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The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut (nytimes.com)
50 points by ciconia 26 days ago | hide | past | web | favorite | 94 comments



"That helps explain why American workers’ wages have been rising relatively slowly despite a low unemployment rate."

Wouldn't surprise me if that's a big part of the problem.

Despite tax cuts, low interest rates, and other corporate handouts, nothing's getting passed onto the people who do most of the spending. Inequality is higher than ever and the people making the most money need it the least.


Seriously.

My family is relatively well off and our home was purchased back in 2004. Still, the steady march of expenses has certainly increased faster than income.


On a micro note, give YNAB a try. Diligent measurement has impressed on me how unconstrained our spending was. Cutting down the number of channels for payment goes a long way. There's a reason all the FAANG companies are happy to handle your credit cards.


+1 on this. I was terrible with money till I started using it a few years ago. I was one of those people with a good job but nothing to show for it. Using YNAB made me realize i was frittering most of my money away on lots of little purchases here and there. YNAB enabled me to see this and I drastically altered my spending. Also, a few years ago I had to take over my fathers business. Subsequently, this involved me having to take a substantial pay cut. I wouldn't have been able to do this without YNAB and budgeting.


I agree this is great advice!

For me the biggest things are that as the family grows, so has many expenses. We need two big cars now, which are like 150% more than they were in the early 2000s. For health reasons we need to really focus on fresh vegetables and meats and avoid most cheaper foods — which are very volitile price wise.


> Inequality is higher than ever and the people making the most money need it the least.

In 2016, for the first time in a while, the middle class grew (in the USA, anyway): https://money.cnn.com/2018/04/12/news/economy/middle-class/i... .

Also, we're seeing real median incomes that we haven't seen for over 20 years: https://seekingalpha.com/article/4231615-november-2018-media...


Those trends began 2011 not 2016. But it's nice the preliminary data shows they may be continuing.

But inequality continues to grow at an alarming rate with almost all economic growth going to asset value not wages. Likewise, the cost for necessary goods such as housing, medicine etc far out pace wages.


> Those trends began 2011 not 2016.

I'm not sure I'd call that totally accurate. Real wages have been increasing since the Great Recession turned around. That's true. However, it is continuing to increase past the point of previous highs. The middle class inflex happened in 2016, although there doesn't seem to be data since then.


The middle class growing isn't mutually exclusive with inequality (GINI coefficient) getting worse.


Growing the middle class raises the Lorenz curve in the center. That, in turn, lowers the GINI coefficient.


It can lower the GINI, but it hasn't been. GINI's been increasing for decades, and was still increasing as of 2016: https://fred.stlouisfed.org/series/SIPOVGINIUSA


That is interesting that the GINI didn't inflex with the middle class in 2016. It would be good to see more data. Apparently the World Bank doesn't compute it too often.


If wages increases are less than GDP growth rate, the GNI must rise. The situation for the last 40 or so years.


The middle class income earners tend to have retirement accounts, don't they?


That would be one of the places wages are allocated after they are received. It is not relevant to take home pay.

And of course retirement saving are stunningly in adequate for the vast majority. Likely because anyone who wants to save has to compete with people who don't and will work for a lower salary.

It should also be noted that in the past, employees frequently received pensions which rival their take home in total value. And even though pensions have disappeared, wages remain flat.


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

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


> Somewhat counter-intuitively, a low unemployment rate is a lot more important to workers' overall incomes than a rise in wages (given typical variation in both).

That's generally true, but it's not an absolute, and it doesn't rule out paying higher wages while also maintaining the current level of employment. It's pretty clear from the data [1] that corporations are earning more than ever and not passing it on to employees.

> This is also why high real wages are so damaging when they lead to higher involuntary unemployment: they actively rob those who are most in need of their rightful incomes! It's why recessions make people angry and anxious for "something to be done", whatever that might be.

That's true, but doesn't apply. Real wages aren't even keeping up with inflation, and are decreasing relative to productivity [2], so it's silly to claim they're so high they're causing unemployment.

[1] https://fredblog.stlouisfed.org/2018/08/corporate-profits-ve...

