[peakaboo]

I'm new here and have read quite a bit on the forum about the effects of peak oil on the economy, with rising energy costs contributing to rising costs and inflation.

From the President's SOTU address to Wall Street talking heads to the Federal Reserve, we always hear about the importance of economic growth. My question to you all is:

Assuming a country could regulate immigration, family size to keep the population constant, and assuming that country started with a blank balance sheet (i.e. not 8+ trillion in debt), why must a country have economic growth as opposed to a steady GNP over time (adjusted for inflation/deflation)? What is wrong with a steady GNP, other than investment returns in the country (on average) being zero? Some businesses would do well, some would not, but pretty much the number of people working would be stable. Couldn't you still save money and live confortably?

Is economic growth pushed so hard because of our debt or is it mostly due to greed?

[rogerhb]

Yes it is all down to debt and inflation.

If we don't grow:

(a) people will stop borrowing and hence stop creating fiat money

(b) people fill find it hard to pay of existing debts and the system will unwind its self

Economists call this cleansing the economy.

Most people don't like the results of being homeless and jobless. It's not popular.

An insane BBC business reporter said "Good news, the Japanese economy has started inflating again", he did not mean growing, he meant good old fashioned prices rising etc. This was proved by him saying "it had got out of deflation".

Ask Joe Sixpack Consumer if he is concerned about prices going down?

[jdumars]

The trouble with an economic system is there is really no such thing as homeostasis. There are two conflicts that never resolve: population growth and resource depletion. Economics is really an abstraction of energy allocation since ultimately that is what drives the ability for life to thrive. In a system with lots of energy inputs, especially those with a high energy return ratio, populations can easily expand. This puts upward pressure on all other aspects of the environment, both physical and social. So the very premise of a population in economic balance is ultimately not realistic. Now, this may not manifest itself immediately in populations spread out over large areas, or consisting of small pockets of populations, but then these smaller systems do not rely so heavily on organized economics. Smaller communities have traditionally engaged in various forms of trade, including barter and loans on trust/faith. Yes, these represent 'economies of small scale' but not necessarily the economy to which I believe you are referring.

Growth in our current economy is a necessity because we have essentially borrowed against it.

[MattSavinar]

A civilization solves its problems by becoming more complex: adding bureaucracy, as an example.

The more complex a system gets, the "bigger" it gets. Problem is there are an infinite number of problems to be solved, so the growth becomes infinite.

You might, for instance, appoint a handful members of your society to make sure there is enough food for the other members of your society. Since humans inherently favor their own families, the people appointed are likely to come up with policies that favor their families by just a bit. Then you need to appoint other members to police the people appinted to solve the food problems. Then, you need to appoint other members to resolve disputes that arise over how the orignal members have figured out how to solve the food problem. I think you get the picture at this point.

As far as greed, consider your children be they alive currently or hypothetical future ones. Naturally, you want them to have just a bit more or be just a bit better than the kids down the street, correct? Of course you do. So there comes the growth. You're going to try to outdo the dad down the street. And he will try to outdo you too, even if just by a bit.

That's the societal and genetic "blueprint", if you will, that underlays the financial system. It's not a wonder we developed a society based on growth when you look at our biology/genetic tendencies.

Best,

Matt

[Donkerdoorn]

It's not to be silly.
Growth is profit. It's the basic of economics....

[peakaboo]

I guess what I'm getting at with this question is, if you took population growth and debt out of the equation, is economic growth the result of the human condition (i.e we want bigger and better) or is it a necessity for a stable civilization?

My fear is that economic growth for the world can't continue past a certain point, and we are reaching that point soon.

[killJOY]

Because the world is run by a set of addicts who go under the euphemism "the wealthy" or "capitalists."

And they are never satisfied.]

And our current system deifies morbid self-interest as a value.

The only thing one can do is not participate, as much as one is able to.

[ohanian]

Short Answer: because the population is growing.

Short Answer: because inflation increases with time.

[rogerhb]

$this->bbcode_second_pass_quote('ohanian', 'S')hort Answer: because the population is growing.

Short Answer: because inflation increases with time.

