagree with the execution of the laws against robbery, the way that it is defined or the punishment for it this doesn't mean that we should repeal the laws against robbery.

It is the very nature of a capitalistic economic system that is the reason that it must be regulated. Capitalism is successful because it rewards innovation and risk taking to provide for the needs of society. Unfortunately capitalism rewards innovation and risk taking in socially undesirable ways even more.

There are many types of economic regulations. Most are supported by industry. Regulations define the market, what is acceptable and what isn't. I was an electrical engineer for a German heavy industrial process equipment manufacturer and contractor in the minerals industry, mining and ore processing. We worked all over the world. I read a lot of regulations and I wrote some.

There are regulations like building codes. We were an ethical designer, supplier and builder of our mines and our plants. As such we welcomed building codes because they prevented a competitor from undercutting us by building a sub-par installation. I helped to write the National Electrical Code, which goes through a new revision every three years. The code panels are made up of all interested parties, owners, equipment suppliers, engineers, contractors, government inspectors, underwriters, tradesmen, union representatives - usually from the IBEW, the International Brotherhood of Electrical Workers.

Anyone can present a proposed addition or revision to the code. The panel votes on whether to consider each proposed change. A proposal doesn't require a majority for consideration, only for adoption, then a super majority is required. The system worked pretty well.

About 40% of the total amount of laws and regulations in the US concern a single item, IP intellectual property rights; patents, trademarks and copyrights. This is another example of regulations that are fully supported by industry and the corporations. IP is an example of property rights that owes its very existence to government laws and regulations. It is transcendental property, there is no there there without governments and regulations.

In fact the only regulations that businesses seem to object to are those that impose costs on them for what economists call externalities, costs caused by the production of the product that wouldn't otherwise be covered by the exchange transaction. The classic one is pollution control. The government has to force producers to limit the pollution that they emit into the air and the water. Competitive pressures will keep the most well meaning business from being able to limit their emissions of pollutants. Requiring the entire industry to limit pollution to the same levels removes the competitive pressures completely. Or rather puts the entire industry to finding out the cheapest way to limit the pollutants.

Basically... the market is smarter than all of humanity put together.

You only think that you believe that, but you don't. If you believed that the market makes good decisions on its own then you would trust the market and the economy that we have now instead of proposing your admittedly meaningless free market, your words, not mine.

Because the current economy is the way that it is largely because of the choices that the market has freely made over thousands of years.

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Prices aren't set by supply and demand because the market collectively decided not to set them that way, because among other problems doing so means that all of the products have to be to the same standard, they have to be more commodity like. Consumers like different products. They like to buy innovative products, so much so that they will pay more for them. This fosters innovation as a competitive means rather than just price. This is a good thing, not a bad thing.

Companies don't want to compete based only on price either. Among other problems it means that in a modern industrial economy that there is no profit. This is a bad thing, profits are good and a desirable result.

So what has happened is that almost the entire effort of a modern consumer products business is devoted to making sure that the business doesn't have to compete on price alone. They do this in many different ways, by innovation as we have covered, by branding, by advertising like paying soccer players to put the company's names on their shirts, by marketing, studying markets to gage consumers' preferences. No government forced the businesses to do these things, the market chose to do them and to not compete on price alone, which unfortunately is a necessary condition for the free market to self-regulate, no matter how you define the free market.

Also... banks don't create money out of thin air. That's the central bank in each country. While technically a bank. I think it's unfair to say that "banks" in general do it. They don't.

You are wrong about banks not being able to create money out of thin air. Google and reread the explanations of "fractional reserve banking" (FRB). They probably say something like the bank has to have reserves that equal to 10% of the loan amount if that is the reserve requirement.

These explanations of FRB seem to always focus on the reserve amount. The important question that is never answered is where does the 90% of the value of the loan come from? This is the portion that comes out of thin air.

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The bank just makes the loan amount appear in the borrower's account by typing numbers into a computer. It is now a deposit in the bank. And like all of the deposits in the bank it is the bank's liability. This liability is balanced by the loan amount plus interest, which is the bank's asset.

This is really interesting, because it means that the nation's money supply is always growing in relation to the need for money in the economy, the demand for money in the economy. It is truly an elegant example of the market in action. I don't know why people are so shy about explaining it. I think that it is because most economists have never really thought it all of the way through. That and the ones that have thought it through are afraid to admit that banks create money out of thin air.

What makes this more interesting is the money created by the loan is destroyed when the borrower pays back the loan. This means that the nation's money rises and falls with the demand in the economy for money. And that we have an explanation for the problem of debt deflation, first seen by Marx and developed by Irwin Fischer in the 1930's. It is the idea that borrowers can cause a recession if they collectively decide to reduce their consumption and pay down their debts. The fallacy of thrift, if everybody saves eventually there is no money to save.

