This is silly. For one, large portions of the economy are not built on actual material. For example, take software, an evergrowing segment of the economy.
The number of computer programs is incredibly large. Even assuming a dense packed instruction set, even 512 bits is already enough to contain more programs than can be assigned to individual atoms in a universe! That's right. We could label every single atom with a number that would fit in the AVX instruction registers. That scale is mind-blowing, but it's true.
Take for example another growing part of the economy: AI. AI models like GPT-3 contain billions of floating point parameters. The number of potential configurations of the weights (which is what ultimately holds the value when models like GPT are productized) is orders of magnitude larger than the universe.
The fallacy here is the equivalence of economic goods to material goods. Many economic goods are not material.
Moreover, many material goods hold no value due to the material, but rather to the placement or arrangement of the material. In this sense, the same 'stuff' can be part of multiple goods and each of those goods can be more expensive than the previous good. For example, if I paid a laborer $10 to mine aluminum, the refinery $2 to refine it, the sheet metal factory $3 to make a sheet, the sheet metal worker $10 to make a good of it, and then the installer $20 to install it. I've made ever more money off the same 'stuff'. As industries like recycling take off, there is yet more opportunity to be had in the same amount of stuff.
And this doesn't even begin to touch on services and such, which do not even require material goods proportional with the economic value added.
In other words, there is no reason to believe we will hit up against an atomic wall after which we will be unable to expand the economy due to a shortage of atoms.
> The number of computer programs is incredibly large. Even assuming a dense packed instruction set, even 512 bits is already enough to contain more programs than can be assigned to individual atoms in a universe! That's right. We could label every single atom with a number that would fit in the AVX instruction registers. That scale is mind-blowing, but it's true.
You're going the wrong direction. The issue isn't fitting atoms into data. It's fitting data into atoms. You can give every atom a GUID, but you can't give every GUID an atom!
You don't have to put it in terms of economy. Our rate of growth for energy and data are unsustainable. Current growth would hit a wall informed by our understanding of physics somewhere very roughly in the thousands-of-years-range. So either we go beyond our needs for space and energy or growth slows down. Both of those are a big change from the status quo.
> Current growth would hit a wall informed by our understanding of physics somewhere very roughly in the thousands-of-years-range.
A thousand years is a very optimistic estimate I would say.
World3 (which is still on track of its predictions) predicts before 2050, which seems realistic considering the current
context.
You can only run so much code with so many electrons. At a certain point, you run out of electrons.
Imagine a world in which there is just one person and the economy is just how big of a number this person can make on a computer.
If there is more than one person or more than one computer - you have less electrons at your disposal - because they're making up other people & computers respectively.
This is obviously very far into the future - but so is 8000 years!
Between 1960 and 1970 - global GDP increased by about ~$1T. That was about the same increase between 2018 and 2019 - even after adjusting for inflation.
That was a low-growth year for the last decade.
In the 1960s we had the entire space race and a lot of the modern computer (including the Internet).
If the trend continues, in another 60 years, we could accomplish about as much in a month. In another 120 years, about as much in a day. In another 120 years, about as much in an hour. Another 180 years, about as much in a minute, and in another 180 years, about as much in a second.
It's hard to argue you haven't hit the singularity at that point - and that's only 660 years away.
8000 years at this current growth rate would be truly unimaginably alien - and I'm not sure why everyone is convinced it could keep growing or would even need to.
If the population keeps growing at current rates - we'd have enough productivity for everyone to have a higher quality of life than Jeff Bezos does today in <700 years - at least, inflation adjusted, the average person on the planet would have >$15Bn in annual income.
This doesn’t really apply to housing or congestion of any sort. Space can be recycled but only when you’re not using it. Everyone and everything takes up space. Things like AirBnb only go so far to make cities more efficient. people don’t like getting packed in, so they will pay for more space.
Camera is made of materials which need to be mined, transported, refined, milled, soldered, molded, etc.
So quite a lot of energy has been used to make the camera. It is not really about of the chemical bonds in the camera, but about the the energy the whole manufacturing chain uses.
The bond-energy of goods is less significant, particularly if that bond-energy existed in the raw form of the material (e.g., wood or plastic (petroleum)). It's the energy used in transforming, processing, and transporting materials that matters.
>The fallacy here is the equivalence of economic goods to material goods. Many economic goods are not material.
It's not a fallacy as long as economic activity is a proxy for human activity, because humans consume to survive. In your sheet metal example, while it's the same physical aluminum throughout the process, you've hired a team of people (and expended a huge amount of energy, incidentally). Each of those people will take that money and spend it on food, electricity, clothes, and luxuries. All economic activity ultimately boils down to that.
Software is actually very special: it can be an economic good (sold by companies), or service, or given away for free as open-source by volunteers.
A few weeks ago I heard a message about there being 3 major forms of investment: private companies (stocks), governments (bonds) and property (banks).
All these want to show exponential, compounding growth, but that isn't what happens. Stocks follow a business cycle of expand-contract. Governments grow in proportion to tax base, which is related to population. Property has been increasing in price due to the ever-increasing population, but this is likely to plateau soon.
I fear the day when companies realise that they can make more money for their shareholders by destroying governments and property through starting a war. (c.f. United Fruit Company, but with private space rockets = missiles).
What's a good investment during a war? I believe that philanthropy is the solution.
Schindler invested in his List of employees, rather than some economic instrument. They looked after him during his later years. People will try to protect their own lives, and if I die, I don't need the return on investment anyway.
Social connections can continue to grow factorially, as the world gets more connected. I think that this is always good, because it promotes peace and understanding among the diverse cultures that exist. I don't know how that can be harnessed economically, and I dislike the advertising model used by private companies to monetise the network. Still, I think that encouraging social connection will create viral growth, and be beneficial to the world.
