Tag Archives: economic growth

December 2014 in Review

At the end of November, my Hope for the Future Index stood at -2.  I’ll give December posts a score from -3 to +3 based on how negative or positive they are.

Negative trends and predictions (-12):

  • When you consider roads, streets, and parking, cars take up more space in cities than housing. (-2)
  • The latest on productivity and economic growth: Paul Krugman says there is risk of deflationary spirals in many countries, and the U.S. economy is nothing to right home about. (-1)
  • There are a few legitimate scientists out there warning of sudden, catastrophic climate change in the near future. (-1)
  • Automation (meaning robots and AI) is estimated to threaten 47% of all U.S. jobs. One area of active research into automation: weaponry. Only one negative point because there are also some positive implications. (-1)
  • Margaret Atwood’s Year of the Flood is a depressing but entertaining reminder that bio-apocalypse is possible. (-2)
  • Before the recent rains, the drought in California was estimated to be a once-in-1200-years event. Major droughts in major food growing regions are not good news, especially with depletion of groundwater, and loss of snowpack and glaciers also in the news. (-2)
  • William Lazonick argues provides evidence that the rise in the gospel of shareholder value correlated with the growth slowdown that started in the 1970s – his explanation is that before that, retained earnings were a cornerstone of R&D and innovation in the economy. Loss of a point because it’s good to hear a dissenting voice, but the economy is still run by disciples of the profits for now. (-1)
  • Elizabeth Warren and Bernie Sanders are warning that the U.S. financial system may still be dangerously unstable. (-2)

Positive trends and predictions (+6):

  • There are some new ideas out there for teaching computer programming, even to young children: Loco Robo, Scratch, and for-profit “programming boot camps”. (+1)
  • You can now get genetically customized probiotics for your vagina. (+1)
  • There are plenty of ideas and models out there for safe, walkable streets, some as simple as narrower lanes. But as I point out, the Dutch and Danish designs are pretty much perfect and should just be adopted everywhere. (+1)
  • I linked to a new video depicting Michael Graves’s idea for “linear cities“. These could be very sustainable ecological if they meant the rest of the landscape is left in a mostly natural condition. I am not as sure about social sustainability – done wrong, they could be like living in a mall or subway station. This was one of my all-time more popular posts. (+1)
  • There are new algorithms out there for aggregating and synthesizing large amounts of scientific literature. Maybe this can increase the returns to R&D and help boost innovation. (+1)
  • There will be several international conferences in 2015 with potential to make real progress on financial stability and sustainability. The phrase “deep decarbonization” has been uttered. (+1)
  • Some evidence suggests that the oceans have absorbed a lot of global warming over the past decade or so, preventing the more extreme range of land surface warming that had been predicted. This is a good short- to medium-term trend, but it may not continue in the long term. (+0)

change during December 2014: -12 + 6 = -6

Hope for the Future Index (end of December 2014): -2 -6 = -8

A realistic leverage point for one-planet living: more compulsory vacation in the rich world

This article in System Dynamics Review advocates requiring more vacation time as a tool to decelerate growth in humanity’s ecological footprint. The idea is logical enough, but politically very hard if you ask me. The only way it might be politically possible is in the wake of a crisis, like a famine or sudden shift in climate, that is big enough to be a major wakeup call to the rich countries but small enough that it doesn’t kill a big fraction of humanity (which would decrease our ecological footprint footprint of course, but at an obviously horrible cost.)

As envisioned by Keynes in Economic Possibilities for our Grandchildren, reducing work hours could make sense if it is done in parallel with productivity and wealth increases, and policies that address a fair distribution of the new wealth created by those productivity increases. This brings us back to trying to steer economic and technological growth in a more sustainable direction, trying to at least postpone and limit the next crisis, but having some ideas on how we might take advantage of the next crisis when it happens, while hoping it is not the one that wipes us out.

Elizabeth Warren, Bernie Sanders, and financial stability

Elizabeth Warren continues to warn that another financial crisis may be in the making as big financial companies are able to influence laws shifting large risks onto the taxpayer:

Bernie Sanders also is worried that the big banks have too much influence over policy:

“Over the last several days, it has become abundantly clear that Congress does not regulate Wall Street but Wall Street regulates Congress,” Sanders said. “If Wall Street lobbyists can literally write a provision into law that will allow too-big-to-fail banks to make the same risky bets that nearly destroyed our economy just a few years ago, it should be obvious to all that their incredible economic and political power is a huge danger to our economy and our way of life.”

