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Wednesday, March 14, 2012

HUMAN EXTINCTION IS INEVITABLE...


Remind me again - Why such a big rush?


Human Extinction Is Inevitable…

But why get there as soon as possible???

The republished blog by GROWTHBUSTERS, together with our comments dated March 12, 2012, highlight the constraining realities of human existence. Shared beliefs in the mathematical observations and conclusions in the blog, and namely those of the highly regarded physics professor; Dr. Al Bartlett, remain of the   highest importance to the human condition; albeit, they are placed at the lowest level of priority by governing entities reflecting a madness of these authorities, institutions and economists who are collectively placing the future of the human experiment in great short-term peril.

A condition that may or may not be reversible...

As our added comments go on to reflect, it is existentially obvious that extinction is definitely in the cards; it is mathematically and physically impossible to avoid, - But why? But why race towards it with a blind passion when longer more and more sustainable journeys are possible. Clearly there is a dysfunction that exists in human cognition that cannot grasp matters that are so utterly apparent. Matters that will painfully abort our future well before its time and full potential are attained. No greater or grimmer loss can be imagined. None ever.

So again please pay close attention to Dr. Bartlett’s profound observations and conclusions; apply there meanings to your life, our lives and that of future generations. How long we exist remains as an elusive answer for destiny to reveal, but that should not dissuade us from embracing  an integrity, responsibility and positive accountability to sustaining our existence for as long as possible. And perhaps then we may come to know that no further answers are required.


LIMITS TO GROWTH – BACTERIA IN A BOTTLE
(Watch Video)

March 11, 2012
           
Retired physics professor Al Bartlett (to whom the GrowthBusters  movie was dedicated), is world famous both for his Laws Related to Sustainability and his lecture about exponential growth. Audiences frequently tell me this segment from GrowthBusters is one of the most powerful. Share it with your lab partners (for the experiment we’re starting tomorrow, see below). And share it with everyone who needs to grasp this concept.





We’re one day away from launching our Limits to Growth 40th anniversary campaign. Be sure to check back tomorrow (subscribe to this blog at the right to be sure you don’t miss it). That’s also when you’ll start your exponential growth demonstration/experiment, so be sure you’ve got the supplies ready (see yesterday’s post). You’re invited to share your experiment experience with us as you go along (written comments, photos, even video), so consider chronicling your progress in one or more of these ways.

Exponential growth is an important concept for us all to grasp. Once world leaders and their economic advisors really understand it, public policy will shift in a much wiser and more sustainable direction. Exponential growth is the reason we get curves shaped like hockey sticks. Today’s 1% annual global population growth rate may seem modest to you. But, thanks to the power of compounding, a population growing 1% each year will double in 70 years, quadruple in 140 years, and octuple 70 years after that.



3% Annual Economic Growth

This math frequently comes up when we’re talking about population. But when the subject is economic growth – not so much. In GrowthBusters I point out an economy growing at a fairly typical 3% annual rate will be one billion times its current size in just 720 years. The graphic above shows just the beginning of a curve that turns into the hockey stick from hell.

You can also follow along on facebook as we perform this experiment and honor Limits to Growth on its 40th anniversary.

Dave Gardner
Film maker


Dave Gardner is the director of the new documentary, GrowthBusters: Hooked onGrowth, which uncovers the cultural forces that keep us pursuing growth in the face of overwhelming evidence we’ve outgrown the planet.

Reprinted under the conditions of permission provided including required links.  



First Financial Insights Comments – March 12, 2012

The 18th Sustainability Law; while true, could also entail the existential reality, that in all probability, human extinction WILL OCCUR sooner or later. Our collective actions contribute to whether this final event is reached rapidly or slowly
.
This leads to a philosophical question as to whether the human species roaming this planet for 250,000 or 300 million years really matters against the time clock of infinity and relevance of the universe? Considering further that even 300 million years against such measures may be illustrated as a mere drop in the ocean of time.

