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Wednesday, December 31, 2008

389. GROWTH = JOBS

Through many changes, one thing stays constant in the peak oil community: opposition to growth. Colin Campbell, Kunstler, Heinberg, virtually the entire staff and readership of the The Oil Drum... They all believe that growth is insane, and have vehemently and incessantly attacked it for years.

I think it's high time that we followed this anti-growth agenda to its logical conclusion.

On the surface, an anti-growth site like The Oil Drum seems to be comprised of very smart, rational people who have the best interests of the public at heart. But is that really true?

Well, there's no doubt that the title of this post is true: Growth = Jobs. So a strong case can be made that anti-growth advocates are very much not in the public's corner. The logic is straightforward:
  • Anti-growth advocates (The Oil Drum, Heinberg etc.) are in favor of a halt in growth.
  • A halt in growth will cause massive unemployment.
  • Therefore, anti-growth advocates are in favor of massive unemployment.
To illustrate, here's a piece of standard anti-growth boilerplate from a peak oiler, corrected to reveal the subtext:
Infinite growth Employment has been so hard wired in the brains of so many, that it will be hard for most to imagine themselves out of having never-ending growth a job as an eternal goal.
Not quite so convincing, is it? Anti-growth rhetoric tends to be very smug, particularly since it ignores the central brute fact: there is nothing crazy or stupid or deluded or denialist about trying to keep people employed.

If anti-growth advocates were honest, they would admit that a massive depression (i.e. reversal of growth and shrinkage of the economy) is precisely what they are advocating. Some have already made that connection on the climate front:
Will the Downturn Save the Planet?
Many climate change skeptics and eco-fundamentalists will welcome the economic crisis, although some more openly then others.

[...]

On the other hand, eco-fundamentalists, many of whom define themselves as anti-capitalist, realized that the contradictions inherent in the market system made a major crisis, possibly a slump, inevitable at some point. Unlike Marxists, though, many welcomed this prospect, since they despaired of any other way to tackle climate change apart from economic collapse, which they think could result in a big reduction in greenhouse gasses. Whether they are correct in that assumption is another matter.

Professor Paul Crutzen, who won the Nobel prize for his work on the depletion of the ozone layer, was quoted by the Reuters news agency on October 7: "It’s a cruel thing to say… but if we are looking at a slowdown in the economy, there will be less fossil fuels burning, so for the climate it could be an advantage… we will have a much slower increase of CO2 emissions in the atmosphere… people will start saving [on energy use]."


Cheer up: You're not unemployed -- you're stopping the growth insanity and saving the planet

This line of thought occurred to me when I was reading about Obama's projected stimulus package, so I asked the folks at the Oil Drum about it:
My point is this: if you genuinely believe that we must stop growth because it is killing us (a view which I believe I can fairly ascribe to the vast majority of people on the Oil Drum), then how can you, in good conscience, support measures which are aimed at reigniting growth, such as Obama's upcoming stimulus package and similar packages in other countries?
The responses fell into a few basic types:

1) Don't get pinned down. Change the subject.

2) The dead-end doomer:
"We are GOING to be living in a contracting world, whether we like it or not. My preferences are irrelevant, this is reality and we had best face up to and adjust to it, the sooner the better.
Yes, a great many people will suffer terribly. That is going to happen and can't be helped. Futile attempts to hang on to the past and sustain the unsustainable will not help them, only hurt them even more." WNC Observer
3) Fessing up
"I, for one, am completely in favour of shrinking. Growth would condemn billions of people around the world especially in the poorer parts of Africa and Asia to a continuous life of strife, misery, and violence that is today much worse than the worse Long Emergency scenarios.

The only smart growth is shrinking. That increases the share of the commonwealth available to eash person and decreases the footprint each of us puts on Gaia's neck. We are a heavy burden and we are killing her. And nether can we live without her." Dryki
4) Waffling
"(1) Are there sectors that need to grow--yes.

(2) Are there obese sectors or ancient sectors that need to decline or die--yes.

(3) Is the human economy in its totality too large relative to the planet--yes.

Therefore, any stimulus plan needs to increase 1 and allow 2 to decrease so that total economic scale is reduced." Jason Bradford

[JD: Jason pays lip service to the Obama stimulus -- perhaps because he realizes how far outside the mainstream he'll go if he opposes it. Nevertheless, he adds the condition that economic scale must be reduced -- i.e. that the economy must continue to recess and shed jobs.]
*****
"I could support a stimulus package aimed at reinstating a growth economy if it's primary side effect was to invest in renewable energy and to restructure society to be less energy intensive and more socially cohesive.

What better way to kick-start the economy than spending a trillion dollars on wind power, upgrading the electric grid, developing adaptive (electricity) demand infrastructure, building and electrifying light rail systems, (small) electric or hybrid cars, etc. etc.

Of course the stimulus would fail, as we descend the energy slope, but it would be less painful. The US (and UK, and many other economies) are inevitably going to collapse. Better to use whatever credit the government can still control whilst it still has any, to build for the future." RalphW
5) Little pleasures:
"I happen to have my own boring list of what those are, things like reading, music, art, science, sailing, being with my loved ones, teaching, learning, watching sunsets, drinking good wine etc.. etc..

Not one of the things on my list requires growth." FMagyar
*****
Ludi (responding to my statement "If you're in favor of a halt to growth; you're in favor of unemployment."): "Yep, sure am! I don't work much and I do pretty well (lower middle-class/working class).

Reduce the need to earn, I say. Leisure is wonderful. I spent two hours of my leisure today cutting brush with a handsaw. I'm exhausted but happy."
The Oil Drum pretends to be a community of rational, serious people who will guide us to a better future. I think the evidence points to exactly the opposite, at least if you regard employment as an important feature of that future. As you can see, anti-growth advocates believe that: a) increasing unemployment can't be reversed or even halted, or b) unemployment should be actively boosted by reducing the size of the economy. Meanwhile, their perspective on being unemployed is "art, music, sailing" and learning to enjoy your "leisure".

These views are totally at odds with the need of vast numbers of people to survive and better their lives by obtaining and keeping jobs.

If anti-growth advocates mean to make a serious contribution, they need to cut the self-righteous rhetoric, and address the reality of growth=jobs head on.
by JD

112 Comments:

At Wednesday, December 31, 2008 at 9:22:00 PM PST, Blogger JD said...

Happy New Year, everyone!

As always, please use the Name/URL option (you don't have to register, just enter a screen-name) or sign your anonymous post at the bottom. The conversation is better without multiple anons.
Thank you!
JD

 
At Wednesday, December 31, 2008 at 9:33:00 PM PST, Anonymous DoctorJJ said...

Happy New Year!

As for growth, I never understood why we always need growth. What is wrong with company A producing a set amount of good B and continuing to do that for 50 years. That would supply people with the good and employ X amount of people. Why would that company always need to grow? Same question for the economy, overall. Is staying at a given level a bad thing? I am genuinely asking. Can someone explain it to me? I'm not a financial guy or an economist, obviously, so keep it simple. Thanks.

DoctorJJ

 
At Wednesday, December 31, 2008 at 10:06:00 PM PST, Blogger Ari said...

Holy hell there are some serious misconceptions on TOD. Leanan says some pretty strange things:

"Life expectancy may have been 45, but that didn't mean people died at 45. People who survived childhood lived about as long as we do today."

Umm... what? This completely goes against every decent population study I've ever read about life expectancy, longevity, and average life span. This is, in short, complete and utter bullshit.

Hell, my own grandmother can tell you that her grandparents didn't expect to live as long as she has. What crap...

Here's a real golden one from "super390:"

"People don't seem to take birth control because it's good for them, but because it's convenient for them. Poor people are breeding their own beasts of burden or slaves, in a sense. They resist birth control."

Yes, that's totally it. It has nothing to do with lack of access to resources. Those darkies just want kids to pull ploughs! Silly darkies!

Is this an incredibly bigoted statement on "super"'s part or is it just me?

Another great one from Leanan:

"Yes, that's the problem. Certainly, the wealthy could cut back their consumption so poor farmers in Africa can have fertilizer for their crops.

But that's not going to happen. And even if it did, it's strictly a short-term solution. Oil production will keep falling. Population will be increasing. The crash, when it comes, will be even worse."

THE CRASH WILL COME NO MATTER WHAT DAGNABBIT!!!

IT WILL COME BECAUSE I SAY SO!

When did "downward sloping curve" become "catastrophic crash wowza zowza!"

Oh, and why do we have to cut back on fertilizer when it doesn't even have to come from dreaded fossil fuels?

Finally, a classic "eat the rich" quote from "davidbygolly:"

"A steeply progressive tax schedule should be imposed, same for estate, and possibly an assets tax. For that matter, there should be a steep tax on oil too."

Yes, because we all know that there are no points where you achieve diseconomies of taxation. Taxing the evil richies always works for the best!

Honestly, most of what they said in that thread was just pseudo-ecology and pseudo-economics wrapped up in a whole lot of whacky anti-Western, and in some cases vaguely bigoted anti-system rhetoric.

Oh, and we definitely can't make it guys! No way in hell! I mean, after peak oil will come peak UNIVERSE ENERGY!

The sun will snuff itself out, uranium will cease being fissile, and thorium will be eaten by those damn darkies in India.

Despair, everyone! We can never hope to move forward! The "decline" in oil stocks is now a "crash," followed by STARVATION AND CHAOS.

Sheesh.

TOD is a perfect example of how looking at one serious problem can become a pathology if you let the forumites have the keys to the house.

 
At Wednesday, December 31, 2008 at 10:07:00 PM PST, Blogger Ari said...

Oh, and Happy New Year, all!

And you, JD, おめでとうございます!

 
At Wednesday, December 31, 2008 at 10:26:00 PM PST, Blogger Ari said...

Sorry everyone for the triple-comment, but...

Holy crap has TOD gone downhill. It's like almost like it's trying to compete with LATOC and PO.com now. Half the stories were from awful sources (little tabloid city papers, other blogs), and half the time it was the kind of cherry picking doomer quotables that LATOC goes for.

Really sad. I guess that's what happens when a group loses its purpose, though. It kind of reminds me of how MADD started attacking video games recently-- what happens when a narrow organization has nothing else to do? Start making work for yourself!

TOD should rename itself "The Oil Doom" and start selling nitro packs already.

 
At Wednesday, December 31, 2008 at 11:34:00 PM PST, Blogger JD said...

DoctorJJ,
There are two main reasons: population growth, and increased productivity/efficiency. Population growth is pretty self-explanatory. Productivity works like this: If productivity is increasing at your company, that means they need fewer employees to produce a unit of output. So they lay off the excess people. In order for those people to return to work, growth must occur. Either the old company (or another company) must have sales growth to justify hiring the workers back, or a new business (which adds new sales to the GDP) must be started up.

Here's a little more from a recent news article:
"But do governments need to do more than just keep production going and avoid recession? Do we really need output to go on growing year after year after year? Well, in one sense we do. If living standards are to be maintained and population is growing, then output at least needs to grow as fast as population.

Then there is the question of poverty. If poverty is to be relieved and the rich are not to be made poorer, then growth is necessary. Of course, making the poor richer is not easy and there are many political obstacles in the way. But at least growth makes it easier.

Imagine trying to alleviate poverty without growth. Income would have to be redistributed from rich to poor. But this doesn't go down well with the rich. Conservatives, and many in new Labour too, argue that higher taxes on the rich will discourage them from working and investing and could result in lower output.

Then there is the question of human wants. People want more. Ask anyone if they would like to be richer and very few people would say no. Why do people do the lottery? And what politician doesn't want to give the people what they want.

Finally, there is the question of debt. Some people are so keen to consume that they just borrow more and more - and this has been fuelled by banks offering easy credit. But rather than borrowing and getting deeper into debt, it would be much better if everyone could earn more. But that takes economic growth."
Link

 
At Thursday, January 1, 2009 at 4:13:00 AM PST, Anonymous Soylent said...

The kind of exponential growth in the number of widgets the TOD inhabitants are talking about is indeed pathological; nobody needs trillions of nutcrackers. But that's emphatically not the kind thing that generates economic growth.

Long term growth prospects fundamentally requires leaving no stone unturned to find new and interesting things someone might want or need. Whether that's video games, faster processors, solar panels, more efficient vehicles, new and interesting breeds of fruits and vegetables, new genres of music, miniaturized Liquid Fluorine Thorium Reactors pushing around container ships, space elevators, whatever.

A lack of growth implies not only a lack of employment it implies a stagnation of technology and a failure to adapt to changing circumstances.

I think the anti-growth mentality is more aptly described as a thinly veiled pro-collapse mentality.

 
At Thursday, January 1, 2009 at 5:29:00 AM PST, Anonymous Drewboy said...

Good article, but you didn't take the next step that they're taking over at TOD. That is, that no only is growth bad, but that we're actually in population overshoot and that people need to die. First they say that mass deaths are bad, that they'll be a result of peak oil. But in truth, they really want the population to shrink down regardless of causes, be it plague or natural disaster.

Ari - I always thought the name The Doomer Drum was more appropriate. There was a point I took it very seriously, until I realized that the place was a bastion of negative cowards afraid of an uncertain future.

Cue anonymous smug doomer post in 5... 4... 3... 2... 1...

 
At Thursday, January 1, 2009 at 5:55:00 AM PST, Blogger JD said...

I should point out that there are some reasonable commentators at the Oil Drum who I respect and read, particularly Big Gav and Robert Rapier. Not everyone there should be tarred with the same brush. Nevertheless, I agree that TOD is steadily deteriorating and becoming more like LATOC. There's something wrong when thinkers who are more mainstream, pro-jobs and pro-technology have to defer to Malthusian/survivalist management at the most widely read site on this subject.

 
At Thursday, January 1, 2009 at 7:06:00 AM PST, Anonymous Anonymous said...

JD, your logic is really shallow on this topic. Sure, growth = jobs. What you inexplicably omit is that growth also means more people and more consumption. And the simple, inescapable fact of all nature is that nothing, no organic thing, can or will grow forever.

Your blinkered growth boosterism schick is just Alan Greenspan's "irrational exuberance" more pedestrian package, the same mentality that produced the growth-crazy derivatives market that created the mess we're in now.

Nothing grows forever, it's universal law.



HDT

 
At Thursday, January 1, 2009 at 10:46:00 AM PST, Anonymous benny :MOAG cole said...