Although the market can create value out of thin air. If banana farmer Jim and shoemaker Bob trade ply their trade and trade bananas for shoes, they're both better off than if they'd tried doing both activities separately. That is creating value out of thin air (which we can after the fact monetize). By trading money, banks are actually doing the same thing, which is a good thing. They are in fact making everybody richer, and also themselves.

I am not sure about this last bit. Banks trading money? Dollars for dollars? Forex? Are you going to break out into three choruses of "money is the veil over the barter nature of the exchange?" I have a cure for that too.

 

[DrZoidberg]

Free market and banking. I wrote a lot as I am prone to do. I hid much of the explanatory material.
Yes, I suppose that everyone can define the "free market" to mean whatever they want it to mean. But it does cut down on our ability to communicate with each other. It will slow discussions like these to a crawl if we have define what we mean by every term that we use.

I believe the term is pretty well defined. I use the term to mean what investopedia defines it as, more is hidden...

The problem with the free market isn´t our ability to define it. What makes it bullshit is that it´s a hypothetical state of affairs that never happens in reality. Products and services are never traded freely on a completely open market. The main obstacle is that of information. Even in the age of Internet getting people´s attention is the one major hurdle to any business. Even in a completely deregulated market there will always be players with an unfair information advantage. Bottom line, even when we make all efforts possible to even the playing field it still isn´t. The market will never be free.

I´d say the market being free is about as realistic as Marxist communism succeeding.

Banks are hard to regulate because financial instruments are so complex today that nobody can do the maths. That was the only and entire reason for the 2008 bank collapse.

Banks are not hard to regulate. We did it pretty successfully in the US for seventy years or so after the Great Depression. Then free market enthusiasts started to deregulate the banks.

I didn´t say it was impossible. Just very hard. As the Great Depression proved. Roosevelt´s New Deal had plenty of failed measures in it. A lot of construction works that failed. Great works can jump start the economy. But that assumes that it isn´t spent on idiotic things that nobody needs. History is full of that.

Nobody saw that coming. But nobody could have seen that coming.

There were people who saw this coming. Warren Buffet, a widely quoted investor in the US, famously said in 2003 that these types of derivatives were ticking time bombs in the economy, waiting to go off.

Who gives a shit? In any system with random behaviour there will always be somebody who makes an accurate prediction. Rare events happen all the time. It proves nothing.

The economist Hyman Minsky of Washington University showed us in the 1970's that the financial markets are inherently unstable, that left on their own, unregulated, that the pursuit of every increasing returns will always lead to financial instability and crises. The free market enthusiasts believed that the financial markets had learned to self-regulate. Who do think that events proved was right, Minsky or the FMEs?

I think we´re talking about different things. I´m not saying that a deregulated market is preferable. I´m not. I´m a big fan of regulation. Yes, I agree that financial markets are inherently unstable and suck at self-regulation. What I´m saying is that state regulation often make a bad situation worse, by stupid regulation.

There's no point in regulating if there isn't a clear desirable result and we have a way of measuring how well we're doing.

There is a certain cart before the horse view of regulation here. Governments are reactive in writing regulations. They write them usually to prevent previously observed bad behavior. Governments don't write regulations proactively, they don't sit around and dream up regulations to slap on businesses to prevent the magical appearance of the meaningless free market.

Since they do by and large write regulations to correct observed problems it makes "a clear desirable result" easy. If the regulation helps to solve the observed problems then we are seeing how well we are doing. If you have a pollution problem and you introduce regulations to force industry to clean up the air and water, then if the air and water slowly become cleaner then that is a pretty clear and desirable result, isn't it?

This is my whole argument. Until it happens there´s no point in regulating. And financial instruments are still evolving. It´s still too early to regulate them in order to avoid the 2008 crash happening again.

 

[Valjean]

We actually use most resources sustainably. It´s just that we tend to take them for granted so we forget they´re there. Water is one such resource. Which is the most important one. The wood industry could be done sustainably quite easily at low cost.

I don't know what the water situation is in Sweden, but here in the US things aren't looking so good. Agriculture in the West and Great Plains depends on either aquifers or diverting natural water sources to agricultural areas. The former is rapidly depleting the aquifers, the latter is desertifying natural areas.

