Exponential growth (again)

[BearBones]

It is my belief that the following simple graph holds an inherent truth that most of us prefer to deny. Whether the Earth’s carrying capacity for human beings is 1 billion or 12, it is obvious from this graph that something absolutely fantastic occurred during the past 150 years that led to a profound exponential growth of human population. What enabled this, and is it sustainable? How long can it continue? What shape will the graph take to the right during future decades?

[LifestyleFreedom]

The Birth of Plenty (http://www.efficientfrontier.com/ef/404/CH1.HTM) attempts to explain modern prosperity and why the planet can support larger human populations.  The ideas in this book seem plausible, but I'm not an expert in this area.

[AdamA]

Have you read Future Babble? 

[MediumTex]

The germ theory of medicine, the discovery of antibiotics, the discovery of fossil fuels and the green revolution in agriculture explains a lot of the population growth.

Where are we headed from here? Who knows?

Read "Overshoot" by William Catton for one answwer to this question.

[BearBones]

The germ theory of medicine, the discovery of antibiotics, the discovery of fossil fuels and the green revolution in agriculture explains a lot of the population growth.

Agree, but I'm guessing that most of the population growth has occurred in areas without access to good medicine. And the "green revolution" has largely been made green by the heavy use of fertilizers, most of which are a byproduct of natural gas. So I am thinking that the growth has largely been powered by fossil fuels. I am not alone in this thinking, of course, and we have already hinted of this in other threads, such as in your "discussion of energy related issues," MT.

It is interesting to look at more accurate graphs than what I have constructed. One sees an initial spike in the late 1800s, coinciding with the industrial revolution (initially powered by coal). Then there is a sharp upturn as we started tapping into easy oil in the early 20th century. Pretty frightening to think of where we go from here, since nothing comes close to oil in its high ratio of energy output to input (EO/EI, or net energy). Even if one does not believe that we are near "peak oil," it is irrefutable that the net energy of our remaining resources is waning.

Thanks for the references. Here's a link that I found interesting:
http://www.paulchefurka.ca/Population.html

See this graph, in particular, showing the correlation between oil and population growth:

[Jan Van]

Maybe agent Smith was right:

[quote=Agent Smith]I’d like to share a revelation that I’ve had, during my time here. It came to me when I tried to classify your species and I realized that you aren’t actually mammals. Every mammal on this planet instinctively develops a natural equilibrium with its surrounding environment, but you humans do not. You move to an area and you multiply, and multiply until every natural resource is consumed. The only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is? A virus. Human beings are a disease, a cancer of this planet. You are a plague, and we... are the cure.[/quote]

[moda0306]

jmouric,

I now need to see The Matrix again.

[Tortoise]

That one can draw some kind of distinction between "natural equilibrium" and "unnatural/artificial equilibrium" is by no means clear to me.

Are human beings not living creatures, and therefore "natural" by definition?  At what point does an action performed by a living creature cease to be natural and become artificial?  Oil is natural, no?  Human beings are natural, no?  So how is the human use of oil ever anything other than natural?

When an animal dies, it doesn't just sit there forever in "equilibrium" with the environment.  It gets picked apart, devoured, and dissolved by all sorts of scavengers and microorganisms that temporarily thrive on the sudden bounty provided by the animal's death.  The bacteria population in the region of the carcass explodes by some huge factor, and then it eventually dwindles.  When there's a forest fire that clears out an entire section of a forest, it opens up a competitive arena for all sorts of plants.  Various trees, bushes, grasses, etc. all come in and compete in their own ways to fill the void.  If given the chance, I'm sure the grass would take up as much of the clearing as it could.  So would the bushes, and so would the trees.  But they all jump in there and start reproducing like crazy, using up all available resources within reach.  What results is a mixture of plants and animals--not because they all sat down together, had a rational discussion, and reached a consensus on the optimal "equilibrium" for nature, but rather because that's simply what results when you throw a bunch of competing organisms together and let them fight over a common resource.

Human beings do the same thing most other organisms do--we just do it much much more effectively because we have the biggest brains.

[moda0306]

I don't think "Agent Smith" was referring to the conscious act, so much as the end result of human activity.  The idea that we've so-mastered the resources of the world around us that we've changed the game altogether.  It's not something to be completely ashamed of.