I think there is also a misconception that growth equals environmental despoilation, which is a serious concern.
Actually, it is only when people feel economic security can they afford the luxury of environmental concern. If you are freezing, you will chop down that last tree.
I think those of us who are pro-growth must consistently state our concerns for the environment, and that only rich societies can afford to be good environmental stewards.
We must always assert that increased efficiency and better use of resources is part of a better society.
I am certain we can obtain higher living standards, while cleaning our air and water. We have been making progress in this regard for 20 years.
Another thought: Those people who say they just want to watch sunsets and be with their loved ones have the option of moving to Third World countries, and trying it out. Buy 10 acres cheap, and watch the sun set every night on your family farm.
Everything is wonderful until you have medical problem, or want to see a concert or join a book club, or visit anybody anywhere, or it gets too cold at night, or too hot in the daytime, or you get weary of hand-washing your clothes, or the hot-water heats breaks and you take cold showers in winter. Or even want an education, or to see Rome and Paris before you die.
Kunstler is a total charlatan, and the motives of the TOD are very suspect. The site practices censorship, a sure sign of intellectual inbreeding.
By the way, a website named greencarcongress has interesting stories on the many, many technical advancs being made constantly.
It is a great read.

 
At Thursday, January 1, 2009 at 11:28:00 AM PST, Blogger Ari said...

HDT,

Saying that "nothing can grow forever" is a truism that doesn't necessarily mean anything to humans. It's all about timelines, baby! Are we talking 2012 Mayan/Olduvai (am I the only one who noticed this?) doomsday, or are we talking about 200012 doomsday?

To be honest, I don't really care if humanity can't grow in the year 200012. Maybe that's me being an uncaring slob, but, well, I just don't. We know that growth on Earth will end someday-- hell, the sun alone will end it by expanding and turning the Earth into a giant yaki dango (Google it). So what? Should we all aim to stop making life better for ourselves and our children?

Soylent,

Exactly! Economic growth means more than just "widgets." It means MRIs, it means better diets, it means "The Dark Knight" (see it if you haven't already), it means wine,
-----
Quick aside:

One guy on TOD said that wine doesn't need economic growth! Absolutely stupid! Unless he's fermenting his own wine, he's buying it from California, Italy, France, Australia, etc. Since most people don't live in places that make wine, that means his purchases were shipped to him. He ought to look into the history of wine and see how many Americans were drinking it before the end of the Second World War (few). Economic growth is what allowed the average person to enjoy a little pinot grigio with their dinner... 'nuff said.

-----
it means warm, comfortable houses, it means getting to read poetry for free, it means getting news from all corners of the globe, it means scientific achievements beyond anything our grandparents could have ever dreamed of when they were our age!

Economic growth is more than just widgets, dammit.

JD,

You're probably right, but just doing a brief scan of that site last night showed me that, for better or for worse, the majority of commentary is being done by the Anti-Growth Goon Squad. I will admit that TOD hasn't yet become LATOC (I don't see anyone talking about the latest issue of "Guns 'n Ammo" or "Aryan Brotherhood Weekly"), but it's hard to take the site seriously anymore. I remember when I first started reading about this stuff being really bothered by the fact that TOD, which seemed authoritative relative to LATOC and PO.com, was also preaching the end of the world. Thankfully, I read between the lines and realized that the smartest commentators, like Mr. Rapier, were not of that ilk. Unfortunately, many don't seem to follow that route.

Benny,

Yep. Those who are enamored with the "pre-industrial lifestyle," ought to go live it. I can introduce them to some people who have lived in Africa, South Asia, Latin America, etc. and see what they can do.

Have any of you ever watched "Dirty Jobs?" Great show with a very endearing host. I kind of see the pre-industrial lifestyle as being "Dirty Jobs" = life. Everyone wallows in muck, filth, etc., but here's the twist: you also don't get the machinery or the tools that Mike Rowe gets! You get to do it with nothing but your bare hands, and if you're lucky, one or two farm animals. Joy!

Also, the whole "bigger economy = worse environment" thing is absolute madness. Madness. These people need to talk to my grandmother. She grew up in WW2-era Pittsburgh, and tells me stories about how dirty and filthy it was. Today? Gorgeous city! The waters are cleaner, the skies are clear, and I would definitely be willing to live there.

Compare life in 18th century London to 21st century London and tell me that the environment was healthier in the 18th century. Tell me that people had better stewardship practices.

I don't agree with everything that Lomborg says, but he definitely makes on salient point: people are to some degree imagining the ever worsening environment.

 
At Thursday, January 1, 2009 at 12:05:00 PM PST, Anonymous Anonymous said...

"So what? Should we all aim to stop making life better for ourselves and our children?"

There you go again, conflating your ambiguous notion of growth as a process always synonymous with "better."

You'll notice I said nothing about doomsday of any kind. I said that what so many others have said - there are limits to growth. Acknowledging limits to growth is not doom-saying outside your world of "more growth" finger-wagging

"nothing can grow forever" means everything for humans, as human health and well-being is the ultimate measure of the quality our time here on earth.

No plant grows forever, no animal grows forever, no system based on organic life grows forever. To say that you don't care about future generations does indeed mean you're an uncaring slob. You have essentially admitted that the growth you advocate is unsustainable, but you don't care.

 
At Thursday, January 1, 2009 at 1:04:00 PM PST, Blogger Ari said...

Let's take this line by line...

[i]There you go again, conflating your ambiguous notion of growth as a process always synonymous with "better."[/i]

I never said that growth always means a better life. However, there is a strong relationship. More GDP = more opportunities for life improving technologies, more opportunities for people to eat, sleep, and live better, and more opportunities for people to enter into fulfilling careers.

Growth in the 20th century gave us MRIs, the chance to see the globe, the Internet, better and more universities, and brought people foods they never dreamed of in the past.

You'll notice I said nothing about doomsday of any kind. I said that what so many others have said - there are limits to growth. Acknowledging limits to growth is not doom-saying outside your world of "more growth" finger-wagging

OK, so you didn't say doomsday. Mea culpa. But saying that growth is not unlimited is a truism. What does it mean?

Population can't grow?

GDP can't grow?

Knowledge can't grow?

Opportunities can't grow?

The "growth isn't unlimited" meme is just a truism.

"nothing can grow forever" means everything for humans, as human health and well-being is the ultimate measure of the quality our time here on earth.

Well, tell you what. Go back to "no growth" 15th century Europe, or hell, 18th century Tokugawa Japan if you don't want to be Eurocentric. I don't mean to be snide or glib, but the idea that a "no growth" society will have the quality of life as a growth society doesn't bode well when we look at the history books. Even Japan, which had relatively good living for most people compare to Europe at the time, didn't exactly inspire hope for the average peasant farmer.

But they had no real growth, you gotta give 'em that!

No plant grows forever, no animal grows forever, no system based on organic life grows forever.

So what? Who wants to live forever?

Theres no chance for us
It's all decided for us
This world has only one sweet moment set aside for us

See? I can wax romantic about the finite nature of life too! But what does that mean for humans, say, two or three generations from now?

To say that you don't care about future generations does indeed mean you're an uncaring slob. You have essentially admitted that the growth you advocate is unsustainable, but you don't care.

I never said that I don't care about future generations-- in fact, I care a great deal about humanity for about the next thousand years or so. However, after that, it gets far too abstract for me to even find ways to care.

Yes, I admit it: I care more about my generation and that of my children. O...M...G! I'm just like... I dunno... every other generation of human that's ever walked the Earth?

Ancient Greeks? You're all slobs!

Ming Chinese? Slobs!

Mayans? Filthy pigs!

OK OK, I'm being silly, but my point is this: all humans are limited, by nature, to being more worried about more "direct" periods of time. It's not that I don't want humanity to thrive in some far off future. I just can't conceive of ways to affect it.

As for your second phrase... what? Way to put words in my mouth!

 
At Thursday, January 1, 2009 at 1:48:00 PM PST, Anonymous Anonymous said...

I was born and brought up in a household with no inside toilet and not even a telephone. My Grandchildren have so many widgets it's tiresome. Widgets do not rule the world. Communications seems to be in good shape but there is so much room for improvement in basic human needs and transportation away from the reliance of fossil fuels. This will take thought and above all, work and lots of it. I wish that America would get off their ass and not wait for China to do it cheaply for them. J.C. Sr.

 
At Thursday, January 1, 2009 at 2:56:00 PM PST, Blogger JD said...

HDT: "nothing can grow forever" means everything for humans, as human health and well-being is the ultimate measure of the quality our time here on earth.

You're indulging in the usual philosophical navel-gazing, and dodging the hard issue. The questions you need to address are:

1) Should we stop growth now?
2) Should we promote recession/depression in order to stop the growth madness?
3) Should we oppose any stimulus, like the upcoming Obama package, because it is designed to reignite growth?
4) If your answers to 1)-3) are "No", then you're all talk, and are actually advocating growth yourself. If your answers to 1)-3) are "Yes", then you're advocating economic destruction and increased unemployment of your fellow citizens. To borrow your words, I think we can also say that employment "means everything for humans, as human health and well-being is the ultimate measure of the quality our time here on earth." How are people going to have health and well-being if they're unemployed due to no growth?

I don't want to tag or flame you. I'm asking you to frankly and honestly address the issue I'm raising.

 
At Thursday, January 1, 2009 at 5:11:00 PM PST, Anonymous Anonymous said...

1) Should we stop growth now?

The economic data we're seeing now says the US economy/GDP has already contracted in the last year. This contraction occurred without your collective "we" articulating a decision to stop growing. It stopped on its own.The point is we can influence - with varying degrees of sucess - whether the economy/GDP grows or contracts, but like any other organism, there is good growth and bad growth and ultimately there are finite limits to growth. Stimulating an economy to grow with cheap credit is a lot like giving steroids to a sick human, or fertilizing a sick plant - these "growth" substances can sometimes, but not always, be beneficial to the organism if administered in precise amounts for a short time. We can't live on a regular regimen of growth steroids.

2) Should we promote recession/depression in order to stop the growth madness?

No, we should understand that is unhealthy to grow too rapidly and promote sound, traditional conservative economic measures. Once an economy overheats and cools as ours has, you shouldn't reach for the grow steroids as a regular course of action.

3) Should we oppose any stimulus, like the upcoming Obama package, because it is designed to reignite growth?

Obviously when you have a sick, obese patient like our economy, you will have to nuance the recovery to "heal" as many citizens as possible, but there will be inevitable pain in the form of job loss. There is already considerable pain in some sectors as the automotive and financial CEOs will tell you. WE need the right kind of new jobs, not just any kind of new jobs.

"How are people going to have health and well-being if they're unemployed due to no growth?"

Again, you're posing a false dichotomy, suggesting that simple growth of GDP is the only way to put the unemployed back to work. We need economic health, not just simple growth. Growth at all costs leads to bubbles, and the growing, deflating and re-growing of huge economic bubbles is having increasingly deleterious effects on our culture as a whole. We need to flatten the oscillating boom/bust growth cycles to minimize the economic roller coaster effect.

HDT

 
At Thursday, January 1, 2009 at 5:43:00 PM PST, Blogger Ari said...

HDT,

Let's tackle your answers.

1) Should we stop growth now?

The economic data we're seeing now says the US economy/GDP has already contracted in the last year. This contraction occurred without your collective "we" articulating a decision to stop growing. It stopped on its own.The point is we can influence - with varying degrees of sucess - whether the economy/GDP grows or contracts, but like any other organism, there is good growth and bad growth and ultimately there are finite limits to growth. Stimulating an economy to grow with cheap credit is a lot like giving steroids to a sick human, or fertilizing a sick plant - these "growth" substances can sometimes, but not always, be beneficial to the organism if administered in precise amounts for a short time. We can't live on a regular regimen of growth steroids.


Your pseudo-ecology aside, you are not necessarily wrong: cheap credit can be bad. It can also be good, however. The problem with the US's economy was not cheap credit alone. It was a confluence of factors, ranging from over-deregulation of rules (allowing for complex instruments like CDOs to mask systemic problems) to poor accounting oversight (read into special purpose vehicles.)

Cheap credit is not simply bad, though. Cheap credit, combined with a degree of intelligent financial policy, helped Japan go from being a destroyed shell of a nation to being a first-world country with modern living standards. Cheap credit in the form of the Marshall Plan helped Western Europe recover at rates that Spain, which aimed for "self-sufficiency," did not begin to match. Cheap credit is a tool that can be used well or can be used poorly.

2) Should we promote recession/depression in order to stop the growth madness?

No, we should understand that is unhealthy to grow too rapidly and promote sound, traditional conservative economic measures. Once an economy overheats and cools as ours has, you shouldn't reach for the grow steroids as a regular course of action.


What exactly are "sound, traditional conservative economic measures," though? I don't necessarily disagree with the idea that we should avoid going for boom and bust growth cycles rooted in bubbles (a la Greenspan), but your statement is incredibly vague and has little meaning in an economic context.

Are we talking Keynesianism? Austrian-think? Pre-WW2 economics? Sharia banking? Post-WW2 Japan-style planning?

All are legit ways of approaching an economy (to some degree), but what do you mean?

3) Should we oppose any stimulus, like the upcoming Obama package, because it is designed to reignite growth?

Obviously when you have a sick, obese patient like our economy, you will have to nuance the recovery to "heal" as many citizens as possible, but there will be inevitable pain in the form of job loss. There is already considerable pain in some sectors as the automotive and financial CEOs will tell you. WE need the right kind of new jobs, not just any kind of new jobs.


And who decides "the right kind of new jobs?" Central planning, as history has shown us, is incredibly difficult. The communist states had hardly any success with it, and Japan, while arguably successful at some degree of central planning, had the benefit of a strong central government and no federalism.

Also, what do you mean by "obese?" Do you mean that our GDP is too large? That our debt-to-GDP ratio is too high? That our change in GDP year on year was too fast? What? Enough platitudes-- more substance!

"How are people going to have health and well-being if they're unemployed due to no growth?"

Again, you're posing a false dichotomy, suggesting that simple growth of GDP is the only way to put the unemployed back to work. We need economic health, not just simple growth. Growth at all costs leads to bubbles, and the growing, deflating and re-growing of huge economic bubbles is having increasingly deleterious effects on our culture as a whole. We need to flatten the oscillating boom/bust growth cycles to minimize the economic roller coaster effect.


I don't disagree per se, but let me ask you a serious financial question, then.

How do we service leverage in the form of debt if we don't grow the GDP? By leverage, I mean loans, of course. Since businesses will of course seek to maximize their weighted average cost of capital (WACC) via debt and equity financing, debt will happen UNLESS you stop issuing any debt via central banks. It's rational for businesses to take on some debt if they believe that the discounted returns that the debt leads to are positive (through some NPV or IRR calculation of sorts.)

---
For more on this phenomenon, read into Modigliani-Miller.
---

But then you of course raise the cost of financing investment quite a bit, as equity is inevitably more expensive than debt up to a point.

So really, what is the right amount of growth? Enough to keep employment to only the frictional amount? Enough to simply keep most people fed and clothed? I personally like the idea that we develop better medical technologies, safer transportation, better science, etc. All of those cost money. Go to a lab at a major university, and ask the older professors if they like the idea of the same amount of money each year-- I guarantee that nearly all of them will say "no! we'd like more!"