For certain many more questions, thoughts and possibilities may be drawn from this assertion of inevitable extinction. And could perhaps go on forever?





First Financial Insights Inc.
Toronto, ON
March 14, 2012



Beyond the shores of the last eternity-



Friday, March 2, 2012

SURVIVING PROGRESS - 2012 Economic Mess


PROGRESS:


All Roads Now Lead to Nauru...



Surviving Progress – 2012 Economic Mess


Mr Krugman, Begging to Differ…


Today when visiting the Facebook site for the internationally acclaimed documentary Surviving Progress, an article was posted from The New York Times titled, “Pain Without Gain” that hit a few raw nerves for reasons to be listed.



Rarely does one venture to take to task the learned Economist and Columnist of the New York Times, Mr Paul Krugman, on matters of global macro-economic concerns. For sure, he has forgotten much more about economics than any one of us could ever hope to know in our life times. Still there is a responsibility to do so, when the assertions presented by the wisest in a speciality do not align with general inter-connected thinking related to a topic; suggesting that economics may be far too important to leave solely in the hands of Economists.

This writing’s basis of reasoning is formulated from a foundation that includes different experiences and beliefs; albeit soldiering on with this task has the disadvantages of not having the superb journalistic talents of both Mr. Krugman and The New York Times. So a little courage is needed to overcome the possible humilities such a task may encounter.

Our framework for dealing with the points in the New York Times article, that are believed to be open to other considerations, is to simply list them on a point by point basis. For each point, two or three reasons are provided explaining alternative views. Then this commentary conducts an experiment related to the “The Nauru
Paradigm” in an illustration using the real historical experience of Nauru as a hypothetical analogy for the economies of other nations and the planet; then closing with a second analysis of these points using the inferences of “The Nauru Paradigm” experiment to draw conclusions.

Not fancy, but the aim is to make these comments easy to follow to the overall conclusions - yet allow ample room for individual judgement along the way.

Five Selected Points of View

Austerity leads to more austerity – Certainly this is the case as governments cut back on expenditures, raise more and various taxes; restricts other forms of liquidity from entering the economy- a multiplier effect takes hold that leads to further economic deterioration. On the other hand, stimulus measures may not work as well because regardless of the new amount of money printed, new debt or investment incurred when these countries have no inputs (usable resources) to convert to more goods and services through their conversion capacities. No form of economic device, tool or abstraction may solve their real physical input problem as they are now in the later stages of The Nauru Paradigm – and they thus have no choices whatsoever. You cannot draw blood from stones in Greece, Ireland, Spain, and other soon to be Nauru Paradigm nations.

Study of Economic History Provides Solutions –Often history provides insights into what tools, policies and ideas worked at a particular moment in time. However, no two momentary observations of national economies are exactly alike, as there are many differences in circumstances, along with the related attributes of their conceptual and physical infrastructures. Referring to Herbert Hoover or similar types, gives the sense of politicising the point – thereby losing a little objective intent.

The major point of contention however, is that Mr. Krugman hypothesizes that the lessons of economic history are somehow beyond dispute; should be known and religiously applied. There is little room for dispute. Statistically he is asserting a complex hypothesis that cannot be proven due largely to issues of determining homogeneous observations. Thus without a mathematical basis of proof, the assertion should be viewed as subjective.  

More importantly, how can the economic beliefs and theories that worked when the planet was populated by two billion or less, and had vast stores of non-renewable resources available be comparable to today? That today; having a population of seven billion people, with possibly half of the planet’s non-renewable resources consumed over just the past 100 hundred years - exponentially creating an economic dead end in a soon to be tomorrow. It is highly unlikely the same ideas that got us into this mess will get us out of it. (A well-known physicist made a similar remark).

Prosperity is somehow lurking around the corner. – Under a proposed platform of further fiscal stimuli we can grow the economy out of its mess into the light of a new prosperous age. First it is this line of reasoning that got us into the mess that was crystallized with the 2008 meltdown. Add in the idea that the US Federal debt load, by some measures, may exceed 100 trillion dollars; requiring the total reservoir of all known physical oil reserves to repay – if anything; that’s a lot of energy. In all, further advances to prosperous times are limited because of tired economic concepts and the drag caused by the “physical debt obligations” underneath the monetary values in use.