I would say that the line between natural and unnatural equilibrium is a fuzzy line that depends on how sustainable a behavior is to an ecosystem over a long (what is long??) period of time.  This is probably as much a matter of population as it is the actions in and of themselves of the individuals making up the human population.

Animals aren't conscious, honorable stewards of the environment... they just haven't figured out agriculture and structural engineering.  When an animal is given the means to completely destroy an environment (I'm thinking the Asian carp in our MN lakes) it often doesn't hesitate to do so.

What I find interesting is that SOME animals do tend to have "family values" and "conservationist ideals" beyond what their environment will offer them RIGHT NOW.  A squirrel hoarding nuts for winter, or a lion raising its children are extremely interesting to me.

[MediumTex]

That one can draw some kind of distinction between "natural equilibrium" and "unnatural/artificial equilibrium" is by no means clear to me.

Are human beings not living creatures, and therefore "natural" by definition?  At what point does an action performed by a living creature cease to be natural and become artificial?  Oil is natural, no?  Human beings are natural, no?  So how is the human use of oil ever anything other than natural?

Ecologists speak in terms of "carrying capacity" of a habitat.  Carrying capacity focuses on a habitat's capacity to support a population of a given size more or less in perpetuity.  When a member of an ecosystem begins to grow in ways that exceeds the carrying capacity of the overall habitat, several things begin to occur.  First, the group that is growing begins to displace other members of the habitat.  Second, the group that is growing begins to destroy the elements of the ecosystem that would be sustainable at smaller population levels (drinking water is a good example).  Finally, the group that is growing runs into a shortage of the least abundant necessity (often it is food), at which point the group that has been growing exponentially tends to have a mass die off, and then the habitat begins to rejuvenate.

The wrench that gets thrown into this process for humans is non-renewable resources.  With a non-renewable resource, it is sort of like Mother Nature has turned Keynesian and is throwing false market signals to the ecological environment.  In other words, when faced with a one-time allotment of a resource like oil, which for the past 150 years or so has felt like a renewable resource (i.e., we have grown to believe that there would always be sufficient energy inputs to support the structure of our society), humanity responds in the same way as the market does when false monetary signals are sent--we grow, expand and make future plans based upon a set of flawed assumptions arising from the set of ultimately false ecological signals.

In ecology-speak, non-renewable resources create "phantom carrying capacity" that typically leads to a spike in population followed by a sudden die-off, whether we are talking about yeast, rabbits, or reindeer.  Sometimes carrying capacity can contract as a result of an external shock, which is what probably led to the extinction of the dinosaurs.

The $64 question is whether a different set of dynamics will ultimately apply to humanity.  Will our greater intelligence and ability to adapt to a greater range of environments lead us to a different outcome than other organisms typically encounter, OR will we ultimately be subject to the same ecological forces that govern all other biological forms of life?  It's really hard to say.  The discussion gets even more muddled when you consider that the human mind typically has a time horizon no longer than 50-100 years (or less), which makes long term inter-generational planning very difficult, and many belief systems take growth into perpetuity as a basic assumption, whether it is growth of money, resources, populations, or complexity.

The one guide to how things may resolve is to simply look at history and see how past societies have dealt with these issues.  The answers you find there are often sobering, but probably helpful in understanding the range of likely outcomes.

People often have an almost religious belief in the potential of technology to deliver a solution to any problem humanity may face.  In my view, the blind spot in this idea is not that technology can do almost anything (it probably can); rather, it is the question of whether humanity will have the energy inputs to animate the technology so that the idea or improvement that starts in the human mind can ultimately become reality. 

I don't think it's an accident that humanity dreamed of flying for ages, but it was only 50 years after the discovery of oil that humanity first took flight en masse, and only 70 years after that that humans landed on the moon.  Give a human mind enough energy inputs and almost anything is possible.  Take away the availability of almost infinite energy inputs, however, and many ideas remain on the drawing board.

It's a controversial, but endlessly interesting topic.

[moda0306]

MT,

My thoughts to an absolute T.

How well do you think the market, left unfettered, would price in any societal obligation we feel to keep enough fossil fuels around to our remaining generations, if any?  How would a government attempt (and probably fail) to fill this role?  Should society have any such obligation?

I often wonder that if all the oil on earth were simply sitting in big tubs all over, and we knew exactly how much we had... how quickly would we develop alternatives given the usage rate and the amount remaining?? Would we feel any obligation to leave some for our kids/grandkids??  How would that collective conscious weigh on oil prices, if at all, since no one individual saves their children's future economy by buying a Prius or biking to work??