Where does that money come from in a zero-sum no growth economy? Who allocates it?

These are questions that I don't think you're answering, and I'd like to see what you think.

----
Anon who mentioned outdoor toilets,

I had something not dissimilar in Japan. It sucked. Give me an indoor, heated toilet any day.

 
At Thursday, January 1, 2009 at 7:27:00 PM PST, Anonymous Oilfinder said...

Another great post, JD.

On a somewhat related note, I can't tell you how much time I've spent at PO.com trying to convince one person or another that economics (in particular, free-market economics) is essentially the same system as an ecology. They are both survival-of-the-fittest systems where entities compete for resources, and sometimes these entities cooperate with one another, and sometimes compete with one another. Many peaker/doomer types seem to think that capitalistic economics is a totally artificial, imposed and unnatural system, when in fact it is quite natural. If they would simply make this conceptual leap they would understand that an economic system is just as "sustainable" as is a forest. Yes, a fire or an ice age might occasionally come along and destroy the forest just as a recession or a depression might come along and destroy an economy, but once the fire or ice age has gone away, the forest can recover, as will an economy after the recession or depression abates.

 
At Thursday, January 1, 2009 at 8:15:00 PM PST, Anonymous Anonymous said...

'No plant grows forever, no animal grows forever, no system based on organic life grows forever".

True. But any plant that has roots or seeds, or any animal that produces offspring, kind of like people with children?, will continue to propagate, thus will keep on growing.

and the funny thing about humans with inquisitive brains, ideas, and the ability to reason, among everything else out there you could name, we continually make improvements in seeds, plants, AND animals.... as long as governments do not come along, and meddle in markts too much.

it's all gooood!


-Bob the anonymous Dobbs

 
At Thursday, January 1, 2009 at 9:10:00 PM PST, Anonymous Anonymous said...

For the record, "growth" means increasing in size, not merely existing.

Biological systems cannot grow forever.

 
At Thursday, January 1, 2009 at 9:50:00 PM PST, Blogger Ari said...

Anon,

Again, that is a truism. So what?

 
At Friday, January 2, 2009 at 2:56:00 AM PST, Anonymous Tony Cima said...

JD,

Happy new year to you. I have been studying Peak Oil for a few years now and find your blog refreshing, intelligent and cogent.

Keep up the good work through 2009.

 
At Friday, January 2, 2009 at 6:42:00 AM PST, Anonymous Anonymous said...

At what point will the population and the GDP have grown enough to satisfy the JDs and Aris of the world? 8 billion? 20 billion? 50 billion? MOre? How many more devastating bubble cycles will this "growth at any cost" mentality produce before you start to see that growth is not the panacea you've misrepresented here?

At least talk about smart growth. Should we grow all industries and populations uniformly, or should we encourage the growth of some areas and discourage the growth of others?

Again, nothing grows forever. If you shoot our sagging economy full of job-growth steroids, it will grow until the next ugly bubble pops.

 
At Friday, January 2, 2009 at 7:36:00 AM PST, Blogger Ari said...

Anon,

Again, let's dispense with the truisms and generalities and get down to brass tacks.

At what point will the population and the GDP have grown enough to satisfy the JDs and Aris of the world? 8 billion? 20 billion? 50 billion? MOre? How many more devastating bubble cycles will this "growth at any cost" mentality produce before you start to see that growth is not the panacea you've misrepresented here?

Who says I'm for bubble-based growth? I've never said that, and neither has JD. You've erected straw men to knock down. Who says we want population to grow to 50 billion? Enough with the fallacies.

Nobody is saying that growth is a panacea (putting words in everyone's mouths), but that growth is necessary under the current economic circumstances to ensure that people remain employed. Big difference.

At least talk about smart growth. Should we grow all industries and populations uniformly, or should we encourage the growth of some areas and discourage the growth of others?

Sure, Japan did it. But central planning is notoriously difficult and notoriously risky. For Japan, it worked wonderfully until the 1990s. For Latin America, it was mixed at best (import substitution). For the communist states it generally failed miserably.

I mean, let's assume that we decide to have some degree of central planning to allocate resources to "necessary industries." Who will we put in charge of planning? The same guys who put us in this position? I mean, the same guys who presided over Japan's post-WW2 recovery also led to the 1980s bubble and burst. And they were notorious for being hard nosed. These weren't Greenspans. MITI (now METI) was infamous for being strongly conservative in how it allocated funds. Honda Motor famously received almost no funding because MITI decided that Japan didn't "need" another automaker.

So who will we put in charge of deciding these things when the people who were supposed to be "the best" at resource allocation were so egregiously error prone (in hindsight)?

Again, nothing grows forever. If you shoot our sagging economy full of job-growth steroids, it will grow until the next ugly bubble pops.

OK. Another truism. So what? Show us, quantitatively and qualitatively, how the Obama plan is just an indiscriminate "steroid."

 
At Friday, January 2, 2009 at 7:50:00 AM PST, Anonymous DoctorJJ said...

At what point will the population and the GDP have grown enough to satisfy the JDs and Aris of the world? 8 billion? 20 billion? 50 billion? MOre? How many more devastating bubble cycles will this "growth at any cost" mentality produce before you start to see that growth is not the panacea you've misrepresented here?

I don't think JD or Ari want massive population increases. Personally, I would like to see world population shrink. I would like to see people make smarter choices about reproducing. I don't want a massive dieoff, just a plateau and then population shrinking slowly as people choose to have 1 or 2 children, or maybe no children, instead of having 5-10 as some people are still doing.

How that plays into a financial growth system, I don't know. Maybe when there is more to go around for less people, that means everyone is better off, even if we don't have growth, per se.

DoctorJJ

 
At Friday, January 2, 2009 at 7:56:00 AM PST, Blogger Ari said...

Dear anyone interested in this topic,

Please note that I am not saying that I necessarily disagree with having more central planning. I have always doubted the hardcore Mises/CATOtards because I simply do not see evidence for completely unfettered markets being more efficient at resource allocation than intelligently regulated markets.

To that end, I have argued, perhaps ad nauseum, for stricter accounting rules (abolishing of loopholes like special purpose vehicles and offshored tax havens, for one), dismantling of excessively opaque and complex financial instruments (CDOs, certain derivatives), and a shift in the corporate culture away from "shareholders as the only party the company is responsible for" to "shareholders, employees, and community."

However, I am also wary of arguments for central resource allocation/planning because I've studied it enough to know how enormously difficult it is, and how it so often leads to the same result as unplanned markets. That is not to say that I am opposed to it entirely. I believe strongly that some degree of central planning can be beneficial. For one, I would like to see increased federal planning of utilities and transportation. States simply lack the instruments necessary to do it well, and private firms lack the incentives to do it in a way that achieves maximum social welfare (minimization of deadweight loss).

However, I don't get the feeling that most people who are coming here and saying that I'm essentially some Simon-loving CATOtard have actually thought their positions through beyond the truisms. I would like to be proven wrong, and welcome those who can demonstrate to me that there are legitimate opportunities for central planning that our federal government is capable of undertaking and achieving greater social welfare than the alternatives (state-planning, municipal-planning, "invisible hand," etc.)

 
At Friday, January 2, 2009 at 8:35:00 AM PST, Anonymous Anonymous said...

Ari, for someone so averse to truisms, you sure like to use them.

Growth = jobs, the title of this blog entry, is the blandest truism of them all.

I never mentioned Obama's name, nor Mises, nor Simon. The efficacy of Obama and Co's various stimuli remain to be seen. No, you you never said you were for bubble-based growth, but then you never really said what you were for, just what you're against, Kunstler, TOD, et al, the doomers who give you sunny armchair optimists the fodder for your rants.

Growth = jobs. That's the Big Truism. T

 
At Friday, January 2, 2009 at 9:08:00 AM PST, Blogger Ari said...

Anon,

I take it, then, that you either will not, or cannot, respond to my arguments?

You're right that the title of the post is a truism. However, what JD argues in the body of the post is not. Instead of responding to his questions, which are really the heart of the issue, you're deflecting whatever you can. I raised significant and legitimate questions, but you seem unwilling/unable to really discuss the topic in any serious fashion.

I've responded to mostly everything you and any other anons have lobbed at me with data-based arguments. You have not.

The ball's in your court, anon. Time to serve.

 
At Friday, January 2, 2009 at 9:20:00 AM PST, Blogger Ari said...

Two more things:

1. Since there are multiple anonymous posts, I don't actually know who's who. Previous anon, you may be the same person, I don't know. Please use a signature, anons. This isn't 4chan: you don't get points for being "Anonymous."

2. Once again, I would like people to tell me how we can avoid the pitfalls of central planning. Do we go with a post-WW2 Japan-MITI style of planning, or do we go with import substitution of some sort?

I am not setting up straw men, mind you. I just don't honestly know what kind of planning would work in our system, since we have a degree of federalism that is fairly rare elsewhere. My concerns with the idea of "weeding out bad industries from good industries" are:

-- who is in charge of allocation of resources? How do we vet these individuals and ensure a degree of rational policy implementation?

-- where does resource allocation policy originate from? Do we have a heavily bureaucratic model like MITI-era Japan, or do we ensure that more power is in the hands of elected officials? In the case of the United States, how do we overcome the "federalism hurdle" and ensure broad national policies are put in place, rather than pork, as is usual in federal systems?

-- how do we ensure a minimization of deadweight loss, which is inevitable to some degree in planned systems?

-- How do we effectively pinpoint industries in need of greater resources?

-- How do we reallocate labor to industries that are being supported? Do we move labor from industries that fail, or what?

-- Assuming that we choose certain industries over others, what will be the imp/exp policies? Do we implement some kind of import substitution via high tariffs? Or do we subsidize and absorb the associated deadweight loss?

Just a few questions that come to mind. Let's have a real discussion, folks!

 
At Friday, January 2, 2009 at 10:03:00 AM PST, Anonymous Anonymous said...

"I am not setting up straw men, mind you. I just don't honestly know what kind of planning would work in our system..."

I didn't think so. But you _do_ know that growth=jobs, and Kunstler and TOD are idiots, etc. Nevertheless, it is difficult to know what kind of planning is needed, given the US history of free-market worship and hyper-individualism. I'll grant you that.

Like Kunstler, Wendell Berry, McKibben, Pollan and others, local agriculture and manufacturing are areas where I'd like to see a big push for more job creation, or better said, job _replacement_. Smaller, leaner, more self-sufficient communities - that's the goal I'd like to see inform our planning policies. Of course, generations raised on corporate cheeseburgers, muscle cars and video games will not buy into that kind of planning without a fight.

Like you, I don't have the answers. I don't think that more generic "growth" creating jobs flipping burgers, building SUVs and McMansions is the answer.

HDT

 
At Friday, January 2, 2009 at 10:19:00 AM PST, Blogger Ari said...

I didn't think so. But you _do_ know that growth=jobs, and Kunstler and TOD are idiots, etc. Nevertheless, it is difficult to know what kind of planning is needed, given the US history of free-market worship and hyper-individualism. I'll grant you that.

Here's the thing, HDT. Unlike the pundit circles, I don't claim to have every answer.

And you're far oversimplifying the matter here. It's not difficult to know what type of planning is needed because of the US's professed, yet hardly adhered to, love affair with libertarian economic policy. It's difficult because it's incredibly complex. All of the questions I've posed are serious, difficult, and complex issues that economists of all stripes deal with when discussing economic policies. These aren't simple things.

"Hyper-individualism" isn't the problem, really. It's navigating a complex interdependent web of local, state, national, and world markets that are incredibly hard to boil down to workable industrial policies.

Like Kunstler, Wendell Berry, McKibben, Pollan and others, local agriculture and manufacturing are areas where I'd like to see a big push for more job creation, or better said, job _replacement_. Smaller, leaner, more self-sufficient communities - that's the goal I'd like to see inform our planning policies. Of course, generations raised on corporate cheeseburgers, muscle cars and video games will not buy into that kind of planning without a fight.

Leaner? Let's be honest with ourselves here: smaller is rarely, if ever, leaner. There are much fewer opportunities for economies of scale. Furthermore, why make communities smaller? All that's going to do is spread them even further out! Is that really what we want when we're already talking about how we supposedly suffer from a paucity of land and resources? Isn't suburban spread the devil?

You can't have smaller without spread.

Like you, I don't have the answers. I don't think that more generic "growth" creating jobs flipping burgers, building SUVs and McMansions is the answer.

I don't disagree. But let's, for just a moment, take a "libertarian" tack here. To what degree do we dictate what the teeming masses get to produce and enjoy? How far do we go with our central planning?

Japan?

USSR?

PRC?

Or something like Sweden?

And if you like Sweden or Japan, how do we overcome the federal hurdle?

Let's keep this going. Now it's getting interesting.

 
At Friday, January 2, 2009 at 11:39:00 AM PST, Anonymous Anonymous said...

"Is that really what we want when we're already talking about how we supposedly suffer from a paucity of land and resources? Isn't suburban spread the devil?"


Small agricultural towns, not suburbs. Wendell Berry's "local economy." Places where a bare minimum of imports are needed.

Of course, dictating to anyone that they adopt a way of life that's alien to them is not something that anyone of us wants to do.

But nature has a way of taking care of these things. I suspect that in time, the population will eventually disperse into small towns, small communities, as large cities become increasingly unliveable; unable to feed and warm their citizens.

Of course, this is not happening now, or in the immediate future. In the short term,I fully expect our leaders, at least those who want to get re-elected, to do everything in their power to grow the GDP in any way they can, deficits and environment be damned, in order to alleviate the immediate problem of unemployment.

 
At Friday, January 2, 2009 at 11:57:00 AM PST, Blogger Ari said...

Small agricultural towns, not suburbs. Wendell Berry's "local economy." Places where a bare minimum of imports are needed.


We know from history that this never happens. Do you know why? Comparative advantage. People trade because they realize that someone somewhere else has an advantage in the production of good Y, so they naturally trade. People trade because it makes sense to produce what you're good at producing and to trade for what you're not good at producing.

What you're calling for sounds like neo-feudalism to me.

But nature has a way of taking care of these things. I suspect that in time, the population will eventually disperse into small towns, small communities, as large cities become increasingly unliveable; unable to feed and warm their citizens.


Based on what evidence?

I really want to know WHY cities, with their incredible efficiency (relative to the neo-feudalism ideal), are going to offer fewer opportunities for responding to the "crash."

Of course, this is not happening now, or in the immediate future. In the short term,I fully expect our leaders, at least those who want to get re-elected, to do everything in their power to grow the GDP in any way they can, deficits and environment be damned, in order to alleviate the immediate problem of unemployment.

The funny thing about the whole "growth = worsening environment" belief is that empirical evidence doesn't confirm that it's true. Ask someone over 70 who grew up in Pittsburgh if Pittsburgh is better off today or if it was better in the 1940s. You'll get a uniform response.

