PoStorm - economics category

The Human population explosion may turn out not to be that bad.

Wed, 11 Mar 2009 15:10:00 GMT

    The Human population explosion may turn out not to be that bad. The experts predict that the population will level out at about 9 billion around 2050. We will be saved by the dynamic that wealthy people have less children, and so as the poorest people of the world get more wealthy the birth rate declines to the point that it matches the death rate, and the population stops increasing.
    Global warming? – don't worry about it. Human technological ingenuity will fix that. If we can put a man on the moon, we can put mirrors in space to reflect the sun's rays. If we can Air Condition a Shopping Mall, we can Air Condition the Air – suck all that CO2 back out and put it back into the ground.
    Our booming economy will drive the pace of technology development as well as the growth in wealth of everyone including the poorest people.
    “Peak-Oil” – and the exhaustion of fossil fuels supplies – may not be that much of a problem either, as long as that human ingenuity delivers. May be we wont be reflecting the sun's rays away with mirrors in space, but focusing them down to earth as an energy source. Of course that would exacerbate global warming, but then we could really Air Condition the atmosphere, with heat pumps to push the excess heat out into space. There's nothing technologically wrong with that – all it needs is power to run the heat pumps, which just means collecting more solar rays.
    We've got it made. A beautiful positive feedback mechanism in which wealth makes things better for everyone, even the poorest, and generates yet more wealth through an economic boom, which fuels technological advances that not only generate yet more wealth, but also provides the solutions to the problems we are creating. We can find more energy, not only to power the wealth boom, but to power the solutions to the problems created by using more energy. .... to infinity and beyond!

    But the dark side of feedback mechanisms is that they work both ways.

What happens if we stumble? Let's suppose the unthinkable happens and the economic boom falters and, for inconceivable reason, the world economy falls into a 1930's like depression. Let's suppose it happens right now – just as we seem to have passed the world's “Peak Oil” production. The silver lining is that the the depression takes the pressure of oil demand. It also takes the eyes off global warming – and starts to eliminate the means to fix it – technologists are going to get laid off too; businesses aren't going to invest – particularly not it the most speculative areas. The beautiful positive feedback mechanisms start to look less beautiful when they work in the other direction.

But may be we will glide to a nice soft landing – like a plane guiding into the Hudson after it loses both engines.

The problem is that there's some feedback mechanisms that aren't going to go into reverse for a long time. The CO2 we have already dumped into the atmosphere is going to cause the temperature to rise for hundreds of years even if we stopped adding more right now. The babies who might have not be born if their parents were wealthier have already been born. We chose not to fix global warming or oil exhaustion problems when the economy was booming, and we might not be able to afford it in a depression. We chose not to fixed problems when they were foreseeable and fixable.

At least we fixed one problem. When the economy was booming we made sure that plenty of the new wealth ended up in the hands of the poorest people, and that those same people saw the benefits of modern medicine and received the best education, so that they would see a future that needed less children to be born. -- Oh no, we didn't do that either. We've had a boom in concentrating wealth into the hands of the richest and most powerful people.

So when there was plenty, the rich hoarded it for themselves. In a depression, the rich are going to use their power to protect their wealth – they are going to be even less likely to allow wealth to go to the poorest people. So there's goes the dream of a stabilized human population.

But never mind, all of these problems will get fixed. People will die. The universe has no use for humans. It will survive without them.

'Consumer Rights': Who decides What Goes into Windows?

Mon, 02 Mar 2009 13:29:00 GMT

Q: Don't consumers have a right to Microsoft Windows without Internet Explorer? ...

A: No one has a right to buy whatever they wish, one only has the right to buy what others choose to voluntary sell to them. ...

This answer is, quite literally, a “half-truth” ...

Is it mine?

Thu, 26 Feb 2009 14:54:00 GMT

Suppose I make, create, invent or discover something. Is it my property? Should I have unlimited rights to do what I want with it? Am I entitled to a “monopoly” of what I made, created, invented or discovered.