Sanders said, “Enough is enough…. If Congress cannot regulate Wall Street, there is just one alternative.  It is time to break these too-big-to-fail banks up so that they can never again destroy the jobs, homes, and life savings of the American people.”

Die, Cobb-Douglas Production Function, Die!

Here Herman Daly unleashes a savage attack on the innocent Cobb-Douglas production function:

A large residual indicates weak explanatory power of the theory being tested–in this case the Cobb-Douglas theory that production increase is due only to capital and labor increase. But instead of being embarrassed by a large unexplained residual, some economists were eager to “explain” it as an indirect measure of technological progress, as a measure of improvement in total factor productivity. But is technology the only causative factor reflected in the residual? No, there are surely others, most especially the omitted yet rapidly increasing flow of natural resources, of energy and concentrated minerals. The contribution of energy and materials from nature to production is also part of the residual, likely dwarfing technological improvement. Yet the entire residual is attributed to technology, to total factor productivity, or more accurately “two-factor” productivity, in the absence of natural resources, the classical third factor.

The Year of the Flood

I finally got around to reading The Year of the Flood, the second book in Margaret Atwood’s MaddAdam trilogy. And I liked it. I remember not loving the first book, Oryx and Crake. Sometimes whether or not you love a book depends on where you are and what you are doing when you read it. Often, I remember exactly where I was and what I was doing when I read a book I loved. And I don’t remember where I was when I read Oryx and Crake, which is a telling sign. However, I remember exactly when I read The Space Merchants by Frederik Pohl – 2009. And I remember thinking that Margaret Atwood lifted themes directly out of that book, only didn’t use them quite as well, so I guess I read Oryx and Crake after that. And I remember being annoyed that Atwood would not admit that the book was a work of science fiction, and that serious people were reading and positively reviewing the book who thought they were too serious for science fiction. Well, I have news – it was science fiction all along, and not only that, it’s cyberpunk. Well, I’ve decided to forgive all this. I can give her the benefit of the doubt, or else I can decide that she was paying homage to an earlier science fiction master and give her credit for that. As I’ve gotten more into science fiction, I’ve seen that done several times, obviously on purpose, and it seems to be acceptable where it might not be acceptable in another genre. So, I’ve decided since then that both books are pretty good after all, and I plan to read the third book.

In The Year of the Flood, there are themes that seem like they are taken right out of The Hunger Games. I found this interview online where Atwood says she has never heard of The Hunger Games, and forgives the author of The Hunger Games for taking her idea.

Have you had a chance to read or see The Hunger Games? The games are designed for the districts to pay back the Capitol for a past rebellion, via the lives of their children, like the heroine Katniss Everdeen. It seems to be inspired in part by elements of The Handmaid’s Tale, Oryx and Crake, and Year of the Flood, especially in terms of the structure of postapocalyptic society, how the disenfranchised are “chosen” for an honor that is anything but …
In kind of a game show? So, basically it’s Painball from Year of the Flood in which people are pitted against other people so other people can watch it on TV? And the origin of that of course is paintball, which is a real thing! It’s always nice to have people see the beauty of one’s ideas. I’m flattered. [Chuckles.] It sounds interesting. Some of these things go way back, mythologically. How did she end up in this position?

Because there’s a lottery, and her sister was chosen, and so she volunteers to take her place.
Shirley Jackson! How old are they?

Between the ages of 11 and 18.
Theseus and the Minotaur! Love it. And so they put these people in a very large area? It’s Painball. Same idea. If you survive, will they let you out?

I don’t want to spoil it too much for you.
That’s okay — I can guess. I haven’t written my third one yet, so whatever’s in it can’t be used in The Hunger Games.

The original Hunger Games novel was released in 2008, and The Year of the Flood in 2009. So it’s plausible that it was a coincidence and I’ll give her the benefit of the doubt again. Anyway, maybe she’s right and there are only a certain number of themes and plots out there, and good fiction is all about how you apply them to your characters and your time.