Economic growth has also given countries like China an impetus for conservation. Look at how much more attention China has paid to "panda diplomacy" since its growth really started taking off. Compare that to Maoist China, with its famines and economic stagnation.

 
At Friday, January 2, 2009 at 12:54:00 PM PST, Anonymous Anonymous said...

"I really want to know WHY cities, with their incredible efficiency (relative to the neo-feudalism ideal), are going to offer fewer opportunities for responding to the "crash.""

You really want to know? Food and fuel. Fewer opportunities because it becomes increasingly expensive/problematic to live in densely populated where all the food and fuel is shipped in and the garbage is shipped out.

Cities are not going away, they'll just get smaller as more people move to smaller towns.

 
At Friday, January 2, 2009 at 1:01:00 PM PST, Blogger Ari said...

You really want to know? Food and fuel. Fewer opportunities because it becomes increasingly expensive/problematic to live in densely populated where all the food and fuel is shipped in and the garbage is shipped out.

Why is this a problem if we simply transition to nuclear/alternatives and reduce fuel use?

Or are you a believer in "peak uranium" as well?

Cities are not going away, they'll just get smaller as more people move to smaller towns.

OK. Give me a timeline.

 
At Friday, January 2, 2009 at 5:24:00 PM PST, Blogger Kartturi said...

For Ari and Anonymous:

There are some obvious problems with the big cities, when they grow
over certain size, see
e.g.:
http://larussophobe.wordpress.com/2006/12/02/the-miserable-moscow-metro/

I think the problem is related to how many "centers/downtowns" the city has (i.e. the part of city where most of the people have to go to work, as long as they are not telecommuting).

If there is just one center, there will be too
many people packing into
there, regardless of any
fancy mass rapid transit systems the city might have, and it will get harder and harder to build enough metro lines through a single city center. (Or highways in some American city.)

I think Randstad
and Swissmetro
show the way for the future.

Also, it seems that many well-to-do people (at least when they get older) want to live in
a bit smaller cities,
if it is possible.

 
At Friday, January 2, 2009 at 5:31:00 PM PST, Anonymous bstone1435 said...

I really value being able to read an intelligent discussion of the whole PO situation. I'd never even heard of PO until about 2 months ago, and since have been working to learn what I can about it- the rationality here helps.

Now regrding the whole "economic growth" discussion-

Isn't it true that many aspects of our economy- inflation, GDP, USD supply, fed debt levels, household debt levels, etc. have grown, and are still growing, exponentially? If that's the case, then doesn't some sort of contraction HAVE to happen? In a finite system, growth simply cannot continue forever, can it?

If the above is true (and I'm no economist, so I'm certainly not entirely sure it is), then how can discussion over the "value" of continued growth have merit? If growth CANNOT continue, then doesn't the discussion need to focus on how to manage contraction?

If we're on the upper end of the exponential graph of the above factors, isn't in our own best interest to contract, even given the inevitable job losses this will entail?

I'm thinking in terms of kids, here- I'm a middle school teacher with a 16-yr-old son and three toddler nieces. I figure I'll get through all this okay one way or another (or not, but whatever- I've had my time and made my choices), but I have a big problem with the thought of keeping jobs secure for the present generation by continuing to doom the one(s) upcoming (though I certainly do acknowledge that many of those who would lose jobs in an economic contraction have kids who would suffer...)

I literally cannot conceptualize "constant growth" as
a sustainable strategy, economic or otherwise. I'm not sure that it's a system I want to leave my students or my son to watch implode of its own impossibility.

If I'm displaying some econ ignorance here, then good- I'm looking to learn, not dictate.

So someone poke some holes, if you would- what am I missing?

BS

 
At Friday, January 2, 2009 at 7:41:00 PM PST, Blogger Ari said...

Kartturi,

Why, then, does the transit system of Tokyo work fairly well? Or NYC?

I mean, you used a pretty poor example there, in my mind.



----

BStone,

Let's talk a bit about each of the issues you mention.

First off, don't get too caught up on the word "exponential." Exponential is just a kind of growth rate. Nothing more. It doesn't mean anything more insidious than that, but for some reason it has managed to take on a life of its own in these discussions.

Anyway, you're PROBABLY right that growth cannot continue forever in a finite system. That doesn't mean, however, that you have to have a contraction in the long-run. It's entirely possible, based on Malthusian theory, that we'd end up with a steady state in the long-run future. That, however, seems doubtful based on demographic trends we're seeing right now. More than likely we'll see contraction of populations in OECD countries in the long run, meaning that we will see some form of "decline." Oddly enough, however, it won't likely happen because of some imposed limit, but because people just stop having babies.

The thing about talking about "upper end" of an exponential curve is that it's meaningless without a context. First off, we don't even know how growth will play out in the long run. I believe that it will actually be asymptotic, with a function of y = arctan(x)

http://en.wikipedia.org/wiki/File:Asymptote03.png

The funny thing about Malthusian limits is that even most of his works didn't predict crashes, but rather growth followed by steady states.

http://people.brandeis.edu/~jefferso/Malthus,%20the%20IR,%20and%20the%20Tech%20Mult,%20Feb%2005.doc,pdf.pdf (warning: PDF and mathy)

In any case, the thing that a lot of people don't realize is that the amount of raw material in the Earth's crust is simply incredible. I mean that. Incredible. Furthermore, we are seeing "dematerialization" of the economy to a great degree.

http://sitemaker.umich.edu/muses/files/FactsheetMaterialUse.pdf

Copper was replaced by fiber optics, metal is slowly being replaced with carbon fiber, steel was replaced with aluminum (it will be hard to run out of that!), and recycling is picking up speed all over.

But like I said before: demographics will take care of a lot of the supposed resource limitations. I'm betting that we'll see an asymptotic population curve by 2100. Of course, I'll be dead by then, so when the grandchildren read the "Way-WAYback Machine," they'll be able to "audit" what crazy old grandpa had to say.

I hope this helps a bit.

 
At Saturday, January 3, 2009 at 1:13:00 AM PST, Blogger Kartturi said...

Ari,

I definitely didn't choose Tokyo as an example "city planning went bad", because I consider it one of the good examples.
That is, as I reckon, it's a city with
"many centers model" (or actually,
many smaller towns grown together).
Has been over fifteen years since I visited there.


Anonymous & others:

Where did some people get this idea that
after the fossil fuels have gone,
it is impossible to live in cities?

Consider this:
http://en.wikipedia.org/wiki/List_of_largest_cities_throughout_history

For example, Alexandria, Rome, Chang'an,
Baghdad, Hangzhou were all cities of at least million inhabitants long before
anybody knew about any other way to
power transportation than muscles and sails. (OK, it seems that Chinese used
coal for heating, but still...)

 
At Saturday, January 3, 2009 at 3:14:00 AM PST, Anonymous Brother Cadfan said...

I must be one of the few people who doesn't think the hallowed 'localised' economies are a good idea. Coming from a small town rural area in my experience it leads to small minded atrophy with little or no future for the young people, not to mention at least a small degree of inbreeding (!). I wonder how the much touted Cubans are getting on in their 'post peak' glory world after the two hurricanes this summer? Not that great if the news is anything to go by. Where would they be without imports?

Happy new year everyone, and my thanks to Ari for some thought provoking comments and article!

 
At Saturday, January 3, 2009 at 3:52:00 AM PST, Blogger JD said...

HDT,
I appreciate your contribution, but I think your response is typically evasive and confused. When I ask you straight out if we should halt growth, you don't actually answer the question. You waffle and talk about "good growth" and "smart growth" and "not growing too rapidly" and "conservative economic measures". Despite your dire rhetoric against growth, you're not taking a principled stand against it. Growth is still growth. If you support economic growth of any type, you don't have any grounds to criticize me, the government or other realists who acknowledge the importance of economic growth to human welfare. Saying "some things need to grow, and others need to shrink" doesn't get you off the hook either. Unless the growing part can compensate for the shrinking part (resulting in positive net growth), you're talking about intentionally causing negative growth, and throwing people out of work. And you replied earlier that you weren't in favor of that. In one breath, you concede the need for growth, and in the next, you're railing against it as insanity.

I'm not accusing TOD and Kunstler of being idiots, at least not on this point. I'm accusing them of not honestly facing the implications of their rhetoric. It's easy to rail against growth in the abstract, but (as you found out) it's not so easy to frankly advocate recession and depression as acts of policy.

You also said that employment can be increased without growth. I'm curious about how that would work. Can you elaborate?

 
At Saturday, January 3, 2009 at 6:55:00 AM PST, Anonymous Babun said...

[i] Despite your dire rhetoric against growth, you're not taking a principled stand against it. Growth is still growth. If you support economic growth of any type, you don't have any grounds to criticize me, the government or other realists who acknowledge the importance of economic growth to human welfare. [/i]

I understand what you mean, but I think these sorts of arguments aren't neccessarily illogical. It's just the difference of realism and idealism. Because of e.g globalization it's quite impossible to realistically discuss the issue of growth without involving the existing economical framework.

As I'm sure everyone acknowledges, growth has its downsides as well. However, most aspects about growth are good. So what's so incomprehensible about wanting to get rid of the downsides? It seems any kind of desire to tune the global economic framework is kind of taboo and gets ridiculed : it's idealistic, it's childish, it's socialistic, it's unrealistic, it's just not going to happend, there's not really any problems with it.

There's actually some similar psychology behind this mentality and the doomer one I think. Denial, a belief of that nothing is going to change, and trying to hide one's own true motive (at least in some cases).

I think smart people don't take a principled stand for or against growth. They see the good and bad things about it.

 
At Saturday, January 3, 2009 at 7:02:00 AM PST, Anonymous Anonymous said...

"In one breath, you concede the need for growth, and in the next, you're railing against it as insanity."

I did no such thing, nor did I "frankly advocate depression." Of course, you defined growth in such vague terms, I can understand your confusion. I interpret your version of 'growth' to be anything that increases GDP, be it cheeseburgers, pornography, McMansions or solar-powered yo-yos.

Should we grow the automotive industries? I think not. Should we grow small-scale agriculture? I think so.

And consider this; there are those people, particularly in Detroit, who would answer "absolutely" when asked if we should "grow" the automobile industry. Let's say they get their wish, and the Fed prints them billions in loans in order for them to "grow." Does this guarantee that the automobile industry will indeed grow? That remains to be seen, but what I suspect is that the automobile industry will shrink (that's the opposite of grow) and I suspect the automobile industry will shrink regardless of whether it's encouraged to grow, or whether it's left to wither on the vine, so to speak.

So yes, the automobile industry will cease to grow, and that's just as it should be.

Yes, employment can be created without growth, as long as two workers are willing to do the job that one used to do, or six workers do the job that five used to do. Does anyone want to take a cut in pay? No one I know. Is it better to have lower wages or lower unemployment? I think it all depends on how altruistic you feel.

And as for not "honestly" facing the implications of one's rhetoric, you and Ari still seem to think that perpetual, undifferentiated growth is the answer to all our problems.

It seems painfully obvious that the industries we see failing (ceasing to grow, shrinking) are failing for good reason. Like other organisms, they've outlived their usefulness, and they should be allowed to die a reasonably dignified death, and not kept alive with steroidal injections some eternal growth fantasy.


HDT

 
At Saturday, January 3, 2009 at 7:36:00 AM PST, Anonymous Fabrizio said...

Interesting discussion, albeit a bit inconclusive, as always with human things. Perhaps what might generate more disagreement than it is really needed or foretold, is the different meaning that different people attach to the word "growth". Somehow, I feel that if we made more use of words like "change", "dynamics", and "evolution", some people at TOD would feel easier and would be more willing to concede that a steady-state or even a regressive social organization are not exactly what they really wish for themselves and their grandchildren.
Also, I suppose that JD and Ari will agree that not all types of growth have the same impact on our planet and our future. To mention just one instance, I guess that all of us would agree that an economic growth based on an infrastructure of renewable energies, electrification, conservation, efficiency, and synthetic materials is by far more preferable and sustainable than one based on mining all the coal of the crustal layers and/or burning all the wood of the tropical forests. So, if we ex-doomers succeed in makin this point clearer, probably many friends at TOD might start reconsidering their criticisms to an un-qualified notion of "growth".
My two cents.
Fabrizio, from Roma, at 16:35 local time.

 
At Saturday, January 3, 2009 at 9:15:00 AM PST, Anonymous Anonymous said...

I suppose that JD and Ari will agree that not all types of growth have the same impact on our planet and our future.

That's unclear, as they both equivocate on that subject. I interpret both of them as asserting that any growth that boosts GDP is essentially good.

if we ex-doomers succeed in makin this point clearer, probably many friends at TOD might start reconsidering their criticisms to an un-qualified notion of "growth".

That would be interesting to try. Thanks, Fabrizio.

 
At Saturday, January 3, 2009 at 9:29:00 AM PST, Blogger wchfilms said...

Seems like many people have this belief that humans are evil to the planet, as if we aren't part of it, and human activity should be minimized or eliminated. I believe Crichton spoke once about this. It's very much like religion in that there is this belief that the world was a bountiful garden (just like the Garden of Eden) before evil humans started mucking with it (original sin). I don't believe this, I think it's absurd. We're no different than a beaver who dams up a river or an elephant who destroys an entire orchard. I feel no guilt at being human. Of course it is good to try to minimize impact, but we are not in a state of sin. Also, if humans vanished, the world would very quickly revert to its previous state.

There is a saying that economic predictions tell you more about the predictor than they do about the economic future.

 
At Saturday, January 3, 2009 at 9:42:00 AM PST, Anonymous Babun said...

Wchfilms,

I don't believe anyone here ever said anything about "evil", "minimizing/eliminating human activity", "bountiful gardens", or "sin".

"Seems like many people.."

Seems like you're a religulous crackpot trying to make an incredibly lame argument which slightly resembles a straw-man argument.

Please, stick to the facts if you try to make arguments.

 
At Saturday, January 3, 2009 at 11:30:00 AM PST, Anonymous VSJ said...

How many people need to die to satisfy Hugely Dumb Truisms? No more than 6 billion.

Hugely Dumb Truisms would be satisfied with that number.

Who should decide who lives and who dies? Why, Hugely Dumb Truisms himself, of course!

 
At Saturday, January 3, 2009 at 12:23:00 PM PST, Anonymous Fabrizio said...

I suspect that quite a few extremists at TOD would easily draw the list of the doomed: Chinese, indians, south americans and africans at large... that would make already at least 3-4 billions... That's the real weak point about the logic of population decrease. In principle, it is a very sensible idea. In practice, nobody knows where to start from, and how, and the risk of slipping into racism, "wars of civilizations", and all this crap is really high.
Fabrizio, from Roma, at 21:23 local time.

 
At Saturday, January 3, 2009 at 12:43:00 PM PST, Anonymous bstone1435 said...