[Leanan]

$this->bbcode_second_pass_quote('', 'I') guess what I'm getting at with this question is, if you took population growth and debt out of the equation, is economic growth the result of the human condition (i.e we want bigger and better) or is it a necessity for a stable civilization?

[rogerhb]

$this->bbcode_second_pass_quote('Leanan', 'P')eople were born into their stations, and could not hope to rise above them.

[Leanan]

That is not really true. Check out The Pecking Order, by sociologist Dalton Conley.

Basically, it finds that most of the difference in socio-economic status is within families, not between them. For example, Bill Clinton became President of the United States. His younger brother is a convicted drug dealer. That is an extreme example, but it is typical of sort of variation you see between siblings.

$this->bbcode_second_pass_quote('', 'I')n fact, in explaining economic inequality in America, sibling differences represent about three-quarters of all the differences between individuals. Put another way, only one-quarter of all income inequality is between families. The remaining 75 percent is within families. Sibling differences in accumulated wealth (i.e., net worth) are even greater, reaching 90-plus percent. What this means is that if we lined everyone in America up in rank order of how much money they have--from the poorest homeless person to Bill Gates himself--and tried to predict where any particular individual might fall on that long line, then knowing about what family they came from would narrow down our uncertainty by about 25 percent (in the case of income).

[rogerhb]

$this->bbcode_second_pass_quote('Leanan', 'B')ut this kind of mobility is possible only because of economic growth. Petroleum-fueled economic growth.

[jaws]

People save. They want a positive return on their savings. Investors know how to obtain such a return. They borrow these savings. Capital accumulates and the economy grows.

[rogerhb]

Nearly,

Foreigners save. They want a positive return on their savings. Investors know how to obtain such a return. Americans borrow these savings. Capital accumulates and the economy grows.

[MattSavinar]

Why population will never be steady state, at least not on a global level:
If each of the 10 kids also have 10 kids, that's 100 grandkids for family A.

Couple A are fiends who don't care about sustainabilty, so they decide to have 10 kids.

Coupbe B are advocates of sustainabililty, so they have 2 kids.

Each of Couple A's 10 kids has 10 kids.

Each of Coupble B's 2 kids have 2 kids.

So when the time comes for the grandkids' generations to fight over diminshing resources, which family is going to kill off which family?

Somebody is going to get their asses kicked and my money is on Family A wiping out Family B unles Family B manages to develop advanced killing technologies.

If Family A (the one with the 100 grandkids) wins, we get a population likely to overpopulate the environment.

If Family B (the one with 4 grandkids) wins, we get a population inclined to develop advanced killing technologies.

Either way, we don't get sustainabilty!

Best,

Matt

[ohanian]

$this->bbcode_second_pass_quote('MattSavinar', 'W')hy population will never be steady state, at least not on a global level:
If each of the 10 kids also have 10 kids, that's 100 grandkids for family A.

Couple A are fiends who don't care about sustainabilty, so they decide to have 10 kids.

Coupbe B are advocates of sustainabililty, so they have 2 kids.

Each of Couple A's 10 kids has 10 kids.

Each of Coupble B's 2 kids have 2 kids.

So when the time comes for the grandkids' generations to fight over diminshing resources, which family is going to kill off which family?

Somebody is going to get their asses kicked and my money is on Family A wiping out Family B unles Family B manages to develop advanced killing technologies.

If Family A (the one with the 100 grandkids) wins, we get a population likely to overpopulate the environment.

If Family B (the one with 4 grandkids) wins, we get a population inclined to develop advanced killing technologies.

Either way, we don't get sustainabilty!

Best,

Matt

[MacG]

$this->bbcode_second_pass_quote('MattSavinar', 'S')omebody is going to get their asses kicked and my money is on Family A wiping out Family B unles Family B manages to develop advanced killing technologies.

[gg3]

Peakaboo, this is a perennial topic around here.

The more detailed answers have to do with the dynamics of investment and return, i.e. without growth there is no basis for investment (the way the economy is presently structured), and without investment, everything grinds to a halt.

But Matt brings up a *very* interesting point. "Naturally, you want (your kids) to have just a bit more or be just a bit better than the kids down the street, correct? Of course you do."