The MaddAdam books present a near-future dystopian society in a very entertaining way, and I was entertained by that. I don’t think I would be giving away too much if I told you there is a collapse of industrialized, urbanized civilization in this story. You find that out in the first few pages of the first book. Then the rest of the story is really about who, how, and why that happened. The first book focuses more on consumer society and dangerous technology in the hands of amoral – in fact immoral – private corporations, while the second mixes that with a bit of climate change, habitat and species loss.

You find out pretty early what actually caused the collapse, but the more interesting part to me, which Margaret hints at but ultimately leaves to our imaginations, is how the society got to the point it was at before the crash. Any sort of representative government seems to be completely absent, but you don’t get the sense that the corporations muscled it aside through any sort of armed means. Maybe they simply starved it of resources to the point where it gave up. The entire society is designed to accumulate wealth and power at the top, but it is a bit of a puzzle how that works. The corporations themselves create new value through their research into the new technologies, but then they have to make the whole society want to buy those things from them. They have to let just enough wealth trickle down to enough people so they can spend the wealth and let it be gathered back up. So there must be a very, very large number of relatively poor people working hard to support the elite few, without realizing they are doing that. I say relatively poor because they can’t be so poor they decide to drop out of the consumer system entirely (as a few people do, which is the focus of the second book.) They can’t realize how poor they are, and they have to have a little bit of income that they can spend on all the things the corporations provide, which is everything – food, shelter, clothing, drugs, even access to reproduction. They have to believe in money, and want to accumulate money, but they have to want the products and services of the corporations so much that they never actually accumulate much money but spend it all. Of course, the corporations are exploiting not just all these people but the natural environment, so at some point that is either going to catch up to them, unless there is an accident or deliberate act to help the process along first…

November 2014 in Review

At the end of October, my Hope for the Future Index stood at -2.  I’ll give November posts a score from -3 to +3 based on how negative or positive they are.

Negative trends and predictions (-6):

  • There is mounting evidence that the world economy is slowing, financial corporations are still engaged in all sorts of dirty tricks, and overall investment may be dropping. Financial authorities are trying to respond through financial means, but the connections are not being made to the right kinds of investments in infrastructure, skills, and protection of natural capital that would set the stage for long-term sustainable growth in the future. (-2)
  • Public apathy over climate change in the U.S. may have been manufactured by a cynical, immoral corporate disinformation campaign over climate change taken right out of the tobacco companies’ playbook. It’s true that the tobacco companies ultimately were called to account, but not until millions of lives were lost. Will it be billions this time? (-2)
  • Glenn Beck has gone even further off his rocker, producing a video suggesting the U.N. is going to ration food and burn old people alive while playing vaguely middle eastern music. One negative point because some people out there might not laugh. (-1)
  • The new IPCC report predicts generally negative effects of climate change on crops and fisheries. The good news is it doesn’t seem to predict catastrophic collapse, but we need to remember that the food supply needs to grow substantially in the coming decades, not just hold steady, so any headwinds making that more difficult are potentially threatening. (-1)

Positive trends and predictions (+6):

  • A lot is known about how to grow healthy trees in the most urbanized environments. But only a few cities really take advantage of this readily available knowledge. (+0)
  • As manufacturing becomes increasingly high-tech, automation vs. employment is emerging as a big theme for the future. The balance may swing back and forth over time, but in the long term I think automation has to win. New wealth will be created, but the question is how broadly it will be shared. The question is not just an economic one – it depends on the kind of social and political systems people will live under in various places. This might be why the field of economics was originally called “political economy”. So I’m putting this in the positive column but giving it no points because the jury is out. (+0)
  • Google is working on nanobots that can swim around in your blood and give an early diagnosis of cancer and other diseases. (+1)
  • Economic slowing is probably the main reason why oil prices are way down. Increased supply capacity from the U.S. also probably plays a role, although there are dissenting voices how long that is going to last. I find it hard to say whether cheaper oil is good or bad. I tend to think it is just meaningless noise on the longer time scale, but you won’t hear me complain if it brings down the price of transportation and groceries for a year or two. (+0)
  • Millennials aren’t buying cars in large numbers. I don’t believe for a second that this means they are less materialistic than past generations, but I think a shift in consumption from cars to almost anything else is a net gain for sustainability. (+2)
  • I discovered the FRAGSTATS package for comprehensive spatial analysis of ecosystems and habitats. This gives us quantitative tools to design green webs that work well for both people and wildlife. Bringing land back into our economic framework in an explicit way might also help. (+1)
  • “Perennial polyculture” gardens may be able to provide food year round on small urban footprints in temperate climates. (+1)
  • A vision for smart, sustainable infrastructure involves walkable communities, closing water and material loops, and using energy wisely. Pretty much the same points I made in my book, which I don’t actively promote on this site;) (+1)