So ok, maybe the "goodness" of growth isn't the issue here. Growth creates jobs, people need jobs, so growth is positive in at least that sense. My concern, though, isn't growth per se- it's the sustainability of the type of growth necessary for us to continue living as we have been.

Given PO (even assuming it's, say, 30 yrs. off), CAN our economy continue to grow in the way it always has? Not even to mention the exponentially increading Fed debt levels and USD supply? Given these factors (which I'd imagine would limit growth through rising energy costs and/or precipitously falling dollar values, inflation, etc.), whether or not growth is desirable seems to be perhaps a moot point- is it even POSSIBLE?

So my real questions, I guess, are:
-If continued growth- in the same way we've grown up to this point- is indeed possible, how so, and
-If continued growth isn't possible, what should be done to contract with as little pain as possible?

BS

 
At Saturday, January 3, 2009 at 2:09:00 PM PST, Blogger Ari said...

WARNING: MEGA LONG REPLY COMMENT! READ AT YOUR OWN PERIL AND BOREDOM! :-)

HDT,

You're starting to frustrate me. Either you're not understanding what I'm saying, or you simply aren't reading what I'm writing.

I've already said that some centralized economic planning (a la Japan/Northern Europe) can be good, but that the challenges have historically be very significant. I've asked you to answer a number of very serious questions about how we go forth with planning, and you then say this:


And as for not "honestly" facing the implications of one's rhetoric, you and Ari still seem to think that perpetual, undifferentiated growth is the answer to all our problems.


You are being disingenuous and fallacious here. Please stop and answer my questions. Namely:

-- who is in charge of allocation of resources? How do we vet these individuals and ensure a degree of rational policy implementation?

-- where does resource allocation policy originate from? Do we have a heavily bureaucratic model like MITI-era Japan, or do we ensure that more power is in the hands of elected officials? In the case of the United States, how do we overcome the "federalism hurdle" and ensure broad national policies are put in place, rather than pork, as is usual in federal systems?

-- how do we ensure a minimization of deadweight loss, which is inevitable to some degree in planned systems?

-- How do we effectively pinpoint industries in need of greater resources?

-- How do we reallocate labor to industries that are being supported? Do we move labor from industries that fail, or what?

-- Assuming that we choose certain industries over others, what will be the imp/exp policies? Do we implement some kind of import substitution via high tariffs? Or do we subsidize and absorb the associated deadweight loss?

If you can, answer them one-by-one.

In fact, I welcome anyone to answer my questions. Any of them!


It seems painfully obvious that the industries we see failing (ceasing to grow, shrinking) are failing for good reason. Like other organisms, they've outlived their usefulness, and they should be allowed to die a reasonably dignified death, and not kept alive with steroidal injections some eternal growth fantasy.


Yes and no. On the one hand, it's entirely possible that the US auto industry was too large relative to what is actually needed to achieve equilibrium. On the other hand, the auto industry is ailing worldwide-- even Toyota and Honda, generally stoic in the face of recessions, are making painful decisions.

You need to look at long term trends, financial decisions, strategic planning, the trade environment, and a host of other factors to really say what happened with the Big Three. Remember that the Big Three all compete with Japan, Germany, and a few other bit players for the consumer's dollar at auto purchase time. The question, therefore, is this: do those manufacturers produce enough automobiles that the market will be at equilibrium without the Big Three?

I doubt it. Even though Toyota, Honda, Nissan, BMW, and MB produce a lot of cars, they probably don't produce enough to fill the space that the Big Three take up. This probably means that the Big Three play some role in setting supply at the equilibrium amount. Why, then, did the Big Three get hit so hard?

Easy: they were overleveraged, poorly managed, and simply not poised to deal with an economy where people don't see fit to buy huge vehicles. Honda and Toyota had better strategy overall, as well as better physical and human capital. I don't know, then, that the Big Three are shrinking because the capacity is not needed (or in your words, "for good reason.") They're failing because they were poorly managed and lacked the long-term strategic outlook that others had/have.

----

babun,

Actually, the "garden myth" is in there somewhere. It's well masked by the "local living/world made by hand" veneer, but that's just another version of it. wchfilms is actually correct in saying that the Western "original sin" way of thinking permeates a lot of these discussions, whether people see it or not.

----
Brother Cadfan,

Thank you! I lived in a place that was highly "localized" in Japan. It was not the idyllic life that so many of the localizers seem to believe.

----

fabrizio

To mention just one instance, I guess that all of us would agree that an economic growth based on an infrastructure of renewable energies, electrification, conservation, efficiency, and synthetic materials is by far more preferable and sustainable than one based on mining all the coal of the crustal layers and/or burning all the wood of the tropical forests.

Agreed! I don't necessarily disagree with subsidizing energy policies and better, more intelligent, regulations of energy policy, financial markets, and futures and commodities. I'm all for that.

However, I also do NOT believe in the "re-localization" idea. It would be an unmitigated disaster for the environment and for people's quality of life. I would rather that we focus on developing 3rd and 4th generation nuclear energy plants, making our nuclear fuel policies more rational (e.g. more like France), developing transit to the tune of hundreds of billions of dollars (electrified transit, mind you), and focusing on conservation for the sake of conservation.

On the other hand, I'm wary of heavy-handed top-down policymaking because I've studied enough of it to know that it's incredibly hit or miss. Look at what Jeff Sachs did to Bolivia and Russia with his ideas.

In practice, nobody knows where to start from, and how, and the risk of slipping into racism, "wars of civilizations", and all this crap is really high.

That's easy. Ehrlich already told us this one: the darkies. But then you have to preface it with how "awful" it is that they live in squalor. If only they'd stop having babies!

Silly darkies...

----

Given PO (even assuming it's, say, 30 yrs. off), CAN our economy continue to grow in the way it always has? Not even to mention the exponentially increading Fed debt levels and USD supply? Given these factors (which I'd imagine would limit growth through rising energy costs and/or precipitously falling dollar values, inflation, etc.), whether or not growth is desirable seems to be perhaps a moot point- is it even POSSIBLE?

Why does PO have to be the end of the economy as we know it? Energy doesn't HAVE to be costly. A lot of the cost of energy, even during the "shock," was "artificial" in the sense that it had nothing to do with scarcity. Nuclear power, for example, is costly because of the restrictive oversight and regulations-- it's not simply because uranium is scarce and therefore expensive (it's not, really.)

The cost of energy in "per $ GDP" terms is still relatively lower than during some of the fastest growth years during the 20th century. We just have structured a lot of spending habits around poor assumptions.

And let me try to tackle the rest of your issues one by one:

- Precipitously falling dollar values Precipitously? When? Where? This is exaggeration, and you know it. In purchasing power parity terms, the USD still buys you and me a pretty decent standard of living. Talk about "precipitous" if we start seeing hyper inflation (which we haven't seen yet).

- inflation What's wrong with a little inflation? I'm not sure I get what you're concerned with here. Are you referring to Weimar-style hyper-inflation, or what?

- "exponentially increasing federal debt" OK, I hear this one a lot. "But what about the EXPONENTIAL (scary math word!) debt?"

OK, what about it?

Let's look at the debt in two ways:

1. Gross debt:

http://one-simple-idea.com/NationalDebt2005and1950Dollars.gif

2. Debt as a percent of GDP:

http://zfacts.com/metaPage/lib/National-Debt-GDP-L.gif

Both are not necessarily good, but the second one gives the first one some context. Looking at debt merely as a gross figure is meaningless. Let's use an individual example. You have two people: Bob and Joe. Bob earns $10,000 a year, and has $10,000 in debt. Joe earns $100,000 a year, and has $20,000 in debt. Which of the two, all else being equal, is worse off?

Well, Bob of course! Bob has debts equal to 100% of his income! He's up to his gills in payments. Joe, on the other hand, pays significantly less out of pocket to service his debts.

Now let's use two modern countries as examples: Japan and the US.

Japan has around 850 trillion yen in public debt (about $8 trillion dollars). The US has about $10.6 trillion or so. Clearly the US's debt is worse, right?

Wrong.

US federal debt service is not bad compared to Japan. It's currently about 8.9%. Japan is at 16.5%. That means that Japan spends almost twice as much servicing its debt as we do. BTW, other countries with more debt as a percent of GDP than the US?

France, Canada, Germany, Norway, Greece, Italy.

Will this last? Hard to say. But don't get caught up on the "exponential" thing. Exponential is just a form of linear growth. That's it. It's not a "scary big factor growth." Debt levels will probably plateau in this coming decade as governments struggle with more expensive credit costs and have to scale back pork.

Except for Japan. It will continue porking the system (enjoy the double entendre, Japanologists.)

- Can the economy continue to grow the way it has?

No, and it shouldn't, either. The past two decades were fueled by God awful fiscal policies that should be burned and buried deep within the Earth's crust. Deep. But so what? That doesn't mean we have to nix ALL growth.

So my real questions, I guess, are:
-If continued growth- in the same way we've grown up to this point- is indeed possible, how so, and
-If continued growth isn't possible, what should be done to contract with as little pain as possible?


Why not the third option: a steady state.

Why is it that the "contractioners" always imagine that the economy HAS to contract? Tokugawa Japan spent a good deal of its time in a steady state where the economy neither really grew nor contracted in per capita terms. Why is this not possible for us, hundreds of years later?

 
At Saturday, January 3, 2009 at 2:33:00 PM PST, Blogger wchfilms said...

This comment has been removed by the author.

 
At Saturday, January 3, 2009 at 2:38:00 PM PST, Blogger wchfilms said...

babun, I'm an atheist, but grew up in a Christian background, so I'm well aware of the Eden mythology, and the parallels to the evils of capitalism.

Crichton (rip) proposed this. Here's his speech about it.

He was talking a bit more about (excessive) environmentalism, but also mentions energy use. It's a good read:

There's an initial Eden, a paradise, a state of grace and unity with nature, there's a fall from grace into a state of pollution as a result of eating from the tree of knowledge, and as a result of our actions there is a judgment day coming for us all. We are all energy sinners, doomed to die, unless we seek salvation, which is now called sustainability. Sustainability is salvation in the church of the environment. Just as organic food is its communion, that pesticide-free wafer that the right people with the right beliefs, imbibe.

 
At Saturday, January 3, 2009 at 2:39:00 PM PST, Blogger wchfilms said...

Kind of slaps you in the face when you think about it that way, doesn't it?

 
At Saturday, January 3, 2009 at 3:11:00 PM PST, Anonymous Barba Rija said...

wchfilms, I totally agree with you and I know that JD too, for he has already posed the question on another post "Where does Apocalyptic thinking come from?"

Good lines in there too:

18:16 And saying, Alas, alas that great city, that was clothed in fine linen, and purple, and scarlet, and decked with gold, and precious stones, and pearls!

18:17 For in one hour so great riches is come to nought. And every shipmaster, and all the company in ships, and sailors, and as many as trade by sea, stood afar off,

18:18 And cried when they saw the smoke of her burning, saying, What city is like unto this great city!(Rev. 18:2-18)

Tell me that isn't Kunstler in a nutshell, right there.

 
At Saturday, January 3, 2009 at 3:33:00 PM PST, Anonymous bstone1435 said...

Why is it that the "contractioners" always imagine that the economy HAS to contract? Tokugawa Japan spent a good deal of its time in a steady state where the economy neither really grew nor contracted in per capita terms. Why is this not possible for us, hundreds of years later?


Tokugawa Japan was able to achieve its steady state by hardcore top-down management implemented by its shogun. This is all well and good, but I think that we both (based on your earlier list of questions re. centralized planning) have the same type of problem with this model: who's gonna do it, and how can we have any assurance that it'll be done well?

Outside of a top-down, Tokugawa-esque model, how can a steady state be achieved in a growth-oriented system? Don't the two, by nature, lie in opposition?

And whichever way we go (continue essentially as is or consciously move toward a steady state)- aren't we still, even in the best economic/energy case, looking at some form of systemic change occurring?

I'm far from anti- re. that type of change; I'm just seriously pessimistic about U.S. society's ability/willingness to embrace/absorb any major change at all change without serious disruption to the way of life to which we've grown accustomed.

And again, I'm not so much concerned about the next decade or two, but those following- the "future", so to speak that we're leaving our kids and grandkids.

And BTW- I appreciate the discussion, Ari. You're a bright dude, and an excellent, skeptical sounding board.

BS

 
At Saturday, January 3, 2009 at 4:00:00 PM PST, Anonymous Anonymous said...

Ari demands: who is in charge of allocation of resources? How do we vet these individuals and ensure a degree of rational policy implementation?

The same way we do it now - with our clumsy democratic process.

-- where does resource allocation policy originate from?

Again, I'm not trying to overhaul the government - policy still comes from the same sausage grinder it comes from now.

Where do you expect your pro-growth policies to come from?

-- How do we reallocate labor to industries that are being supported? Do we move labor from industries that fail, or what?

You seem to think I have all the details worked out. I don't. You don't either. No reason to be frustrated. Lighten up.

Some of the reallocation will simply be creative individuals making up their own minds to abandon dying career paths and start new enterprises on their own. Filling niches. Some will come from other macroeconomic trends like energy workers, recyclers, re-purposing, small-scale, local agriculture. Some will come from federal edict.

HDT

 
At Saturday, January 3, 2009 at 4:22:00 PM PST, Blogger Ari said...

BS,

Tokugawa Japan was able to achieve its steady state by hardcore top-down management implemented by its shogun. This is all well and good, but I think that we both (based on your earlier list of questions re. centralized planning) have the same type of problem with this model: who's gonna do it, and how can we have any assurance that it'll be done well?

My point is not that Tokugawa Japan is the only such model, but that there aren't only two paths (i.e. growth and contraction.) The problem with a lot of these discussions is that they end up resorting to straw men fallacies such as the "two paths" argument.

I'll be honest: I simply don't know! I don't know what will happen! I do know that I doubt that we'll see economic contraction due to energy. If anything, the decline will be brought about by population growth ending.

By the way, the "hardcore top-down management" of the shogunate is a myth in my mind. As a graduate student, I taught feudal Japanese history as a TA (at the University of California if that counts for anything)-- my experience with the material was that there were a number of factors that drove the Japanese economy:

1. Feudalism: this is the big one. Japan did not have the strong "top-down" rule that Diamond suggests in Collapse, and that others have somehow come to believe in. Japan had a highly decentralized government where each daimyo (feudal lord) had a lot of control over the region, and the central government played a less significant role. In fact, the current Japanese government is much more centralized and "top-down" than Tokugawa feudal Japan was! The bakufu was not the incredibly powerful center of authority that some suggest. On the contrary: the bakufu begun losing power over time due to the currency of rice being inflated (samurai became impoverished relative to the merchants.)