[2] https://www.epi.org/publication/charting-wage-stagnation/


amazing how you put the blame on workers for unemployment instead of on corporations being greedy vampires sucking the life out of everything in the pursuit of ever more shareholder value.


I don't blame workers for unemployment. If anything, corporations are to blame for not being willing to hire workers at lower real wages, or perhaps with worse working conditions (e.g. increased monitoring and micromanagement) when involuntary unemployment is high. (To be clear, this happens for entirely self-serving reasons, like the concern that hiring someone at lower pay would ruin "morale" within the firm. No one sane thinks that hiring unemployed workers is bad for them, and worse than the alternative of leaving them without work!)


I still personally believe that the real underlying truth of "peak oil" was that as lower EROEI sources replaced higher ones, even though we would be able to grow the total number of barrels per day, the net-energy provided to drive the economy from those barrels would(is) plateau(ing). Everyone who points to fracking (or even worse tar sands) as a disproof of peak oil never understood the underlying argument about how the "economy" is effectively our word for total/net energy consumption and a fracked barrel of oil provides vastly less energy to the system.


If you think about it, a lot of the arabian/russian/corupt oligarchs money from oil were spent in ludicrous ways, like luxury beyond belief. The economy is getting less value from a fracked barrel, but those money are spent more wisely, returning back into the industry. This is not just sticking a pipe in the ground anymore, we are advancing our tech by using fracking. This is a new economic engine, maybe it's not as big as the free oil, but it's something.


It's an interesting thought; I think you'd also have to look at the absolute dollar amounts of "luxury spend vs. capital/research reinvestment" to get the full picture. (Since the actual benefits accrued to society are proportional to the absolute spend on R&D).

Also, is R&D in fracking transferable? Or is it just tech that will be irrelevant in 20-30 years? (I don't have a good picture on this one; I could see a reasonable argument that we will be using natural gas for a long time, even when we're a mostly-renewable economy, since it's a convenient-to-transport form of energy as LNG).


I can't imagine fracking is too transferable unless there's some other easily flowing substance you want to get out of the ground besides water, oil, or natural gas.

EDIT: It might be useful for enabling greater storage density of CO2 in rock formations if we attempt to sequester CO2 out of the atmosphere at scale: https://phys.org/news/2018-11-co2-underground-curb-carbon-em...


Fracking is important in geothermal. An experimental form uses drilling to dry hot rocks and injection of water (even waste water or grey water) to produce steam.

Destructive uses of aquifers may mean we need skills in underground water table remediation. I don't think fracking directly helps (I think it hinders) but we're going to need to understand how to use it to fix things as well as extract things.


Well, too bad fracking in the US is on its way down. By the looks of it, it will last maybe 3 years before it peaks out. Then the barrels/day will crash. Not kidding though, and higher ups know... which is probably why the US is intervening in Venezuela, for example.


Source on that?


Most of it was stockpiled in US dollars.

End of the day, the dollar will inflate away in the long run. We will have created more value with oil than the shieks and Russian mob bosses yielded in dollar terms.


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

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


I tried to put together a case for this yesterday in a thread on Germany and coal. The comment is probably relevant here too, so I'll copy it with minor adjustments. The US-centric figures are because I was arguing about the US, but I think the picture actually covers a lot of countries.

There is some evidence that we are either hitting peak oil, or rising competition from previously-developing countries is choking the West out of energy markets. Energy prices are not cheap at the moment (I'm not accounting for inflation, but according a back of the envelope check these numbers are all growing much faster than inflation).

Crude oil prices went from $35 -> $70 around 2005 and have generally been floating around there since, with short periods of time (a year or two) where they drop down [0], coal did something similar from $50 -> $80 [1]. In the US, coal use for electricity immediately started dropping off, and Natural Gas has been replacing capacity but not overwhelmingly [2]. There was a 5 year period where gas (ie, car fuel) prices were just out of control, and a long period of time where they were just high.

Most of the US's energy is sourced from petroleum and coal [3, 4]. I'd suggest that although cheap natural gas has absorbed some of the shock, there is evidence of cost pressure. This all seems like a pretty substantial problem (read: threat to political stability at a grand scale), I'm constantly surprised it doesn't get more press.