The Google Bombshell

Fri, 14 Nov 2008 21:03:00 GMT

Google de-listed a German website because it was cheating.

Sounds right: Google is the good guy protecting its customer from receiving deceptive results. They were the bad guys trying to deceive. They got what they deserved.

Does anyone see any danger in that?

HENRY's Having Trouble Getting by on $500K

Mon, 03 Nov 2008 16:17:00 GMT

While Fortune acknowledges that HENRY (families that are High Earners Not Rich Yet) are the bread and butter of its subscription list and so you can't expect them to be too hard on them, this article is not exactly hard hitting journalism,. They do agree that it's hard to weep for families that earn more than 98% of American households.

The thrust of the article is that HENRYs are already pretty stretched financially and can't afford the tax increases necessary to pay for the bailout (or Obama's proposed tax increases on people making more than $250K).

There's an interesting table in the print version of the article that's not in the on-line version.

Eminent Domain for Intellectual Property Rights

Fri, 04 Jul 2008 19:27:00 GMT

‘Eminent Domain’ is the process by which government can take private property when it deems it necessary for the greater good. For example government may want to build a road, and uses ‘Eminent Domain’ to force owners of the land over which the road is to run to sell their land to the government.

I have never heard of Eminent Domain being used on any type of property except real estate, but there’s no reason why the process should not apply to any property. Certainly the 14^th amendment prevents the US government taking any property, not just real property, without due process, and Eminent Domain is the Due Process.

Would why there be a public interest in the public acquiring Intellectual Property Rights?

Suppose a pharmaceutical company discovered a pill that cured cancer or a biogenetic company invented a seed that could feed the world. The owners of the intellectual property rights of the pill or the seed would be obliged, at least as a public company, to set the price of their product so as to maximize their profits. Typically the profit they make, as a function of price, is a bell curve. At very low prices they would sell large quantities, but at low unit profit and so make low profits. At very high prices they would make high profit per unit but a low number of sales. Somewhere in the middle they make the maximum profit out of a somewhat high profit per unit and a somewhat high sales volume.

Typically the company would expend effort making sure that only those who paid their price, got the benefit. Those who could not afford the price must die of cancer or starvation.

Suppose government acquired the rights to the pill or the seed. Suppose they paid the company the same as it would make at the optimal price. Suppose government ‘sold’ the solution to the same people who would have bought it at the profit-maximizing price, but also ‘gave it away’ to everyone else. This trick is possible to do for government, but it is not possible for a company to do. For example government could pay for the solution using general taxation (which is normally intended to be progressive: charging more tax to richer people), and give the solution away for free to everyone.

The result would be that the solution was available to everyone: everyone who had cancer could be saved by the drug; everyone who was hungry could get the seeds.

That is a better solution. The company and the rich people got the same benefits and some poor people got extra benefits. Why wouldn’t we do it?

Human Ingenuity Will Solve The Food Crisis, Oil Crisis, And Global Warming – but can ‘they’ afford it?

Thu, 03 Jul 2008 16:49:00 GMT

Optimists look to human ingenuity to solve any problem that humanity confronts – including all those that it creates.

In the 1960’s there was great concern that the world couldn’t feed itself. Nobel Peace Prize Laureate Norman Borlaug’s Green Revolution did much to solve the problem.

Something has changed since Norman Borlaug’s: the rise of Intellectual Property rights. Nowadays the results of Human Ingenuity are protected by Patents and copyright, and other products of human ingenuity, such as terminator seeds, that ensure that the benefits flow mainly to a few. Pills that cure diseases, such as AIDs, that can be manufactured for a pittance, must be price as high as possible so that the companies that own the patents must get as rich as they possibly can.

Just think, a brilliant scientist – a Norman Borlaug, an Einstein – might come up with a few seeds, like Borlaug’s dwarf Wheat Seeds, that can grow to thousands, to millions, to endless producing food for the world, but, with this extra human ingenuity, the farmers of the world can be forced to pay a tithe to the company that owns the patent. Poor farmers will be force to part with much of what little they have, so that rich people can get richer. The poorest farmers will not be able to afford the royalties and will starve.