2. Lack of trade: though some scholars (I forget their names, can always dig out my readers if you want) argue that Japan had significant trade with the Dutch and others, there is ample evidence to suggest that trade was not carried out at levels high enough to achieve any sort of equilibrium (that is, there was significant deadweight loss due to self-imposed embargoes.)

3. Slow technological development: One the bakufu did do well is to restrict technological development (though not by choice, per se.) The anti-gun, anti-trade policies of the Tokugawa Era helped Japan's technological development to slow considerably. Some, such as Herbert Plutschow at UCLA have referred to the "open doors- closed doors" periods of Japanese history. In other words, Japan oscillates between "open" and "shut." Open periods foster importation of ideas, technology, culture, etc. Closed periods, like the Tokugawa, allowed Japan to assimilate the new ideas into the culture. However, Japan typically "stagnated" during closed periods, and had little in the way of economic growth.

And a few others that are less important.

Like I said, though, I wouldn't be too quick to herald in the powerful bakufu, simply because it wasn't there. Unfortunately, most Western scholars who aren't really Japanologists tend to mistake the occasionally successful bakufu ruling with bakufu influence. I tend to believe that those were the exception, and not the rule.

Feudalism, however, is generally quite good for suppressing economic development! That, and civil rights...

Outside of a top-down, Tokugawa-esque model, how can a steady state be achieved in a growth-oriented system? Don't the two, by nature, lie in opposition?

Well, no. The truth is that we simply don't know what will happen as the OECD countries' populations decline. Russia's population has plummeted in the past decade:

http://upload.wikimedia.org/wikipedia/commons/7/7a/Population_of_Russia_from_1992_to_January_2008.PNG

But it's GDP has grown:

http://www.cfr.org/content/publications/images/RussiaGDP_Chart.png

Part of this is oil, and it's safe to say that a lot of the "average Russians" see nothing coming out of it. Russia is in large part a state run in part by thug mafiosos, so I don't know how to compare it to other industrialized nations.

I also don't know what that will mean for OECD nations. Barring another baby boom (increasingly unlikely, of course) Japan or Germany will most likely be the first "experiment" in population decline in the Western bloc. I doubt, however, that resources will be the problem. If anything, the problem will be the cost of entitlement burdens relative to taxation regimes and in light of declining productivity. This is, of course, why former Prime Minister Abe pushed robotics so much: when you have fewer people working, but need to do work, you need robots to do it for you.

Or immigrants. But they're smelly and dirty as so many Americans make clear ALL THE TIME.

And whichever way we go (continue essentially as is or consciously move toward a steady state)- aren't we still, even in the best economic/energy case, looking at some form of systemic change occurring?

I don't know. I really don't. Systemic change happens more than people seem to believe. The pre- and post-WW2 systems were wildly different in many ways, and many people were displaced by those changes. Industrialization created rifts in society that we're still looking to close.

Change happens, but only a soothsayer with a serious talent for forecasting can truly say what's on the horizon. I, being trained at least somewhat in statistics and the "art of prediction," know to be cautious around those with the most detailed proclamations. They usually come bearing snake oil of the most vicious kind.

I'm far from anti- re. that type of change; I'm just seriously pessimistic about U.S. society's ability/willingness to embrace/absorb any major change at all change without serious disruption to the way of life to which we've grown accustomed.

And again, I'm not so much concerned about the next decade or two, but those following- the "future", so to speak that we're leaving our kids and grandkids.


To be honest, I think people tend to let the times affect their outlook. Most people were talking about flying cars and crazy ass Star Trek tech in the boomin' internets era. Today, we're all running around acting like it's the end of the world and the shit will hit the fan but it's not a fan it's really a big globalwarmingpeakoilfinancialmeltdown monster with sharp scary fangs that will eat us all OMGOMGOMG. Reading books from guys like Freeman Dyson, however, shows that people really ought to be scared of nuclear weapons! Because, I mean, when will the arms race ever end?

Etc. etc.

I don't honestly know what kind of world we'll leave for our children. I do know that my grandmother tells me that the world I inherited-- that is, the environment and the comforts-- are a significant upgrade from WW2-era Pittsburgh and its steel mills. So, who knows? Maybe our grandkids will look back at us and go, "OMG... how did they live without space elevators and the Ultraweb?"

Like one blogger I occasionally read from said: We don't live for the catastrophes. We live in defiance of them.

And BTW- I appreciate the discussion, Ari. You're a bright dude, and an excellent, skeptical sounding board.

Thank you. I do enjoy talking to someone who is actually interested in discussion.

 
At Saturday, January 3, 2009 at 5:50:00 PM PST, Anonymous Babun said...

The issue wasn't whether such a "garden myth" exists but the relevance to the discussion (and in particular to the current argument) here.

 
At Saturday, January 3, 2009 at 8:32:00 PM PST, Anonymous bstone1435 said...

"Like one blogger I occasionally read from said: We don't live for the catastrophes. We live in defiance of them."

Damn straight; excellent sentiment. I'm just trying to figure out if there is indeed a catastrophe to begin defying!

BS

 
At Saturday, January 3, 2009 at 8:33:00 PM PST, Anonymous bstone1435 said...

"Like one blogger I occasionally read from said: We don't live for the catastrophes. We live in defiance of them."

Damn straight- excellent sentiment.

Just wish I could figure out if there's a catastrophe to begin defying...

BS

 
At Saturday, January 3, 2009 at 8:57:00 PM PST, Blogger wchfilms said...

babun: The issue wasn't whether such a "garden myth" exists but the relevance to the discussion (and in particular to the current argument) here.

Babun, I wasn't really following the flow of the conversation, I was commenting on the original "growth=jobs" post, so sorry if it was confusing. JD's post reminded me of the "original sin" concept when he was describing many of the TOD people's comments and their personalities.

 
At Saturday, January 3, 2009 at 9:29:00 PM PST, Anonymous Richard said...

Lazy reasoning, a logical fallacy of a type known as "Hasty Generalization", and a nice "Post Hoc Ergo Propter Hoc" (ref):

The author provides no information about what anti-growth advocates say about unemployment. The argument reduces to:

No-one who supports peak oil says anything about the terrible evil of unemployment. I guess everyone who supports peak oil must be in favour of unemployment.

Fallacy: you can´t use the absence of evidence to prove anything.

massive unemployment follows a halt in growth; therefore a halt in growth causes massive unemployment

Fallacy: confusing chronological order with causality

 
At Saturday, January 3, 2009 at 10:07:00 PM PST, Blogger Ari said...

Richard,

Incorrect. We know from past economic slowdowns that slowing GDP growth leads to unemployment. We do not "lack" evidence in this case: we know, within limits of economic knowledge, that lack of GDP growth almost universally leads to increases of unemployment.

Unless you can show figures that demonstrate this to not be true, the criticism does not hold.

Your arguing for a post hoc ergo prompter hoc fallacy is also strange because we know to some degree the mechanisms for why GDP growth slowdown or contraction causes unemployment.

This is not lazy reasoning. It has been demonstrated, for example, that "for every 2% GDP falls relative to potential GDP, unemployment rises 1% (of the total workforce). " (U= ^u-h[100(y/yn)-100] ). This is known as Okun's Law and is fairly well established macroeconomic modeling.

Now, if you would like to argue Hayek vs. Keynes, then I'm glad to do so, but I don't remember being taught that a fall in GDP leading to an increase in unemployment was in any way disputed. I may be wrong, however, as I did not do much work in labor economics. Feel free to link me to some articles (peer reviewed, preferably) that demonstrate otherwise.

 
At Saturday, January 3, 2009 at 10:15:00 PM PST, Blogger Ari said...

HDT,

HDT,

Ari demands: who is in charge of allocation of resources? How do we vet these individuals and ensure a degree of rational policy implementation?

The same way we do it now - with our clumsy democratic process.


You're getting kind of silly. The only "demand" I made was for you to flesh out your ideas. You've made strong statements: be prepared to back them up with strong logic.

Or as Sagan once said: extraordinary claims require extraordinary evidence.

-- where does resource allocation policy originate from?

Again, I'm not trying to overhaul the government - policy still comes from the same sausage grinder it comes from now.

Where do you expect your pro-growth policies to come from?


Same place, except that I realize that: "pro-growth" is nothing more than people engaging in normal economic behavior. People maximize profit because it's rational. If you are arguing for some sort of shift, then you have to say how we're going to see people stopped from doing what's simply rational (that is, maximization of profit.)

Hell, even merchants in Tokugawa Japan maximized profit in a system that was expressly designed to end rent-seeking behavior!

-- How do we reallocate labor to industries that are being supported? Do we move labor from industries that fail, or what?

You seem to think I have all the details worked out. I don't. You don't either. No reason to be frustrated. Lighten up.

Some of the reallocation will simply be creative individuals making up their own minds to abandon dying career paths and start new enterprises on their own. Filling niches. Some will come from other macroeconomic trends like energy workers, recyclers, re-purposing, small-scale, local agriculture. Some will come from federal edict.


"Macroeconomic trends?" This is odd phrasing, so explain what you mean by this. I think you are referring to boom sectors vs. shrinking sectors, perhaps. Yes, it's true that labor will migrate out of shrinking sectors into boom sectors, ceteris paribus, but there's nothing physically necessitating re-localization. Perhaps people will do it because they prefer the lifestyle in the long run, but it seems doubtful that we'll see a return to cottage industry simply because the economics do not work out. Business will go solar/wind if it comes down to it, simply because the economies of scale do not exist in the "localized" model.

I actually abhor the idea of "localized" society because it would be an environmental disaster in my mind.

I suppose my final point is this: don't make broad, sweeping claims and expect a fairly sharp person to not expect you to elaborate. It's only natural for someone to be skeptical of really exceptional claims.

 
At Saturday, January 3, 2009 at 10:21:00 PM PST, Blogger Ari said...

One last comment for now...

BS,

I honestly don't think so. I believe strongly in human ingenuity and our intellectual prowess to advance further.

I'm sure this will cause a few people who comment after this to blow a gasket in some way, but you know what? To hell with them. I don't see any reason to live my life buying nitro packs and talking about the PEAK THAT HAS BEEN COMING FOR TWENTY YEARS.

In the meantime, I'll continue lobbying as much as I can for policies that encourage nuclear, wind, solar, hydro, and intelligent city planning. I also will look forward to my children (if I actually have any... I'll probably adopt if I do!) enjoying a standard of living beyond mine.

And yes, any children I have will be vaccinated. Damn anti-vaccine nuts....

Bah.

 
At Sunday, January 4, 2009 at 11:16:00 AM PST, Anonymous Anonymous said...

I actually abhor the idea of "localized" society because it would be an environmental disaster in my mind.

I suppose my final point is this: don't make broad, sweeping claims and expect a fairly sharp person to not expect you to elaborate.

If you would, please elaborate on this environmental disaster in your mind. How does producing as much of a community's essential products and services locally becomes an 'environmental disaster?' How is minimizing shipping costs an environmental disaster? Please elaborate.

Bear in mind, no one's claiming that in some agrarian nirvana it's even possible to be 100% local: there will always be some amount of import/export of excess production in any system.

In answer to your earlier stawman "peak uranium," I have no idea about uranium reserves, or at what rate we'd consume it if we were to 'grow' the nuclear industry. I do think a certain amount of base-line nuclear power is useful and inevitable. With more nuclear facilities though, you grow more implementation problems. The question for nuclear growth advocates is essentially how to you protect it, distribute it, and dispose of the waste. These are not trivial problems, or unsolvable.

And more importantly for those who do value local food production, and this is a pretty distinguished crowd, electricity from nuclear is not really a workable substitute for gasoline and diesel fuel in agriculture of any scale.

Sure, there appears to be a glut of cheap oil for now. There's another pro-growth bubble that just burst for you. And that burst is causing some major pain right now.

Big Agriculture, drivers and eaters just got a big boost in their pocketbooks with the sharp drop in oil prices. The next growth-driven oil bubble, that most certainly will come, will recreate all the food and commodity price chaos we've seen over the last cycle, only amplified by an economy that will likely be stagnant at best.

IF you care to, please elaborate on agriculture dependent upon expensive gasoline and diesel.

HDT

 
At Sunday, January 4, 2009 at 12:29:00 PM PST, Blogger Ari said...

HDT,

If you would, please elaborate on this environmental disaster in your mind. How does producing as much of a community's essential products and services locally becomes an 'environmental disaster?' How is minimizing shipping costs an environmental disaster? Please elaborate.

Because you're losing economies of scale. You will have to use more land and more energy on the margin to actually accomplish this.

Economies of scale are good. They let people focus on doing what they're good at (through competitive advantage), and allow minimization of social deadweight loss (including pollution).

Bear in mind, no one's claiming that in some agrarian nirvana it's even possible to be 100% local: there will always be some amount of import/export of excess production in any system.

Define "excess."

And now I have to ask you a question. Have you formally studied studied any economics? You seem to be struggling with a lot of the terminology and ideas. If not, I'd be glad to point you in the direction of some good econ texts that will help you to formulate your ideas, and I can gladly provide you with notes and things that will also help.

But when you say "excess" as you did, it makes it hard to have a discussion-- excess in this case is used incorrectly.

In answer to your earlier stawman "peak uranium," I have no idea about uranium reserves, or at what rate we'd consume it if we were to 'grow' the nuclear industry. I do think a certain amount of base-line nuclear power is useful and inevitable. With more nuclear facilities though, you grow more implementation problems. The question for nuclear growth advocates is essentially how to you protect it, distribute it, and dispose of the waste. These are not trivial problems, or unsolvable.

Actually, it wasn't a straw man. It was a serious question. A lot of the peak oilers have applied "peak everything" logic to anything they can to make sure that we have no "outs." In this case, however, you willingly admitted ignorance: good! I wish more people would do that.

Anyway, yes, you're right that there are logistical concerns. However, I suggest you read into France's programs. They have demonstrated that you can almost totally close the cycle in a secure and safe fashion. Americans tend to look at the American case and go, "It can't work!" Well, sure, when you have miserable policy and miserable regulation it can't.

And more importantly for those who do value local food production, and this is a pretty distinguished crowd, electricity from nuclear is not really a workable substitute for gasoline and diesel fuel in agriculture of any scale.

I have nothing against local food production per se. I buy from local farmers and at farmers markets when I can. It's usually really fresh and tastes good!

But I don't think most of the localizers have really though through the economies of scale problems all that much. They also seem to assume that "small" means "green," which is not necessarily the case.

Sure, there appears to be a glut of cheap oil for now. There's another pro-growth bubble that just burst for you. And that burst is causing some major pain right now.

All, I love the platitudes. Look, I've said already that I don't like the bubble-style policies that were in place. How many more times do I need to say this? I'll say it again: I abhorred the policies that were put in place in the 1980s. I am all for smarter policy and an eye toward less violent swings.

Shall I repeat that again, or can we move past your insistence to make this claim over and over?