Translation: This is an example of a genetic algorithm. You want your genes to have a competitive edge over someone else's genes. Material wellbeing confers reproductive advantage. Therefore no matter that you and the neighbors are both fully materially comfortable, with good food, clothing, housing, health care, education, and so on: to gain a reproductive edge, you want *MORE* and *BETTER* for yours. Run this algorithm at-large in a society, and what you get is pressure for growth.

To this add another factor: the Instinct for Increase. This is what drives reproduction and consumption: the hardwired algorithm that MORE is ALWAYS BETTER. In fact this is below the level of an instinct, it's a reflex, or more specifically, two reflexes. One is orgasm (which at least in human males is entirely spinal, doesn't involve the brain except as a spectator), the other is the compulsion to grasp at objects that are novel and bright, or as the popular phrase has it, "shiny and new." Both of these are operative in chimpanzees as well as humans, and the compulsion to grasp at "shiny and new" can be seen in infants of both species.

To this add the factor of acclimatization: no matter what level of material comfort people have, they will become acclimatized to it, habituated to it, and will necessarily desire even greater material comfort and alleviation of effort. I call this one "the conservation of human mass and energy," by analogy with the first law of thermodynamics. Another word for it is laziness, and it knows no bounds. An ironic side effect of this is, as humans conserve their own energy (effort), they gain mass (weight), and obesity is the logical outcome, presently becoming pandemic among children in the entire industrialized world.

I've gone into excruciating detail on many of these points, so if you look up an index of my postings you can probably find them.

My conclusion is: Humans have inherent flaws in their genetic programming and the societal programming that arises as a result. Overshoot and collapse is universal among species that are not direcly held in check by predators. Homo Sapiens' probability of being an exception is approximately equal to the percentage of non-prey species that do not exhibit overshoot and collapse. (For anyone who wants to do the arithmetic, add up the total number of species that do not have a food-chain predator, call that Y; add up the number of species within Y that do not exhibit overshoot and collapse, call that X. Then divide X/Y to get your percentage probability for the human species.) In other words, we are well and truly screwed, and the data show that this will be the century when all of those chickens come home to roost.

Realistically this leads to two implications for action.

One, do what you can to save the world but don't expect it to prevent a crash entirely. Practice the "Azimov's Foundation strategy" of building small self-sufficient communities that can preserve relevant knowledge and sustain themselves through the decline and fall until another stage of civilization emerges. Think of monasteries that preserved knowledge during the Dark Ages in Europe. At the same time, use every reasonable political measure to reduce the degree and severity of the crash phase: speak out, write, vote, get more people to vote, etc.

Two, Homo Sapiens is toast, we need to evolve into a de-facto new species. Genetic evolution is the long-range requirement, and will necessarily include built-in limiting factors on reproduction and consumption, much as we already have a built-in factor against truly extreme over-eating, i.e. "the sensation of FULL." But humans also evolve "memetically," i.e. in terms of "memes," which are units of ideas or meaning (see Richard Dawkins for more on this topic, and you don't have to agree with his atheism either). For example, over the 20th century, memes against racial bigotry and certain extreme forms of brutality have become normalized in industrial societies (GW Bush's torture policies will hopefully prove to be an exception to the rule, and this is not political snark).

The term I use for "the next human" is "Homo Noeticus," which was originally coined in consciousness research, and translates as "God-knowing human" or "reasoning human," depending on whether you want to engage a theological implication (optional). This is an individual who understands the big picture and acts accordingly; whose sense of self-interest is long-term and generalized rather than short-term and personal. The goal here is for the cognitive and behavioral patterns of Homo Noeticus to become generalized in the species, and of course one aspect of this is the capability for sustainable civilization.

I'm going to be setting up a website/blog to explore these ideas in detail, and I'll post the URL once I have something up. And my friends & I are planning for sustainable community, starting with buying land somewhere in northern CA as soon as the funds can be raised. There'll be another website set up for that in the next month or so and I'll post the URL on this board once it's up.

Meanwhile, if you think any of this is empirically or logically correct, the thing to do is to start acting on it, starting now.

[MrBill]

$this->bbcode_second_pass_quote('rogerhb', '')$this->bbcode_second_pass_quote('ohanian', 'S')hort Answer: because the population is growing.

Short Answer: because inflation increases with time.