The major point however, is that any increase in per capita real prosperity is virtually impossible. WE ARE PAST PEAK PROSPERITY. Economists may continue to promote this notion of improving prosperity by quoting suspect growth GDP numbers and the like (ignoring real GDP per capital - which is the much more relevant measure to us plain folks). Why is growth suspect? Because we live in two worlds: one; where Economists use various abstractions such as Money, GDP, CPI, and so forth to fabricate a wonderland of eternal growth based on fiat currencies that defy logical physical constraints. And the second world, that consists of concrete constructs that forge a reality based on a currency of usable mass and energy units – both of which are rapidly depleting on a per capita basis; faster and faster every year. So the economists’ promoted abstract prosperity is running contrary to the decline in real prosperity.

Providing aid to lower-level governments will give the economy a big boost; namely by hiring thousands of teachers and restarting the cancelled building and maintenance projects. Gee whiz, is that all we have to do remedy the ailing economy? Somehow this has the smell of over-simplification that shocks us in many ways because of its source. So before commenting on the hiring of thousands of teachers here are a number of other suggestions that could boost the economy in greater measures; short and long-term:

Establish government guaranteed lending programs for new, growing and emerging businesses that will act to create and advance industry and jobs.

Dramatically reduce military spending and deploy the savings to industries where long-term benefits are greater such as energy technology, medicine, conservation, education and so forth.

Effect substantive changes in the political process at all levels to reduce the time and resources employed in elections and stream-line the day-to-day decision-making process so it is more adaptive and responsive to a modern society – Constitutional and Congressional Overhaul?

Complete an audit, review and structural overhauls of the entire financial, banking and regulatory systems to ensure that they are the fairest, most efficient and transparent structures possible to serve the nation’s on-going needs.

Substantially increase taxes for the upper 5 % of tax payers and directly use such revenues to encourage industry, education, research and jobs related to energy, climate, bio-diversity and other conservation programs.

Impose a new immigration tax of say $100,000 per person recognizing the national dilution of wealth that occurs when new stakeholders are added to the pie. This would serve to restrict unsustainable and unneeded population increases, preserve a prosperous middle class, and cure current fiscal deficits. Remember too, that Companies do not issue new shares and dilute current stakeholders – a good and fair capitalist idea.

In all fairness we appreciate that The New York Times may not have the space to list ideas in this manner. Still, it is implied that the ones mentioned are considered to be the best possible boosters for the economy Sharp aim is particularly taken at increasing the number teachers when technology now offers so many ways to reduce educational labour costs while enhancing quality at all levels through efficient distribution methods (no reason why thousands could not attend and be tested at top college level courses). Yet for reasons of initiative, imagination, leadership and politics there is little evidence of seismic technological advancements being applied to education’s products and delivery systems – grad students could be at least tripling in many key fields.      

Those on the anti-austerity train (Japan? America?) have lower borrowing costs. This is a paradox as when borrowing costs are this low it reflects two different conditions in the markets and in lending practices on
Main St
. As a consequence they both act to create a grass roots austerity train that is more powerful in some ways than fiscal policy measures. The point being let’s not be fooled by lower borrowing costs.

First when bond markets are only demanding 2 to 3% for longer-dated instruments – there are sending at least two possible messages. Traditionally, it suggests there is little expectation that future levels of inflation will exceed these current interest rate levels. Or, we suspect that the second signal and operative message today, is that there is simply no where else to invest, as alternative investments in equities, real estate or other assets are likely to provide worse returns – or possibly even negative returns. Funds are thus no longer being invested through stocks in the capital of businesses, thereby creating an austerity in capital deployment, job creation, and resultant consumption and tax revenues they generate.   