Big Agriculture, drivers and eaters just got a big boost in their pocketbooks with the sharp drop in oil prices. The next growth-driven oil bubble, that most certainly will come, will recreate all the food and commodity price chaos we've seen over the last cycle, only amplified by an economy that will likely be stagnant at best.

Based on what evidence?

IF you care to, please elaborate on agriculture dependent upon expensive gasoline and diesel.

Increased efficiency in tractors/equipment. Or perhaps electrified equipment. Hybrid semis already exist, why not hybrid tractors?

Or maybe tractors powered by overhead caternaries?

You assume that oil consumption HAS to go up in all sectors: that's not true. Remember that some oil consumption can be reduced as other sectors increase their consumption. Elasticity of demand differs by sector.

 
At Sunday, January 4, 2009 at 12:45:00 PM PST, Anonymous Anonymous said...

And now I have to ask you a question. Have you formally studied studied any economics? You seem to be struggling with a lot of the terminology and ideas. If not, I'd be glad to point you in the direction of some good econ texts that will help you to formulate your ideas,

Thanks for the offer. I have studied some economics. I purposely used generic terms like 'excess' in case there was one other person reading this thread that didn't have your masterful grasp of textbook lingo.

Excess = what's left over after you consume some of what you've produced and save what you think you need for the future.

 
At Sunday, January 4, 2009 at 1:23:00 PM PST, Blogger bc said...

The question "why do we need growth?" is very important, but is usually ignored by people writing about proposed "sustainable" (i.e no growth) economies.

JD hints at the reason; jobs are the way we redistribute wealth. If it only takes 3 or 4 people out of 10 to produce essential goods and service for society, how could we share the workload and the wealth? Job sharing is doable in low skilled part-time jobs, but is inefficient in jobs requiring significant experience or training.

So the question that would need to be addressed in any zero-growth scenario, is who does the necessary work, and who gets to sit around, or some combination?

 
At Sunday, January 4, 2009 at 1:42:00 PM PST, Anonymous Anonymous said...

"So the question that would need to be addressed in any zero-growth scenario, is who does the necessary work, and who gets to sit around, or some combination?"

We're in contraction right now, and it looks like the same people who used to sit around are still sitting around, but they're joined by a lot more unemployed than only a few months ago.

I suspect that in any mode - growth, contraction or steady state - that there will always be those who figure out a way to sit around while someone else does the heavy lifting.
HDT

 
At Sunday, January 4, 2009 at 1:49:00 PM PST, Blogger Ari said...

HDT,

I use "textbook" language because it's standardized. It's the same reason that anyone else uses jargon: because when someone uses it properly, then everyone can immediately understand what's being said, assuming they look up the terms used.

Economics is a technical field, and therefore technical language will be used. Same as discussing math or science-- you have to accept a degree of difficulty.

Unfortunately, along those lines, I have to correct you on something: it's not "excess," it's "surplus." We generally refer to economic surplus as production beyond that which is necessary for basic survival. This is a good thing, because then you can sell your goods to other places that cannot produce said goods as efficiently or at all. Economic surplus is what allows us to specialize and become doctors or scientists instead of tenant farmers. Economic surplus is what allows for representative democracy without serfs or slaves (cost of labor being low enough that people can specialize in government).

Trade is good. Trade allows surpluses to be distributed throughout large populations.

Economies of scale are good. They allow companies to produce at higher efficiency, reducing waste and cost for all of society. Economies of scale allow people to enjoy things that they can't otherwise. Without economies of scale, you don't get MRIs. Without economies of scale, you don't get computers. Without economies of scale, you don't have a middle class that can enjoy cutting-edge technology and medicine.

The push for re-localization will almost certainly have three very serious side effects:

1. It will increase the cost of labor, and require more people to de-specialize. This will slow progress in science and technology because the social costs will go up, making things go more slowly.

2. It will reduce trade. This will cause people to lose the opportunities to enjoy a variety of foods (as Brother Cadfan can point out), and will cause significant increases in costs of goods across the board. This will not necessarily amount in "less" being consumed per se, as people will be forced to consume potentially less efficiently produced goods.

3. It will hurt economies of scale significantly, and may destroy industries that depend on them. Computers, airplanes, and high-end medical technologies to name a few.

Now, you may say, "Well, that's just inevitable!" I say rubbish to that. It is far from inevitable, as we have a wealth of energy sources that we can replace oil with if our policies push for that.

Unfortunately, we have the green lobby on one end saying, "We can't go nuclear! Nuclear is baaaaad! Oh, but we can't have coal, either... so uh...

Hamsters on wheels!"

Or something like that.

Then we have the right going, "Drill, baby, drill! Durr!

Oh, and deregulate! It's always good! Friedman said so!"

However, I still remain optimistic that we'll work things out. Why? Because humans are awesome. Unlike the misanthropes that troll the wider interwebs, I believe humans are amazing. I'm a "Dyson humanist," so to speak.

Plus, I know enough about nuclear to know that it has incredible potential for doing what the good Hubbert said decades ago: replacing fossil fuels.

I mean, even James "Earth fried to a crisp" Lovelock has come out in favor of nuclear! That's gotta count for something with the greenies.

(I make fun of greenies, BTW, but I replaced all of my bulbs with CFLs years ago, never have owned a car that doesn't average 30 MPG or more, and recycle and compost. And I can't afford to fly, so I don't! Win!)

 
At Sunday, January 4, 2009 at 1:57:00 PM PST, Blogger Ari said...

HDT,

Are you referring to the scummy i-bankers? Because they didn't just sit.

They sat HARD. (10 points if you get the reference)

Now, however, they just sit like a bunch of douchey weenies who finally realize that they contributed nothing to the economy. Too bad we gutted our vocational schools, because I'd have loved (adored!) watching some of the a-hole i-bankers I knew going back to become plumbers. Then again, I wouldn't wish that level of bullshit even on a toilet...

I'm here all night folks.


bc,

History is not kind in its examples of what happens when you have a surplus of labor but no opportunities for that labor. China during the Great Leaps comes to mind as an extreme example. Though that was more a consequence of the state mandating stupid policies.

Steady states are poorly understood as far as I know, simply because we have little experience with them. What's interesting, though, is that Russia, which lost 6 million people in a decade, managed to grow its GDP despite thuggish rule at a lot of levels (I do, however, believe that Russia nominally democratic).

Perhaps we should ask an interesting question: are we necessarily requiring that GDP stay steady or decline, or can we simply let demographics take care of population as per capita income grows due to efficiency increases?

This is actually an interesting topic, and something all the OECD countries will be dealing with awfully soon, regardless of resource crunches! I think the thing that will make the anti-population growth people happy is that at this rate, the OECD will unbreed its way into nothingness. But how do we pay for the baby boomers?

That actually worries me a bit.

 
At Sunday, January 4, 2009 at 2:03:00 PM PST, Anonymous Anonymous said...

"Without economies of scale, you don't get MRIs. Without economies of scale, you don't get computers..."

No, without eos, you don't get cheap, ubiquitous, computers, ding-dongs, etc. But then, you seem to function in "either/or mode", we either have eos or we don't. Rest assured the future will not be that polarized.

Thanks for ECON 101 hectoring. I'm sure they're really proud of you down at the junior college.

Sheesh...

HDT

 
At Sunday, January 4, 2009 at 2:11:00 PM PST, Blogger Ari said...

HDT,

Ubiquity is a big deal! What's so great about MRIs if only the richest hospitals can afford them? What's so great about computers if they go back to being the playthings of the wealthy?

But no, you can't get some things without economies of scale. There are "inflection points" where certain manufacturing processes become impossible. Intel and AMD, for example, could not produce some of their products without large, well-staffed facilities. There's no cottage industry for semiconductors for a reason: it's financially prohibitive.

And as far as the hectoring goes, I'm trying to get you to clarify your thoughts so we can have a discussion, but also so people reading this learn something. I don't do all of this "to win." I do it because I want to make sure that people get the straight dope, and not some mishmash of pseudo-econ.

Also, I was a TA for a long time as a grad student. You can take the teacher out of the classroom...but... well, you know the rest. I'm just trying to help people learn.

 
At Sunday, January 4, 2009 at 2:13:00 PM PST, Blogger Ari said...

Also, I spent a year at a community college. Us transfers are awesome. Don't be hatin'.

A real playa' knows that community college is a sound financial decision, provided that the individual sees it through to the end (e.g. graduates from a four year university.)

So yeah, don't be hatin', yo. Just 'cause I saved on tuition doesn't mean you have to be a hata'.

:-P

 
At Sunday, January 4, 2009 at 4:20:00 PM PST, Anonymous Babun said...

[i] US federal debt service is not bad compared to Japan. It's currently about 8.9%. Japan is at 16.5%. That means that Japan spends almost twice as much servicing its debt as we do. BTW, other countries with more debt as a percent of GDP than the US?

France, Canada, Germany, Norway, Greece, Italy. [/i]

I just have to make a note that at least Norway and Canada are pretty bad examples since Norway is a net creditor and Canada is almost break-even.

I guess Japan and the US are pretty much in the same boat, but without actually checking I'd claim any of the other countries are pretty far off.

 
At Sunday, January 4, 2009 at 4:42:00 PM PST, Blogger Ari said...

Babun,

That's true, but it's even more complicated! Another interesting measure is what percent of GDP goes to servicing the debt. Even if Norway is a creditor, it may be in a worse situation if it spends more money servicing its debt than another country.

My point, really, was to demonstrate that simple gross debt figures don't tell us the whole story. While the idea of $10t of debt is really incredible, it's only part of a complex picture, as the Japan example demonstrates.

Honestly, though, I'd like to see the debt reduced long before it reaches Japan or Italy levels. Now we just need to make sure to not elect another Reaganite supply sider...

 
At Sunday, January 4, 2009 at 10:24:00 PM PST, Anonymous Anonymous said...

do any of debunking fucktards know what happened to andrew ryan the anti-doomer's blog? i can't find it any longer

 
At Monday, January 5, 2009 at 5:28:00 AM PST, Blogger Barba Rija said...

That's not the nicest way of asking a question, anon.

Wanna try again?

...

WELL, because I'm just feeling good today, here it is.

Don't mention it, child.

 
At Monday, January 5, 2009 at 6:31:00 AM PST, Anonymous Anonymous said...

Ari attempts humor: "Now we just need to make sure to not elect another Reaganite supply sider..."

You shouldn't joke about the Patron Saint of Eternal Growth!

 
At Monday, January 5, 2009 at 6:36:00 AM PST, Anonymous Anonymous said...

IF thou believest in Ronald Reagan, and the Holy Tax Cut, thou shalt have eternal growth.

And, incidentally, thou shalt burn in the fires of eternal debt.

Yes, let's talk more about apocalyptic thinking and where it comes from. That's a rich vein to mine, so to speak...

 
At Monday, January 5, 2009 at 7:29:00 AM PST, Blogger Ari said...

Anon,

Ari attempts humor: "Now we just need to make sure to not elect another Reaganite supply sider..."

You shouldn't joke about the Patron Saint of Eternal Growth!


I wonder if you are the Anon that called the "debunkers" "fucktards"? In any case, my comment about supply-siders was only half-kidding: It's a defunct economic philosophy.

IF thou believest in Ronald Reagan, and the Holy Tax Cut, thou shalt have eternal growth.

And, incidentally, thou shalt burn in the fires of eternal debt.


Well, to be fair, some tax cuts make sense. The major cuts made by Ike and JFK made a lot of sense, as the marginal rates were clearly so high as to be irrational. In the case of Reagan et al., however, we're talking about simple cronyism.

Yes, let's talk more about apocalyptic thinking and where it comes from. That's a rich vein to mine, so to speak...

I say two places:

1. Human inclinations for seeing the bad out of self-preservation (a species that is "comfortable" is dead.)

2. Western religion amplifying #1.

 
At Monday, January 5, 2009 at 7:41:00 AM PST, Anonymous Anonymous said...

"It's a defunct economic philosophy."

And yet you seem to be trying to revive the same basic philosophy in the guise of 21st century 'growth.'

Curious.

 
At Monday, January 5, 2009 at 7:48:00 AM PST, Blogger Ari said...

Anon,

Ah, this runaround again.

I've already outlined my attitudes toward this-- I am not in favor of the kind of growth that Reaganesque policies led to. Why do you and HDT both insist on ignoring the subtleties of my argument for no apparent reason?

 
At Monday, January 5, 2009 at 8:09:00 AM PST, Anonymous Anonymous said...

"Why do you and HDT both insist on ignoring the subtleties of my argument for no apparent reason?"

BEcause your 'subtleties' are just vague equivocations and recycled Newt Gingrich platitudes?

 
At Monday, January 5, 2009 at 8:19:00 AM PST, Blogger Ari said...

Anon,

It's funny that you say that, since I've only voted Republican once (Governator), and he's somewhat of a Democrat-in-hiding. But, I suppose if you want to tar me with a GOP brush, you're welcome to do so.

I take it you don't want to respond to what I've said about GDP decline and unemployment (e.g. Okun's Law)? I've said before, however, that I would be interested in discussion of a steady state economy, because I think it could potentially work, and may actually be required of future generations as population declines hit the OECD nations anyway.

You say I'm vague-- that may be. However, if I am vague, then it's simply because a lot of these issues are complex and cover a lot of ground, requiring a fairly broad brush in this context. I'd be glad to focus on individual topics, however, if anyone wants to suggest one.

 
At Monday, January 5, 2009 at 9:58:00 AM PST, Anonymous Anonymous said...

Yes, no one wants to quibble over Okun's Law with you. Talk about a truism. Why would anyone dispute that GDP tracks unemployment, and worse, dispute it with someone who insists that the conversation conform to the protocol of Ari's freshman economics text?

So, yes, GDP tracks employment by percentage or other. The geeks at TOD agree with you on that point.

The issue that you stubbornly refuse to engage is that GDP is not the only measure of human health and well-being. I see that someone has finally badgered you into admitting that steady-state is something feasible, and not just another windmill for you and JD to tilt at. Thank you. So if the economy can exist in some steady-state, then it has ceased to grow, which, as someone mentioned earlier, means that nothing grows forever.

 
At Monday, January 5, 2009 at 10:26:00 AM PST, Blogger Ari said...

Anon,

Please use a name, as it's really hard to know who I'm talking to otherwise. I think it's a nice way to engage in a real conversation. Don't you agree?

Anyway...

Yes, no one wants to quibble over Okun's Law with you. Talk about a truism. Why would anyone dispute that GDP tracks unemployment, and worse, dispute it with someone who insists that the conversation conform to the protocol of Ari's freshman economics text?

I'm not insisting that the conversation "conform to protocol," but saying that it's hard to have a serious conversation about economics if we are incautious about our terminology. I want to have an interesting and serious conversation, and have been getting a lot of guff for simply engaging ideas. Then again, I don't know who anyone is, as a lot of people seem intent on maintaining anonymity like it's 4chan...