This type of thinking really gets me to stop wanting to tinker with my PP, as I'm not very optimistic about our path out of the woods.

[MediumTex]

When talking about resources needed for human survival, economics often provide inadequate solutions because in many cases there are no acceptable substitutes for certain items and/or the lead times for replacement are longer than people can afford to wait. 

For us, food, clean water and breathable air are not good things to look to economists to manage because the economist will often fail to realize that the price signals indicating scarcity appear too late to provide enough lead time to either relocate or develop an alternate approach to a given problem.

For example, by the time the air became un-breathable over much of the planet, it might be too late for market forces to come up with a solution based upon price signals and supply and demand.

As for the government's ability to provide a solution to some of the problems we are touching on, I am not hopeful.

Overall, I believe that societies have life cycles just like people do.  This view is sort of at odds with the currently popular notion of endless progress and a sort of techno-utopian view of the future.

My view of things has history strongly on its side, but the techno-utopians probably have more fun than I do.  The one thing to be optimistic about when looking at history, however, is that although civilizations do have a tendency to ascend and then decline, the point at which each new ascendancy begins tends to be higher than the beginning point of the prior ascendancy.  From a charting perspective, you might say that humanity has been in a secular bull market for about 6,000 years (starting with organized agriculture).  (The next secular bear market will probably begin with the next ice age.)

As long as we have some mechanism for preserving knowledge, we are probably not going to revert to cavemen.  The scary thing about digitizing knowledge, however, is that one good EMP event could wipe out an enormous amount of stored human experience and information.

I once read a science fiction story called "The Machine Stops" where a techno-utopian society was living very well in a more or less completely automated world.  One day, some small component of the main computer system broke, and the people were basically just beyond the point at which there was enough knowledge stored outside the system in order to have the skills and information necessary to fix the broken machine.  As one would imagine, this society quickly deteriorated, simply because there was no mechanism for them to fall back to a more recent generation of technology.  For them, they basically fell all the way back to a primitive state.

[Storm]

Here is a link to that short story that MT wrote about: http://archive.ncsa.illinois.edu/prajlich/forster.html

I love sci-fi!

[Pkg Man]

MT,

My thoughts to an absolute T.

How well do you think the market, left unfettered, would price in any societal obligation we feel to keep enough fossil fuels around to our remaining generations, if any?  How would a government attempt (and probably fail) to fill this role?  Should society have any such obligation?

I often wonder that if all the oil on earth were simply sitting in big tubs all over, and we knew exactly how much we had... how quickly would we develop alternatives given the usage rate and the amount remaining?? Would we feel any obligation to leave some for our kids/grandkids??  How would that collective conscious weigh on oil prices, if at all, since no one individual saves their children's future economy by buying a Prius or biking to work??

This type of thinking really gets me to stop wanting to tinker with my PP, as I'm not very optimistic about our path out of the woods.

I am not sure we should consider future generations in regard to oil supply.  As the supply of oil diminishes the price will naturally rise and we will adjust accordingly.  The problem in my mind is that without full information on supplies (i.e., how much oil does Saudi Arabia really have left?) prices may adjust abruptly.  This would be a problem for the current generation.  Another issue is that since so much energy comes from unstable regions of the world, a disruption in supply is a possibility the the free market may not adequately take into account.

Here is another way to think about it.  Let's say that you want to leave the largest endowment possible to your heirs.  How would you do this?  Avoid using fossil fuels and instead use more costly alternative energy sources, so that they will pay a lower price for energy in the future, or simply use the current-cheapest form of energy for your needs and save the difference and provide that to your heirs?

A properly functioning market will provide the optimal extraction rate of natural resources.  Although that does not mean that there are not other considerations which we should take into account, IMHO saving for the next generation is not one of them.

[BearBones]

MT,
I really enjoyed your last 2 postings, and I agree entirely. A lot of quotable material there, such as the "6,000 year secular bull market."
Three questions:
1.  You have basically described a phenomenon of overshoot. Is this from the book you mentioned by William Catton?
2.  You mention that "the discussion gets even more muddled when you consider that the human mind typically has a time horizon no longer than 50-100 years (or less)..." Doesn't this give you pause when you consider that most of the wisdom of this forum is based on assumptions from the past 50-100 years, potentially a unique period in human history in which we have reaped enormous benefits from a very limited natural resource, notably high net energy fossil fuels (as if "Mother Nature has turned Keynesian")?
3.  If you knew that humanity were close to this period of overshoot, would this change your investment methodology, or would you stay with the 4 asset classes of the HB PP?