This same lack of appetite for risk transports itself to Main St. Banking, whereby even though borrowing rates are below historical norms; counter-intuitively fewer business and home loans are actually made because both credit criteria and loan terms and conditions are more onerous. At lower rates fewer borrowers qualify and governments begin to crowd out private sector borrowers. Again this creates an austerity in capital deployment, job creation and resultant consumption and tax revenues they generate.  
  


The Nauru Paradigm – Economic Pandemic Spreads

“It was once thought that the all roads lead to Rome; then under today’s economic beliefs, it may be thought that all roads now lead to Nauru…” First Financial Insights Inc, 2012


Both Easter Island and Nauru offer us a glimpse into the possible economic futures of both nations and our planet. For it is these two nations that were first to experience the practical exhaustion of their natural resources that led to the collapse of their respective civilizations. Many nations today are experiencing conditions similar to those experienced by these two nations and move past Peak Prosperity heading towards the abyss where human existence is substantively more difficult; if not, impossible.

To solve the problems faced by these nations Economists, Central Banks, Governments and others use abstract economic theories, devices and policies as tools to correct a deteriorating physical condition. This reaction is premised on the time tested measures offered by fiscal and monetary means. What is not recognized? Well, these measures were applicable as nations rose to Peak Prosperity, but when they turn the corner their usefulness is much diminished. Diminished, because ideas cannot create physical constructs; the usable units of energy and mass needed for conversion to consumable goods and services for human utility. That’s not possible.

The original economic success of the actual Nauru is attributed to the mining of the indigenous reserves of phosphate that at one point made this country one of the richest on a per capita basis in the world. It became a physical wasteland once the phosphate mining was completed and the surrounding ecology was destroyed by the polluting and destructive residuals of mining activities. During its golden period, Nauru was further plagued by corrupted government and poor finances that were intended to preserve the citizen’s living standards once the phosphate was exhausted. Untold millions were either squandered or embezzled by foreigners and failed off-shore ventures.

So today, Nauru is a now familiar story where the population is left with economic squalor, poor living conditions, greater health risks and little hope of any future. What can happen to any entity in a few short decades is a real life lesson we should all heed wisely. What should be clear is that in the last analysis physical realities dictate economic inputs, activities and outputs – and without usable mass and energy no form of economy is possible by means of abstract theories.

The Nauru experiment is rather simple; it assumes that instead of just phosphate, its resources are an exact proportional replica of all our planet’s usable units of mass and energy – renewable and non-renewable resources. Let’s further assume that it is the only land mass on the planet where human existence is possible and exists. Imagine too, that the same events and processes of resource exhaustion occur in the Nauru experiment. Except instead of just one resource - phosphate; assume in the experiment, all the multiple replicated renewable and non-renewable resources concurrently follow the exact same exhaustion pattern as phosphate. In both the actual and experimental cases the outcomes are the same – a polluted wasteland with little remaining units of usable mass and energy to sustain human existence. The Nauru Paradigm of today –

On further analysis it is self-evident that The Nauru Paradigm experiences three distinct stages: 1) Rise to Peak Prosperity; 2) Post-Peak Prosperity; and lastly, 3) Destitute Existence (Perpetual Dark Age). The economic template (the accepted total system of theories and beliefs) that exists for each of these stages should be different and adaptive to the actual physical conditions either Nauru or any other nation is facing in the specific stage. Such a change in the economic template is particularly clear when the shift from the Rise to Peak Prosperity to Post-Peak Prosperity occurs. (Accepting this theory, also means that Economists need to build two additional templates comparable in scope and nature to the current system of beliefs and theories – ah haw!).

Let’s examine such a shift in stages a little more closely. What is one very important economic issue? Well, first to mind is that a sharp monetary debasement should occur. Should such a monetary debasement enter into a free fall, then it leads to a rapid breakdown in society. It would be further exacerbated if the population was also expanding rapidly because they foolishly believed that the Rise to Peak Prosperity stage could last forever. No doubt the citizens of Nauru succumbed to this unfounded notion of perpetual prosperity, as perhaps do the governments and citizenry of Greece, Ireland, Spain, Portugal and others do today.