The issue that you stubbornly refuse to engage is that GDP is not the only measure of human health and well-being. I see that someone has finally badgered you into admitting that steady-state is something feasible, and not just another windmill for you and JD to tilt at. Thank you. So if the economy can exist in some steady-state, then it has ceased to grow, which, as someone mentioned earlier, means that nothing grows forever.

I've never said that GDP is the only measure of well-being, and I actually have argued in the past for better proxy measures of well-being outside of GDP.

Also, nobody "badgered me into admitting that a steady state is possible." I said that early on in the conversation, actually, by my own volition. I can imagine a Malthusian steady state as being workable under certain conditions, but I don't quite know how it would work.

Finally, I've never said that growth will continue forever-- I just don't think that it will stop because of catastrophic limits being reached. I've already said that I believe that population growth, for one, will be asymptotic. But it will be because people stop breeding (OECD, Russia), and not because of physical scarcity. So yes, nothing grows forever... but that doesn't mean we have to be witness to the deaths of 5 billion people, either.

Just hundreds of millions of Boomers retiring off of my taxes. Bah.

However, I don't know what GDP will do. Ultimately, I just don't know. GDP is a fairly abstract measure, and could potentially grow long after population plateaus, but I don't know.

If you want to continue labeling me a "Newt Gingrich Republican" or something along those lines, then go ahead. I don't think the appellations stick, to be honest.

 
At Monday, January 5, 2009 at 10:35:00 AM PST, Blogger Sean Daugherty said...

It seems to me that the question is, when will growth stop, and under what demographic and cultural conditions will that occur.

As the original post suggested, the question is whether or not the "Stop Growth Now" contingent at TOD and elsewhere are legitimately "rational, serious people who will guide us to a better future." An orderly transition to a steady state economy is not the same thing as what is being advocated here. It's one thing to argue that negative growth is unavoidable and imminent, sure. I personally don't believe that, but it's a position that can be argued logically and/or empirically. Working from that position, it's possible to discuss mitigation strategies.

But that's not the same thing as explicitly advocating for negative growth in advance of the (far from guaranteed) "natural" decline. Taking the "growth = jobs" truism at face value, then advocating negative growth is the same as advocating fewer jobs. And under our present circumstances, that is essentially the same thing as advocating that people lose their homes and go hungry. Acting like it's an issue of people learning to "enjoy their leisure time" is just about the most callous, out-of-touch sentiment I've heard since Marie Antoinette professed her fondness for baked sweets.

 
At Monday, January 5, 2009 at 10:48:00 AM PST, Anonymous Anonymous said...

have any of you DEBUNKING FUCKTARDS noticed that all the DOOMERS have turned out to be right? the car companies are collapsing, oil prices have been incredibly volatile going from $55 to $145 and then back to $35 all in about 2 years?

have you seen the price of ammo lately? any of you not stocking up on food and supplies, well don't come to me or mine looking for anything when you go hungry, the only thing I'll have to offer is a lot of hot lead at 200 yards.

IdadoSpudFarmer

 
At Monday, January 5, 2009 at 10:56:00 AM PST, Blogger Ari said...

This comment has been removed by the author.

 
At Monday, January 5, 2009 at 10:57:00 AM PST, Blogger Ari said...

IdahoSpudFarmer,

Big Three are in a lot of trouble, but Toyota, Honda, and Nissan are far from collapsing. Toyota is hurting, but it seems doubtful that it will "collapse" any time soon.

As for the price of ammunition, a lot of factors played into that: for one, there has been a big surge in demand since 2001 (for obvious reasons), and ammo was just as subject to the cost of commodities as anything else. However, I'm inclined to believe that the rapid increase in demand from two major conflicts is what has played the largest role in the cost in the medium-run.

Finally, as for your kind gesture: shouldn't you be saving the rounds for others with weapons, rather than to use on errant beggars? I mean, assuming we end in a Mad Max apocalyptica scenario, ammo will be awfully scarce, right? You'll have to make some pretty careful choices regarding who to shoot and when, no?

Just a thought. Trying to be helpful!

 
At Monday, January 5, 2009 at 3:11:00 PM PST, Anonymous Anonymous said...

"...the question is whether or not the "Stop Growth Now" contingent at TOD and elsewhere are legitimately "rational, serious people who will guide us to a better future."

That's the question we should have been asking about the last 5 or 6 administrations, not just a handful of geeks on a website.

FWIW, I'd like to think that we could orchestrate an "orderly transition to a steady state economy" given a little luck and a few good men (and women), but I don't think that's a sure thing. Economies, like other organisms, don't always respond to our various manipulations exactly as we expect them to, and the larger the economy, the more dramatic the expansions and contractions.

Regarding the callous behavior, I'm not sure who's calling whom lazy in this spat. I can't think of anyone more callous right now than the CEOs of Lehman, AIG, Fraudy and Phoney et al, the SEC and ratings agency sycophants who basically gave them permission to screw investors for hundreds of billions of dollars and then ask for a bailouts so they can get 100s of millions in bonuses and continue business as usual. That's beyond callous.

 
At Monday, January 5, 2009 at 11:01:00 PM PST, Blogger OptimisticDoomer said...

Ari

I just wanted to thank you for all your well thought out & factually backed posts. You have put a lot of things in perspective for me. I hope you continue to post on this blog.

Hopefully I'll have something to add to the discussion some day lol.

 
At Monday, January 5, 2009 at 11:05:00 PM PST, Blogger OptimisticDoomer said...

have any of you DEBUNKING FUCKTARDS noticed that all the DOOMERS have turned out to be right? the car companies are collapsing, oil prices have been incredibly volatile going from $55 to $145 and then back to $35 all in about 2 years?

have you seen the price of ammo lately? any of you not stocking up on food and supplies, well don't come to me or mine looking for anything when you go hungry, the only thing I'll have to offer is a lot of hot lead at 200 yards.

IdadoSpudFarmer


Wow! It's people like you that I fear if we do actually have a collapse.

What is it about peak oil that attacks so many hate filled racist people. I really don't understand it.

 
At Tuesday, January 6, 2009 at 4:47:00 AM PST, Anonymous Luis Dias said...

IdadoSpudFarmer,

Get your manners straight, kid. That's no way to talk to adults. You are showing yourself to be an uneducated brat. Grow up.

 
At Tuesday, January 6, 2009 at 4:51:00 AM PST, Blogger Ari said...

OptimisticDoomer,

Thank you. To be honest, my goal has always been to give people-- myself included-- some perspective. If it were about "winning," I'd be at slashdot or something, bitching about Windows... or something.

Thank you for the kind words. Everyone! I do appreciate them.

 
At Tuesday, January 6, 2009 at 7:22:00 AM PST, Anonymous Drewboy said...

"have any of you DEBUNKING FUCKTARDS noticed that all the DOOMERS have turned out to be right?"


When you throw 20 darts at a dartboard at once, one or two are bound to stick.

Wasn't Matt Simmons predicting $200 oil last year, on up to infinity? What happened with that? (lol) As an oil industry investment banker, doesn't he have an interest in higher prices?

With regard to the car companies, they set themselves up to be vulnerable to price increases in gasoline, by having a short-term view in producing the most profitable vehicles they could - SUVs. GM/Ford/Chrysler also gave subprime auto loans out, and that bit them as well. But hey, lets try and desperately connect everything to peak oil. Ooooooh scary!

 
At Tuesday, January 6, 2009 at 7:40:00 AM PST, Anonymous Luis Dias said...

When you throw 20 darts at a dartboard at once, one or two are bound to stick.

His technique is different. It's called Texas Sharpshooter

The name comes from a story about a Texan who fires several shots at the side of a barn, then paints a target centered on the hits and claims to be a sharpshooter.

That's Kunstler, Matt & Matt right there.

 
At Tuesday, January 6, 2009 at 10:30:00 AM PST, Anonymous Juliet said...

Hi.
I'm new.
I'm coming off reading up on steady state economics and it looks like that might be what Ari is potentially maybe almost advocating? Must admit to listening to kunstlercast as well. I'll definately be checking back in. Great information being exchanged here.

I guess this counts as a hello?

Juliet

p.s.CATO-tard is funniest thing I've heard in, like, forever.

 
At Tuesday, January 6, 2009 at 12:04:00 PM PST, Blogger Ari said...

Hi Juliet!

I'm not "advocating" really, but more like "pondering." I think that a steady state is a possibility in an economy whose population is either not growing or shrinking, but I simply cannot say for certain that that is what will occur as population growth halts in the future.

 
At Tuesday, January 6, 2009 at 6:30:00 PM PST, Anonymous AndrewRyan said...

Juliet,

I'm glad you found POD, however if you want to stay realistically informed, I would avoid anything related to Kunstler's bitter old man rants.

Welcome!

 
At Wednesday, January 7, 2009 at 7:34:00 PM PST, Blogger DB said...

Limits to growth.
Argument: No plant grows forever.
No animal populaion grows forever.

Well I argue that's false.

The reason is that the concept of "growth" used by the "limits to growth" people and the dieoff people is false too.

They claim that the *size* of the economy or population cannot continue to expand forever.

Correct. It cannot.

That, however, is not what endless growth means.

Endless growth is the population is born, grows, dies and is added to in a *continual* process of birth and rebirth and evolution.

The same thing happens with the economy. It is not necessary for rate of *extraction of resources* to grow to some infinite level, it just needs to continue to boom bust and boom again in an endless cycle for "growth" to continue.

All of us here on pod intuitively understand this. It seems that the dieoff crowd can only stare mindlessly at the petridish, holding hands while they all chant together: "I believe in the church of algal blooms and sudden population crash" while ignoring the wolves and rabbits undulating population outside the door of the temple in an ENDLESS GROWTH patern of boom bust boom bust and so on...

 
At Wednesday, January 7, 2009 at 7:37:00 PM PST, Blogger DB said...

"have any of you DEBUNKING FUCKTARDS noticed that all the DOOMERS have turned out to be right? the car companies are collapsing, oil prices have been incredibly volatile going from $55 to $145 and then back to $35 all in about 2 years?"

Heh muppet?
That's exactly what is SUPPOSED to happen in the *endless growth* cycle of capitalism. Boom then bust and boom again in continual endless cycles of creative destruction.

 
At Friday, January 9, 2009 at 6:50:00 AM PST, Anonymous Anonymous said...

"Boom then bust and boom again in continual endless cycles of creative destruction."

Yeah, and if you get really creative you can fuck with the cycles, really stimulate faster and faster cycles of growth. If you stimulate hard enough and fast enough, the economy grows so big that no one will ever have to work again. If we grow it big enough in one cycle, we'll have enough real wealth so that no one in the West wiill ever have to wrk again, we'll just let all those stupid motherfuckers in China do all the real work while we drink Red Bull and text each other.

 
At Sunday, January 11, 2009 at 2:48:00 AM PST, Blogger wchfilms said...

"have any of you DEBUNKING FUCKTARDS noticed that all the DOOMERS have turned out to be right? the car companies are collapsing, oil prices have been incredibly volatile going from $55 to $145 and then back to $35 all in about 2 years?"

Heh, that's rich. "all the doomers" have predicted oil prices going from $55 to $145 to $35?

 
At Sunday, January 11, 2009 at 11:13:00 AM PST, Blogger wchfilms said...

Well, keep in mind, there are many levels of "doomer"... this site itself is in a way reformed doomers who know there will be a transition, but the question is simply how severe will it be.

That the SUV making companies are crashing was trivial to predict, since it happened before due to the 70s oil shocks, and the pattern of cheap gas leading to guzzlers was directly repeated.

The big problem here is the silly cheap money policies of the fed and as Krugman put it the fact that much of America largely made a living from 2003-2006 (or so) selling houses to each other on money borrowed from China. This of course caused massive price inflation, and that inflation spread to everything else including oil.

Oil may or may not have peaked, but it matters not. The price collapse proves there is absolutely plenty as MOAG says. Of course they are going to cut production--- no one is buying the shit. There is no imminent die off due to shortages or price being to high or any of that other extreme nonsense. And now, there are suddenly all sorts of electric vehicles being paraded around, which will soon be on the market. Plus, that and Obama's "energy economy" (money drop) will likely create a massive economic stimulus indeed, which is just what is needed.

 
At Sunday, January 18, 2009 at 5:44:00 AM PST, Blogger Kartturi said...

Thanks Ari for the many points you have made, bringing at least a little realism
to the current localism fad.

However, it should be borne in mind, that not all localists are of primitivist, ecofundamentalist, peak-oil-doomer
"only-muscle-power-available/allowed" variety.

There are also people I would classify
as "high-tech, pro-future localists".

There are couple of interesting threads on John Robb's blog:

"STEMI Compression", at:
http://globalguerrillas.typepad.com/globalguerrillas/2008/11/stemi.html

From which a quotation:

Second is a switch to bio-processing. In short, growing your computer or product rather than manufacturing it. The development of this technology might get us out of the only centralization trap left: fabrication facilities using exotic materials to make computer chips. Both of these trends may make decentralization nearly costless to the computational complexity of the system.

(Yes, currently this sounds just a pipe-dream. Grow your computer in a vat...)

To which levy14 says comments:
Local scale nano-scale fabrication (LSNSF?) is some time constant away - say t0. The system seems to be collapsing at a different timescale - say t1. Thing is, t0 > t1, maybe even t0 >> t1. So you'd better hope the near term collapse ends up at a plateau that keeps Intel and Cisco and Applied Materials and Comcast and Verizon _et al_ as going concerns.

Otherwise we will be drinking from the Tiber.

Those few thousands dwelling among the ruins of the Campus Martius in medieval times found those waters rather less appealing than those of the aqueducts, which, sadly, were no longer flowing...



Some other "reconsilient communities" threads:
http://globalguerrillas.typepad.com/globalguerrillas/2008/12/journal-resilie.html
(This is NOT green, luddite, hippie, vegetable-trade-only localism." in the comments..)

etc:
http://globalguerrillas.typepad.com/globalguerrillas/2008/12/the-resilient-c.html

 
At Sunday, March 15, 2009 at 11:27:00 PM PDT, Blogger JD said...

Jamey Hecht, Ph.D:
Try to make your point without whoring your blog.

 
At Saturday, June 13, 2009 at 4:22:00 PM PDT, Anonymous Neil F said...

Imagine a group of stone-age humans living in equilibrium with their environment.

(Note to the anti-peak-oilers, whose knees will otherwise jerk spastically: I'm NOT suggesting we ought to 'turn back the clock' and become these people.)

In year 1, there are X many people, of whom Y can be said to be 'employed' in some manner (e.g. farming, hunting, childminding etc.)

Now go forwards a year (or a century) and see that essentially nothing has changed. No progress. No growth. There are still about X people, of whom the number 'employed' is still about Y.

Jobs, then, but no growth.

Oops!

 

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