{"id":10889,"date":"2015-08-11T07:20:03","date_gmt":"2015-08-11T12:20:03","guid":{"rendered":"http:\/\/olduvai.ca\/?p=10889"},"modified":"2015-08-11T07:20:03","modified_gmt":"2015-08-11T12:20:03","slug":"how-economic-growth-fails","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=10889","title":{"rendered":"How Economic Growth Fails"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/ourfiniteworld.com\/2015\/08\/10\/how-economic-growth-fails\/\" rel=\"bookmark\">How Economic Growth\u00a0Fails<\/a><\/h3>\n<p>We all know generally how today\u2019s economy works:<\/p>\n<p><a href=\"https:\/\/gailtheactuary.files.wordpress.com\/2015\/08\/we-are-all-familiar-with-how-an-economy-works.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-40037\" src=\"https:\/\/gailtheactuary.files.wordpress.com\/2015\/08\/we-are-all-familiar-with-how-an-economy-works.png?w=640&amp;h=492\" alt=\"Figure 1\" width=\"640\" height=\"492\" \/><\/a><\/p>\n<p>Our economy is a networked system. I have illustrated it as being similar to a child\u2019s building toy. Ever-larger structures can be built by adding more businesses and consumers, and by using resources of various kinds to produce an increasing quantity of goods and services.<\/p>\n<p><a href=\"https:\/\/gailtheactuary.files.wordpress.com\/2014\/06\/leonardo-sticks-dome-01-b.gif\"><img decoding=\"async\" class=\"size-full wp-image-39069\" src=\"https:\/\/gailtheactuary.files.wordpress.com\/2014\/06\/leonardo-sticks-dome-01-b.gif?w=640\" alt=\"Figure 2. Dome constructed using Leonardo Sticks\" \/><\/a><\/p>\n<p>There is no overall direction to the system, so the system is said to be \u201cself-organizing.\u201d<\/p>\n<p>The economy operates within a finite world, so at some point, a problem of<strong><em>diminishing returns<\/em><\/strong>\u00a0develops. In other words, it takes more and more effort (human labor and use of resources) to produce a given quantity of oil or food, or fresh water, or other desirable products. The problem of slowing economic growth is very closely related to the question:\u00a0<strong>How can the limits we are reaching be expected to play out in a finite world?<\/strong>\u00a0Many people imagine that we will \u201crun out\u201d of some necessary resource, such as oil, but I see the situation differently. Let me explain a few issues that may not be obvious.<\/p>\n<p><strong>1. Our economy is like a pump that works increasingly slowly over time, as diminishing returns and other adverse influences affect its operation. Eventually, it is likely to stop.<\/strong><\/p>\n<p>As nearly as I can tell, the way economic growth occurs (and stops taking place) is as summarized in Figure 3.<\/p>\n<p><a href=\"https:\/\/gailtheactuary.files.wordpress.com\/2015\/08\/overview-of-our-predicament.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-40055\" src=\"https:\/\/gailtheactuary.files.wordpress.com\/2015\/08\/overview-of-our-predicament.png?w=640&amp;h=461\" alt=\"Figure 3. Overview of our economic predicament\" width=\"640\" height=\"461\" \/><\/a><\/p>\n<p>As long as (a) energy and other resources are cheap, (2) debt is readily available, and (3) \u201coverhead\u201d in the form of payments for government services, business overhead, and interest payments on debt are low, the pump can continue working as normal. As various parts of the pump \u201cgum up,\u201d the economic growth pump slows down. It is likely to eventually stop, once it becomes too difficult to repay debt with interest with the meager level of economic growth achieved.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How Economic Growth\u00a0Fails We all know generally how today\u2019s economy works: Our economy is a networked system. I have illustrated it as being similar to a child\u2019s building toy. Ever-larger structures can be built by adding more businesses and consumers, and by using resources of various kinds to produce an increasing quantity of goods and [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[154,195,202,209,236,240,7985,1233,7983,7984],"class_list":["post-10889","post","type-post","status-publish","format-standard","hentry","category-economics","tag-complexity","tag-debt","tag-deflation","tag-diminishing-returns","tag-economic-collapse","tag-economic-growth","tag-finite-world","tag-gail-tverberg","tag-networked-system","tag-self-organising"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10889","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10889"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10889\/revisions"}],"predecessor-version":[{"id":10890,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10889\/revisions\/10890"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10889"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10889"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10889"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}