> The fallacy here is the equivalence of economic goods to material goods. Many economic goods are not material.
But what part of the economy does this represents?
Most of the Internet run through ads, whose objective is to sell stuff.
The real fallacy is the knowledge economy here.
The value of Internet is that it sells physical stuff, not that it makes people smarter or happier.
> Money isn’t magical. You can’t create infinite value out of nothing.
It's not 'nothing'. It's something, just sold over and over and over again.
Remember that MV = PQ . Fundamental equation of macroeconomics. The average price of all goods (P) times the total # of goods (Q) is equal to the total amount of money (M) times V, the total number of times a dollar is spent in the time period in question.
You can make the total cost of goods be anything depending on how often that dollar is spent in a year / decade / whatever.
As a reductio ad absurdum, suppose that you and I and a few friends sit down in a circle and sell the same hot dog to each other over and over again. What value have we created? Assuming that the price of the hot dog remains the same each time, and we’re spending the same money over and over, according to your formula we have created an infinite supply of hot dogs. Q can go as high as we want it.
That’s quite a hot dog! Maybe that’s how Jesus fed all those people with just a couple loaves and fishes? The hot dog of infinite bounty. :)
I rather suspect however that Q in that formula is only quantity of goods sold, not quantity of goods produced or consumed. I’m more interested in the actual amount of value produced- the amount of work done.
But this is a contrived example where each person agrees to buy the hot dog for purposes of this experiment.
Fair market value is typically defined as the value you'd get on the market, selling to someone you don't know and without coercion.
So, like if I arrange with a rich guy to sell my house (worth about $700k) to him for $2million, so that he can 'donate' it back to me and take the charitable giving write-off for $2million, this would not fly, because by the definition of fair market value used by the IRS (and other agencies), my arrangement with the guy is not the fair market value. In order to determine that, I'd need to put the house up for sale to general availability and see what others offer 'me'.
So to 'fix' your example, you'd need to sit in a circle with your friends. Say the hot dog you are about to eat is for sale, and see if any of your friends want it from you.
By the way: GDP measures of a country’s economy are measuring the total value of the finished goods produced in a given year, sold to the final user. The intermediate steps you listed don’t count. So the mv=qp formula doesn’t directly translate to gdp growth. It’s just an accounting identity over the intermediate sales of unfinished products.
Then you increase the GDP, the nominal measure of the economy. This is not rocket science.
If person A mines aluminum and sells it to person B for $10.
And person B sells person A wheat for $5.
And then person A sells person B bread for $8, and person B sells a metal box to A for $12.
And this is the entirety of the economic activity in country X, then country X's economy is $35 in size. You can sell the same 'stuff' back and forth.
A more contrived example. Suppose person A makes water bottles. He sells to person b for $10. Then person A goes on vacation. At a concession stand run by person B, person A needs water, which he buys from person B for $4 each. Person B has added value to the same 'stuff' person A sold him simply by moving it. The 'good' being sold by person B is simply the transport of the good sold by person A, which is not subject to the same limitations as number of particles. There are many ways in which things can be moved or repositioned to add value.
If you look up how gdp is measured, you will find that they measure the total of transactions for the final consumer, for exactly the reasons I’ve listed.
From the IMF:
“ Theoretically, GDP can be viewed in three different ways:
The production approach sums the “value-added” at each stage of production, where value-added is defined as total sales less the value of intermediate inputs into the production process. For example, flour would be an intermediate input and bread the final product; or an architect’s services would be an intermediate input and the building the final product.
● The expenditure approach adds up the value of purchases made by final users—for example, the consumption of food, televisions, and medical services by households; the investments in machinery by companies; and the purchases of goods and services by the government and foreigners.
● The income approach sums the incomes generated by production—for example, the compensation employees receive and the operating surplus of companies (roughly sales less costs).”
So, sorry but you are mistaken about this, I’ve been trying to get you to understand this but you’re not paying attention. So in my hot dog example, you’re not supposed to count anything as gdp other than the final sale to the person who ate the hot dog. Or you can measure it one of the other two ways listed but you’ll get the same answer.
What if I need a water bottle for a minute. I buy it for $5, then I resell it for $5 and so does every following person? Surely each transaction shouldn't add $5 for GDP?
What if it is an extremely valuable water bottle. Let's say it costs $10,000 as it's made out of gold. Let's say it gets transferred similarly as everyone needs it for just 1 minute just to use it to fill it and take a sip.
The number of computer programs is incredibly large. Even assuming a dense packed instruction set, even 512 bits is already enough to contain more programs than can be assigned to individual atoms in a universe! That's right. We could label every single atom with a number that would fit in the AVX instruction registers. That scale is mind-blowing, but it's true.
Take for example another growing part of the economy: AI. AI models like GPT-3 contain billions of floating point parameters. The number of potential configurations of the weights (which is what ultimately holds the value when models like GPT are productized) is orders of magnitude larger than the universe.
The fallacy here is the equivalence of economic goods to material goods. Many economic goods are not material.
Moreover, many material goods hold no value due to the material, but rather to the placement or arrangement of the material. In this sense, the same 'stuff' can be part of multiple goods and each of those goods can be more expensive than the previous good. For example, if I paid a laborer $10 to mine aluminum, the refinery $2 to refine it, the sheet metal factory $3 to make a sheet, the sheet metal worker $10 to make a good of it, and then the installer $20 to install it. I've made ever more money off the same 'stuff'. As industries like recycling take off, there is yet more opportunity to be had in the same amount of stuff.
And this doesn't even begin to touch on services and such, which do not even require material goods proportional with the economic value added.
In other words, there is no reason to believe we will hit up against an atomic wall after which we will be unable to expand the economy due to a shortage of atoms.