[MediumTex]

A properly functioning market will provide the optimal extraction rate of natural resources.  Although that does not mean that there are not other considerations which we should take into account, IMHO saving for the next generation is not one of them.

When it comes to non-renewable resources, there really isn't a lot of point in "conserving" them.  All conservation does is slightly extend the period of time during which the resources can be enjoyed.  When looked at over longer time frames the difference between maximum extraction and a "conservation" focused rate of extraction is modest--in each case the resource disappears pretty quickly (by quickly I mean one human lifetime or so).

A cousin of conservation is increased efficiency, which also has limited potential to actually extend the period during which a non-renewable resource can be enjoyed.  I believe it is called "Jevon's Paradox", which postulates that as efficiency improves, the net effect is normally the same level of consumption, but with greater efficiency.  A good example of this is when a person gets a more fuel efficient car they tend to drive more.

PkgMan, I think you are also touching on a basic time value of money approach to natural resource extraction--i.e., every day that a barrel of oil stays in the ground is a day that the wealth it represents is not being fully utilized by the economy.  This is obviously a somewhat flawed argument, but it also has some merit.

When it comes to non-renewable natural resources, it's hard to know what the right answer is.  Ideally, we would use the oil and other fossil fuels as a way of coming up with an even more elegant store of energy, but I don't think that's really an option.  It's almost like Mother Nature gave us a gigantic ice cream cone but told us not to eat it. 

I once heard someone say that modern economics is the process of seeking the most efficient way of converting natural resources into garbage.  I thought that was funny. 

[MediumTex]

MT,
I really enjoyed your last 2 postings, and I agree entirely. A lot of quotable material there, such as the "6,000 year secular bull market."
Three questions:
1.  You have basically described a phenomenon of overshoot. Is this from the book you mentioned by William Catton?

Catton makes the argument lucidly and persuasively.  He outlines a process that is hard to argue with.  The only question is timing.  It could be 100 years or 1,000 years, or human nature could change, which might invalidate some of his thesis.  Who knows?

2.  You mention that "the discussion gets even more muddled when you consider that the human mind typically has a time horizon no longer than 50-100 years (or less)..." Doesn't this give you pause when you consider that most of the wisdom of this forum is based on assumptions from the past 50-100 years, potentially a unique period in human history in which we have reaped enormous benefits from a very limited natural resource, notably high net energy fossil fuels (as if "Mother Nature has turned Keynesian")?

Well, as von Mises wrote, however burdensome or vexing the cosmic questions may be, there is still the spur of today and the fact that we have decisions to make in light of the reality in which we find ourselves.  If we have extra money, we must decide what to do with it.  If we decide to invest it, we must use some method, and to me the permanent portfolio is about as robust and all-weather as you will find.

3.  If you knew that humanity were close to this period of overshoot, would this change your investment methodology, or would you stay with the 4 asset classes of the HB PP?

I don't know if it would or not, because I have the more pressing matter of my own mortality to think about.  Whether or not civilization is able to make it for another millennium, I'm probably only going to be around for another few decades (if everything goes the way I have planned).  This more immediate time horizon really turns the matter of what happens to the rest of humanity into a bit of a parlor game (though it can be a quite terrifying one if you are into that sort of thing).  Based upon my own time horizon, I think that the four economic conditions Harry Browne described are likely to continue and the asset relationships he described continue to hold up, but if they don't I will simply look for something else that IS responsive to whatever sort of world we create for ourselves (it may be a PP consisting of a 25% x 4 allocation to leather chaps, .223 rounds, MREs and liquor).

Ultimately, one could choose to send the rest of his life planning his funeral and lamenting the sorrows of this world, but that's probably not the best use of one's time.  I think the same goes for the future of humanity--even if we accept that humanity may be a transitory phenomenon on this earth (even if it lasts another million years), as von Mises said there is still the matter of today, and what we are going to do, and there are mountains to climb, fortunes to make, and truth to discover.

[BearBones]

All wise words, MT. I have enjoyed this discussion. Thanks to all that have participated.