Hope for the Future Index (end of October 2014): -2

change during November 2014: -6 + 6 = 0

Hope for the Future Index (end of November 2014): -2 + 0 = -2

not so fast, says Paul Krugman

Not so fast with the backslapping on the U.S. economy, says Paul Krugman:

On Dec. 16, 2008, the Fed set its interest target between 0 and 0.25 percent, where it remains to this day.

The fact that we’ve spent six years at the so-called zero lower bound is amazing and depressing…

It’s true that with the U.S. unemployment rate dropping, most analysts expect the Fed to raise interest rates sometime next year. But inflation is low, wages are weak, and the Fed seems to realize that raising rates too soon would be disastrous. Meanwhile, Europe looks further than ever from economic liftoff, while Japan is still struggling to escape from deflation. Oh, and China, which is starting to remind some of us of Japan in the late 1980s, could join the rock-bottom club sooner than you think.

In other inflation news, the price of Thanksgiving was up slightly this year:

– The American Farm Bureau Federation’s annual price survey found the average cost of this year’s Thanksgiving meal for 10 is $49.41, a 37-cent increase from last year.

– Don’t blame the turkey for the slight uptick. The AFBF says the typical 16-pound turkey will cost $21.65. That’s an 11-cent decrease from last year.

– In fact, cranberries, stuffing and pie shells are down in price. The slight rise in total meal cost can be blamed on higher prices for sweet potatoes, milk and whipping cream.

China is now the world’s biggest economy

From Jeffrey Sachs:

According to the IMF, China’s GDP will be $17.6 trillion in 2014, outstripping US output of $17.4 trillion. Of course, because China’s population is more than four times larger, its per capita GDP, at $12,900, is still less than a quarter of the $54,700 recorded in the US, which highlights America’s much higher living standards.
In other U.S. – China news, the NSA is worried that China has the ability to crash the U.S. electrical grid with a cyber attack:
China and “one or two others” can shut down the U.S. electric grids and other critical infrastructure and is performing electronic reconnaissance on a regular basis, said NSA director Admiral Michael Rogers, testifying Thursday (Nov. 20) at a House Select Intelligence Committee hearing on U.S. efforts to combat cybersecurity.

habitat loss and animal welfare

Brian Czech makes the point that habitat loss causes a lot of animal suffering. I think this is almost certainly true, and sad. He mostly blames urbanization. I want to argue with that, because a compact, well-designed city should have a relatively small ecological footprint per person living in it, compared to people spread out over a more rural landscape. For example, the Amish way of farming actually is a big contributor to the water pollution destroying the Chesapeake Bay. If there are going to be 7 billion of us, or 10 billion, we can’t all live like the Amish or it would be an ecological disaster. Of course, it is true that the relatively low-impact lifestyle in the city is supported by an enormous rural base of agriculture, forestry, fishing, resource extraction, mining, and manufacturing that has a huge and growing ecological footprint. It’s possible to envision a world where we eventually turn the corner and manage to grow in quality without growing our physical footprint. But we are far from that, and natural ecosystems are certainly the big losers whether or not we are actually on the verge of destroying ourselves.

Japan

According to the Economist, Japan’s economy is officially back in recession. I don’t fully understand these things, but I do find them interesting, so here’s my attempt at an explanation. They’re in a deflationary spiral, which means prices are falling, and people aren’t spending money because they expect prices to keep falling. It makes sense – if you want to buy something, and you expect it to be cheaper next week than it is this week, you will wait. It’s hard for an economy to grow under these circumstances. The government combats this by printing massive amounts of money and loaning it to itself, which it can then spend. Normally that would create massive inflation, but it doesn’t because no matter how much they print, everybody just sits on it and won’t spend it. If you think about it too much, you can’t help wondering whether money actually has any value or meaning under these conditions. It’s best if people don’t sit around wondering about that too much.