[0] https://www.macrotrends.net/1369/crude-oil-price-history-cha... [1] https://www.indexmundi.com/commodities/?commodity=coal-austr... [2] https://en.wikipedia.org/wiki/File:US_Electricity_by_type.pn... [3] https://www.eia.gov/todayinenergy/detail.php?id=10 [4] https://en.wikipedia.org/wiki/File:Energy_Flow_US_2017.png [5] https://en.wikipedia.org/wiki/Energy_in_the_United_States#Su...


Energy intensity is going down [1], so it seems like the economy is less about energy consumption than it used to be? But averages can be misleading.

[1] https://en.wikipedia.org/wiki/Energy_intensity


To some extent that's because, apart from construction, we're outsourcing the manipulating-atoms business to other countries which results in higher energy intensity abroad.


There are two interpretations. The first is that energy doesn't matter, and the second is GDP doesn't matter. GDP was only important when it was a proxy for energy (for a long time, the correlation between energy /capita and gdp/capita was very strong).

IF you assume that GDP is no longer a good measure of energy but that the people care about energy more, it provides an interesting interpretation of Trump's 2016 victory, the fracturing of politics and the widespread condemnation of politicians. People's lifestyles are no longer being buoyed by a rising quantity of cheap energy, and they are angry without quite understanding why their lives don't seem to be improving.

It is easier to put tensions aside and work together when you are seeing an increase in your living standards each year - even if you don't agree, it obviously works. Harder to do when they are falling - even if you agree, something seems to be going wrong.


As is typical of such articles, this is written from the point of view of a central bank. Low inflation is only a problem to central banks. Central bankers are bothered by low inflation because they can't cut interest rates below zero. The US and Europe inject money into the economy by having the central banks loan it out to commercial banks, who then loan it out at a profit. That's not the only way to do things. Japan uses large government-funded infrastructure projects to pump money into the economy.

The real problem is "secular stagnation". We just don't need that many people to make all the stuff. The US now has a huge population that's irrelevant, and acts as a dead weight dragging down wages. I've been saying this for over a decade, and it's now conventional wisdom, although it took way too long.


Capitalism seems to be capable of producing far more than it can consume.


Production technology today is capable of producing far more than can be consumed. This is a change from most of history, and it's why classical economics doesn't have the answers.

Capitalism is now market limited. There has to be buying power. People who are only marginal players in the economic system don't generate much discretionary buying power. As the CEO of WalMart has said, "Our customers are out of money".


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


There's a "Talk at Google" about this. I think it's Douglas Rushkoff (1), who wrote Throwing Rocks at the Google Bus. Basicly, if you rethink the economy in terms of a global garden, where you're spatially bounded, you just have to accept that there's only so much carbon, silicon, water, etc. Paul Romer (Nobel Economics 2018, 2) has a similar point (again trying to recall a lecture here...): if you take all the copper in the world, you can only make so many circuits. So tech can only get you so far. There's some kind of upper bound on "just make more motors". Progress may well occur, but it will take innovations not yet foreseen.

(1) https://www.youtube.com/watch?v=0EnmH95016w

(2) https://www.nobelprize.org/prizes/economic-sciences/2018/rom...


Can't you?

Growth just means the human race getting smarter at being productive, so we can grow more food with less effort, get around in transportation with less cars and drivers, buy the things we need at lower prices and with less friction.

You could argue that once literally everything is roboticized and automated with strong AI then there's no more growth... except humans will be looking for even better real-life experiences, better art, better teaching, better personal connections... and robots and technology will still evolve to be better designed, use less energy, use less resources...

I'm not sure I can imagine a world in which people didn't want anything else to be improved that could possibly be improved, which is what a world with no growth would have to be.


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


The long-term rate of growth in financial investment is said to be 7% at best. For much of economic history the value of currency was so stable that agricultural workers pay as essentially unchanged across generations.

Look at the chrts in http://www.econ.ucdavis.edu/faculty/gclark/papers/long_march...


"You can't sustain growth forever."

Of course you can. We've been doing for most of the last 2000 years, we'll keep doing it. Mostly.