It is the Big-men of New Guinea on a global scale. What does it matter if a few billion starve, as long as a few people make it to be billionaires?

Human Ingenuity is no longer the tool of Humanity’s progress; it was been hijacked, like everything else, for the benefit of a few.

Peak Oil Theory and the Limits of Growth

Thu, 19 Jun 2008 18:49:00 GMT

I was surfing through blogs on Peak Oil and saw old thread (that, maddeningly, I can’t find again), started by someone asking for a refutation of Peak Oil theory, and his responders were happy to oblige.

I found it to be a curious phrasing of a question. It’s a bit like saying “I am about to step off the edge a cliff, so will someone provide a refutation of the Theory of Gravity.” And his responders might have pointed out that Einstein showed that Newton’s Law of Gravity to be wrong. And so it’s safe to step of the edge of a cliff. Right?

One commenter pointed to a chart in a paper written by M. King Hubbert, the originator of Peak Oil Theory. The chart shows world oil peaking in 1995. The commenter points out that world oil didn’t peak in 1995, therefore Hubbert was wrong and so it is indeed ok to step off the cliff.

It would appear that no one in the heated debate bothered to read Hubbert’s paper. (After all mankind used to seek knowledge; now all you need is a web link to knowledge.). They might have noted that the paper was not about Peak Oil and the one chart with the peak at 1995 was almost incidental.

Hubbert’s paper was entitled “Exponential Growth as a Transient Phenomenon in Human History”. The last two paragraphs are reproduced below:

“It appears therefore that one of the foremost problems confronting humanity today is how to make the transition from the precarious state that we are in now in to this optimum future state by a least catastrophic progression. Our principal constraints at present are neither lack of energy nor of material resources [emphasis not in the original] nor of essential physical and biological knowledge. Our principal constraints are cultural. During the last two centuries we have known nothing but exponential growth and in parallel we have evolved what amounts to an exponential-growth culture, a culture so heavily dependent upon the continuance of exponential for its stability that it is incapable with reckoning with nongrowth.

Since the problems confronting us are not intrinsically insoluble, it behooves as, while there is yet time, to begin serious examination of the nature of our culture constraints and of the cultural adjustments necessary to permit us to deal effectively with the problems rapidly arising. Provided this can be done before unmanageable crises arise, there is promise that we could be n the threshold of achieving one of the greatest intellectual and cultural advances in human history.”

M. King Hubbert. 1976
see http://www.hubbertpeak.com/Hubbert/wwf1976/

Those whose need to “refute Peak oil” is greater than their need to think rationally may take the words I have emphasized out of context and show to the world the King of Peak Oil says there is nothing to worry about.

Unfortunately King Hubbert was worrying about something a great deal worse: arithmetic; specifically the arithmetic of exponential growth. He lists statistics of growth rates over the last two centuries: production (and consumption) rate of oil doubling every ten years, for example.

He hasn’t much hope of convincing the general population (many of whom are baffled by the ‘miracle’ of compound interest) but the arithmetic of exponential growth inexorable. Arguing about the precision of the numbers is irrelevant. Doubling in ten years is not sustainable. Doubling is not sustainable. Ultimately, growth is not sustainable. The question is not whether we will run until insoluble problems but when.

There seems to be a large and noisy population that acts as if not problem is important unless it is their face right now. At least if it’s a societal problem.

We have learnt that some problems are worth dealing with before they get severe. We attempt to diagnose cancer as early as possible because it’s a lot more likely to be treatable. It takes just 46 cell generations for a single cancer cell to become a tumor that’s bigger than your body. How big do we like it to get before we treat it?

Do we want our Societal Doctor to shake his head ominously with the words “If only you had come me sooner”? “While there is yet still time” as Hubbard said, 30 years ago. 30 years in which humanity has done something about the problem: it was made it exponentially worse.