In California's Central Valley you used to get all the water you wanted with a 200 foot well. Now farmers need to drill to deeper aquifers 1200 feet down. What's more, the land is subsiding as the water strata are pumped out. Once these water layers collapse they will not recharge -- the aquifer is extinct. The same thing is happening on the great plains. Wells going dry, drying reservoirs with huge "bathtub rings" around the edges, rivers running dry.
Elsewhere in the world deserts are spreading. In Africa, for example, the Sahara is rapidly moving south. The civil war in Sudan, the Darfur refugees, -- blame desertification/deforestation.
Water: Not Sustainable.

Wood: Forests are a vital part of the ecosystem -- our life-support system. Currently rain forests in S America, Africa and Asia are being destroyed.
You may be thinking in terms of woodlots or tree plantations. These are not forests. They do not function as forests do. Yes, we can supply wood with plantations, but at the expense of the ecosystem.

 

[DBT]

So, given that practically all of our economic activity is based on our use of natural resources, the fact that the market can create value out of thin air doesn't really help reduce our impact on natural resources. As I said, my comment was related to this specific point, consequently it's not related to your post as a whole...and the reason why I didn't do a quote from your post.

I´d say it completely unrelated. We can use natural resources without depleting them. The fact that we are anyway is just down to bad or too lax regulation. It´s not that we can´t do it. We just lack the political will.

Obviously we can live sustainably, it is possible...if we do not exceed the carrying capacity of our environment.

As our environment is finite, if growth continues indefinitely, our population numbers/economic activity places ever increasing demands on our finite resources that it must necessarily exceed carrying capacity (being finite).

The only question is: at what point does the balance tip from sustainability to sustainability?

 

[DrZoidberg]

I´d say it completely unrelated. We can use natural resources without depleting them. The fact that we are anyway is just down to bad or too lax regulation. It´s not that we can´t do it. We just lack the political will.

Obviously we can live sustainably, it is possible...if we do not exceed the carrying capacity of our environment.

As our environment is finite, if growth continues indefinitely, our population numbers/economic activity places ever increasing demands on our finite resources that it must necessarily exceed carrying capacity (being finite).

The only question is: at what point does the balance tip from sustainability to sustainability?

If we look at Jarred Diamonds Collapse, and compare ecological disasters we see that the pattern for humans is to over-exploit their environment and their society collapses. As collapse is imminent preserving old traditions become very important to people. People start exploiting their environment even more systematically speeding up the collapse. I think today´s political situation is ample proof of that happening. Politically it seems impossible today to get everybody pulling in the same direction.

I think we´ll be cheerfully chugging along until we get hit by a catastrophic event killing most humans, and once that initial trauma has passed we´ll be back to business as usual. Whether it´s environmental collapse, Ebola, a gigantic meteor or something completely new, is no no consequence. And we know these catastrophic events do occur from time to time. It´d be stupid to think it´s stopped happening. And it´s not like it won´t happen. If it won´t be one thing it´ll be something else. Something will get us in the end. But I doubt humanity will die out from these events. We´re the mammalian equivalent of a cockroach. As a species we´ll always pull through IMHO.

Prediction: even after a catastrophic event killing most humans people will still be as Christian as ever telling us that god loves us and in general making a fool of themselves in forums.

 

[bilby]

Obviously we can live sustainably, it is possible...if we do not exceed the carrying capacity of our environment.

As our environment is finite, if growth continues indefinitely, our population numbers/economic activity places ever increasing demands on our finite resources that it must necessarily exceed carrying capacity (being finite).

The only question is: at what point does the balance tip from sustainability to sustainability?

If we look at Jarred Diamonds Collapse, and compare ecological disasters we see that the pattern for humans is to over-exploit their environment and their society collapses. As collapse is imminent preserving old traditions become very important to people. People start exploiting their environment even more systematically speeding up the collapse. I think today´s political situation is ample proof of that happening. Politically it seems impossible today to get everybody pulling in the same direction.

I think we´ll be cheerfully chugging along until we get hit by a catastrophic event killing most humans, and once that initial trauma has passed we´ll be back to business as usual. Whether it´s environmental collapse, Ebola, a gigantic meteor or something completely new, is no no consequence. And we know these catastrophic events do occur from time to time. It´d be stupid to think it´s stopped happening. And it´s not like it won´t happen. If it won´t be one thing it´ll be something else. Something will get us in the end. But I doubt humanity will die out from these events. We´re the mammalian equivalent of a cockroach. As a species we´ll always pull through IMHO.

Prediction: even after a catastrophic event killing most humans people will still be as Christian as ever telling us that god loves us and in general making a fool of themselves in forums.

How many resource driven collapses have occurred in societies with freely available, safe, effective, female controlled contraception?

The pill is a huge game-changer. Its effects are only now becoming apparent.

The population panic of the 60s and 70s was obsolete even as it began.

But the baby-boomers who started it are unable to let it go, and have infected their children with the same needless worry.