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


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

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

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

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

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

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

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

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

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


Sorry, this is a bit of a pet peeve of mine when people argue that exponential economic growth can continue forever, which flies in the face of anything remotely resembling critical thought. It’s just so depressing that people are so in denial over basic features of reality. You know that bad things are about to happen when people can’t face reality.


"which flies in the face of anything remotely resembling critical thought. It’s just so depressing that people are so in denial over basic features of reality."

Stop attacking with ad hominem and address the argument -> there is absolutely nothing preventing perpetual growth. Nothing at all.

History has shown there to be consistent exponential rates of growth through long periods, and it's utterly reasonable to assume this will continue.


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


Past Chinese growth has set expectations too high. It is ridiculous to point to a 6.6% growth rate and say it is low.


Perhaps a better read might be "too low for 'the 1%' to continue extract wealth from the global economy at the rate to which they have become accustomed without provoking destructive backlash"?


Also ridiculous to think those numbers were accurate.


In a lecture to senior business executives on Dec. 16, Renmin University economics professor Xiang Songzuo, said that a “very important institute” in China estimated that China’s GDP growth for 2018 should be about 1.67 percent or even negative, and not the statistics bureau’s official figure of 6.5 percent.

https://sinoinsider.com/2018/12/politics-watch-xis-reform-an...


The numbers may not be super accurate but if you've ever been to a big city in China in the past decade you would have witnessed circa 10% GDP growth with your own eyes.


I don't think anyone thought they were accurate, what mattered was the fiscal policies the Chinese state bank enacted regarding the value of the renminbi.


You need an increase in worker population or an increase in productivity per worker to increase the output of your economy. If populations are stagnating and innovation is low, that would cause less growth overall. Consider that many countries have a lopsided age distribution, such as Japan, China, and some European countries. Immigration into those countries may in fact be useful if it balances their population pyramids.



It’s inaccurate to say that we “can’t” escape it. The federal reserve has been raising interest rates to slow inflation and growth in employment, and for years they have paid interest on bank reserves at the fed and constantly talked up plans to unwind their portfolio (selling off assets). If they had done less of all that we would have higher inflation.

Same is true of some other central banks. I always am frustrated when I hear about japan not being able to raise inflation rates much. If their activities have no impact on inflation at all, why not buy up all the securities and foreign exchange in the world by printing yen? The Japanese could live entirely off the dividends because of this magical property of their central bank.


If the central banks sold off all the bonds they bought with QE, that'd cause deflation, not inflation. In fact, the japanese central bank is printing money and buying up ETFs. It's too soon to say if this is a success, but thus far, hardly any inflation!


So, I have a question and it may seem like a childish or stupid one because I think I've missed something somewhere.

Our society, and I think capitalism in general, seems to be pinned on the foundation of perpetual growth.

The question for me is: how can we have infinite growth on a planet with limited resources?


> how can we have infinite growth on a planet with limited resources?

I find it sad but unsurprising that a reasonable question like this attracts a bunch of downvotes here.

I heartily recommend Higgs' book "Collision Course" -- it doesn't provide solutions about how to get ourselves out of the mess that we're in, but it does provide a lot of historical evidence explaining how much public thought and speech around economic growth has been warped by propaganda:

Kerryn Higgs -- Collision Course: Endless Growth on a Finite Planet

https://mitpress.mit.edu/books/collision-course

A few quotes from reviews:

> If modern society ever had a core taboo it is against speaking favorably of limits, especially with respect to growth.

> Higgs explains brilliantly how our ideas about economics and the environment have been carefully warped and manipulated over decades, just so a small minority could get rich.


Thanks for the recommendation, from the quotes that seems like the exact thing to fill my knowledge gap.

:)


Technology? Well not infinite but up to the point of a dyson sphere.


What massive efficiencies have technology brought us lately? I count ... fracking as a real improvement. That's it!


Fracking as we know it today started in the 40’s, it’s just a matter of economics that it’s feasible to do on a wide scale today. Mind you, that only goes to further reinforce your point.

Edit. Every example other people are posting have been around for longer than most of us have been alive. I’m not trying to take a dump on the notion of progress, but I feel the distinction between “new” and “maturing” is being lost.


Electricity from utility scale solar PV and wind turbines cost ~2 cents/kwh. That's orders of magnitude decline over the last 15 years.


Internet? You know you wouldn't be able to take part in this debate without it. I wasn't able to read so many interesting things 20 years ago, and I was behind in everything because I wasn't born at the right place in the world.


20 years ago, the internet was vastly superior to what we have now, which is basically turning into a much worse version of Genie, Compuserve and/or Prodigy (... now with more surveillance dystopia ...).


The internet is probably older than you are. A lot of the “exciting new tech” is a mature or market-ready form of technology that has been around since the Cold War or much earlier. There is also a lot of very old tech that is “new” only by virtue of having a microcontroller stuck in, much in the same way an IoT device is often just Device X + Network connection.


Long-distance phone calls

Long-distance message transmission

DTP

Photography

Short-haul flights

Electric lighting (LED uses less than 10% of the power of incascendent bulbs)

Travel, in general (remember luggage did not have wheels until the 70s because it was expected that a traveler would have servants to carry their luggage)


While economic output has historically correlated with ressource usage, there is nothing that requires such a link. For energy, this is called “energy intensity”, and we already see it stagnating, and energy being sourced from infinite (renewable) resources rather than fossil fuels.

The same can happen with materials: there is definitely enough iron and brick and glass and cobalt on this planet to enable everyone to live in comfort and safety. One iPad likely requires far less natural resources than a C64 and screen, while delivering far more value. And once people are clothed, and fed, and housed, consumption increasingly turns to “intellectual” value, i. e. theatre, or Netflix, or a good book.


Consumption also turns into a way to show status to attract mates, and one of the most resource consuming activities, traveling, is currently in vogue for those who have attained housing and food security.


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

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

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

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

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

Etc. etc..


>The question for me is: how can we have infinite growth on a planet with limited resources?

1. Some resources are truly unlimited. We can ultimately meet all our food and energy needs via unlimited energy from the sun, for example. If necessary, the economy would adjust to do just that.

2. We aren't going to be limited to one planet forever. We'll be mining extraterrestrial objects long before we run out of stone or metal on Earth.


As for point 2: you’re underestimating the distance between stars. Trade on the interstellar scale can’t exist; so we’re limited to at most our own solar system (I would count a colony in a new solar system to be a separate system altogether).


In the extremely long term, yes, we will probably have to abandon the solar system. But others exist and are reachable.


Increasing productivity can increase the output while other factors of production stay the same.

Reducing material intensity and energy intensity allows growth under material and energy constraints.

If population starts to decline, you can continue increasing GDP/capita even in material terms. Although in practice I think reduced demand from population decline is bigger issue than material resources.


Productivity can’t increase forever either.


Economic growth is not measured in the usage of limited resources. You can have growth by simply increasing the efficiency not the production sector and offering more services.


The genius of capitalism is that it realizes a world in which constant growth is a natural law of the universe.

The folly of capitalism is that it realizes a world in which constant growth is a natural law of the universe.


You can’t, but the belief that you can is a deeply ingrained feature of capitalist ideology, so everyone walks around believing that you can.


Space travel.


In my opinion a deflation is what the world and especially the nature needs. People have to stop wasting our limited resources.


I think this is a valid point of view. Has anyone ever stopped and asked if an ever-increasing GDP is sustainable?


This physicist has done a number of blogs on physical restraints on economic growth.

https://dothemath.ucsd.edu/2012/04/economist-meets-physicist...

For example, if economic growth persists black body ration independent of power source raises the surface temperature of the earth to boiling in a few hundred years.


this link is _fantastic_ , thank you for sharing it, i haven't heard this argument before .

First: For a given constant T > 0 there exists C > 0 such that Temp(earth) <= T implies Energy(earth) <= C

  > Right, if you plot the U.S. energy consumption in all forms from 1650 until
  > now, you see a phenomenally faithful exponential at about 3% per year over
  > that whole span. The situation for the whole world is similar. So how long
  > do you think we might be able to continue this trend?

  > Alright, the Earth has only one mechanism for releasing heat to space, and
  > that’s via (infrared) radiation. We understand the phenomenon perfectly
  > well, and can predict the surface temperature of the planet as a function of
  > how much energy the human race produces. The upshot is that at a 2.3% growth
  > rate (conveniently chosen to represent a 10× increase every century), we
  > would reach boiling temperature in about 400 years. [Pained expression from
  > economist.] And this statement is independent of technology. Even if we
  > don’t have a name for the energy source yet, as long as it obeys
  > thermodynamics, we cook ourselves with perpetual energy increase.

  > At that 2.3% growth rate [of global energy consumption], we would be using
  > energy at a rate corresponding to the total solar input striking Earth in a
  > little over 400 years. We would consume something comparable to the entire
  > sun in 1400 years from now. By 2500 years, we would use energy at the rate
  > of the entire Milky Way galaxy—100 billion stars! I think you can see the
  > absurdity of continued energy growth. 2500 years is not that long, from a
  > historical perspective. We know what we were doing 2500 years ago. I think
  > I know what we’re not going to be doing 2500 years hence.

  > If we tried to generate energy at a rate commensurate with that of the Sun
  > in 1400 years, and did this on Earth, physics demands that the surface of
  > the Earth must be hotter than the (much larger) surface of the Sun.
Second: Energy(earth) / GDP(earth) >= K > 0

  > Then in order to have real GDP growth on top of flat energy, the fractional
  > cost of energy goes down relative to the GDP as a whole.
  > How far do you imagine this can go? Will energy get to 1% of GDP? 0.1%? Is
  > there a limit?
  > if energy became arbitrarily cheap, someone could buy all of it, and
  > suddenly the activities that comprise the economy would grind to a halt

That is, assuming we want Temp(earth) <= T for some constant temperature T, then there exist positive constants C > 0, K > 0 such that Energy(earth) <= C and Energy(earth) / GDP(earth) >= K > 0 . Therefore GDP(earth) <= C / K .


We do not consume energy. We consume goods and services which require energy to produce. This model completely ignores past and future advancments in energy efficieny.


Clearly, it is not. That would imply that gdp per person can go to infinity. In fact even if you just plug in 3% gdp growth per year and extrapolate a few hundred years, you get absurd results. Why nobody talks about this, I don’t know.


What is "a deflation"? Do you mean a recession?

Or if you're talking about the phenomenon of economic deflation in general (the opposite of inflation), what does that have to do with nature? Is there a proven link that higher inflation rates lead to further negative environment impact? It's not clear to me why that would be the case.


"People have to stop wasting our limited resources"

+ 'Resources' are a whole other issue

+ By whose definition do you mean 'wasting'?

+ Deflation is a scary thing not because prices go down, that alone is just a number. When deflation hits, what happens is businesses lose incentive to invest. They stop, further driving the spiral.

The reason that the Fed shoots for 2% inflation and not 0% is to keep the treadmill moving just a little bit forward - if it stops or goes negative, it has crazy scary implications.

Businesses need to see the economy expanding in order to make investments in people, capital equipment etc. which is why 'a little bit of inflation' is good.


Which people and which resources?


I can see the appeal of being a Doomsday prepper now. Having your livelihood held hostage to fiscal policies of random nations feels a bit like an ant being played with by a bored child. You might as well gain some agency by stocking cans of beans and vitamin supplements in a concrete bunker.


What the world can't escape is politicians and people in power always overspending.

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

What usually comes after that is destruction of capital, either by war(you loose all what you have) or inflation, deflation or both simultaneusly(terrible deflation in some things,terrible inflation in others).

You can make the general population pay for it(raising inflation higher than incomes), or you can make the owners of capital pay for it(haircut of 30% or so of their worth).

Of course the owners of capital, like the owners of the NewYorkTimes do not want to pay for it. So they will try to influence the population to do what is best for them basically with propaganda.

In the past it was basically States and Church the only capable institutions for using propaganda. Right now there are also private institutions who control what people feel and think through PR, ownership of media, think tanks and Universities.


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

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


Homeostasis will become far more common as the economy further deversifies and education becomes more commodity.


Stagnant real wages + increasing real expenses + a captured political system = revolution.

Get ready, it’s coming.


Im guessing most of this is a measuring error due to incorrectly accounting for technologies impact on industry. In an extreme example: If we all spent 99.9% of our lives in VR then every single industry would basically implode.




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