What are the other specific implications of this debasing of monetary value? The specific implications usurp all the economic assumptions of the Rise to Peak Prosperity’s economic template. Social-economic behaviour changes dramatically as individuals realize that every year the monetary unit is worth less than the preceding year because the supporting store of physical resources per unit are rapidly depleting. Moreover, they begin to appreciate that once all the physical resources are consumed - the monetary unit will hold no value whatsoever!

Apart from prices rising dramatically during this stage, savings, investing and lending will virtually shut down. Why save? Invest? Or Lend?  When the monetary values received in ensuing years with interest, acquires fewer goods and services because the physical resources no longer exist to produce them in the same quantities as in preceding years. The production possibility curve of Nauru begins to contract as well, so the capacities to convert usable mass and energy to goods and services that are utilities needed for survival shrink- physical production facilities become useless without routine maintenance, repair or replacement.

Monetary and fiscal policy measures are applied by Nauru to revitalize the shrinking supply of input units – usable mass and energy, as well as the deteriorating productive capacity. But to no avail. For without actual physical units of supply, no stimuli aimed at incenting demand can create economic activity, goods and services, plus the related utilities needed for human survival.

Nauru now faces an unstoppable slide in economic output related to a currency debasement caused by the exhaustion of its usable mass and energy. The debasement ultimately leads to austerity measures, economic collapse, social unrest and constant political upheaval that fragment the country into the anarchy of tribal factions struggling to serve their own kind with whatever remaining resources are available. Nauru is entering the last stage – Destitute Existence, where another new economic template is needed for application.
In the end this experiment takes the actual experience of the real Nauru and simply changes the nature of the resources it owned. Regardless, the outcome is still the same when all Nauru’s resources are exhausted in both cases; no fiscal or monetary policies imposed by its Central Bank, Agencies or Governments can in any way affect the economy of this country. Concluding then that the effectiveness of such policies diminishes because of their strong correlation with the supply of resources, albeit it is difficult to know just how ineffective they are becoming as Nauru or any economy enters the Post-Peak Prosperity Stage. 




Post Experiment: Five Points Revisited


Austerity leads to more austerity- The Post-Peak Prosperity template being the operative stage for these economies confirms that they have no choices. Neither fiscal nor monetary tools will have any effects on these second stage nations; as their magic cannot create usable mass and energy to be converted to goods and services for the utility of the people. Conclude: Expect more austerity with further economic, social and political deterioration.

Study of Economic History Provides Solutions – Studies of economic history focus on economies where supplies are perceived to be unlimited and growth potential is infinite. Economics has yet to give recognition to the idea that nation’s economies go through different stages, and the tools used in the growth stages do not work in the decline stages caused by the exhaustion of inputs needed to create supply. Thus the history of concepts applied in the growth stages is not as relevant to the situations of the decline stages  

Prosperity is somehow lurking around the corner – Economics assumes that a perpetual growth hypothesis is possible for all nations. Inputs into the economic system do not expire, so greater prosperity is always possible. However, as can be seen with Easter Island and Nauru, all economic activity virtually ceases when the inputs are exhausted. Many countries are past peak oil or non-renewable resource production and are thus experiencing some form of Post-Peak Prosperity, whereby previous fiscal and monetary measure should and would have less effect.   

Providing aid to lower-level governments will give the economy a big boost; namely by hiring thousands of teachers and restarting the cancelled building and maintenance projects – If economies are now past Peak Prosperity then all types of programs need to be carefully examined, including whether they incent more or less growth. More growth programs will accelerate the depletion of the remaining forms of usable mass and energy pushing the society and economy quickly through the Post-Peak Prosperity stage. Designing programs that incent slower growth is a challenge for economic theory and application. Needless to say, they have their work cut out for them.

Those on the anti-austerity train (Japan? America?) have lower borrowing costs -  If economies are past Peak Prosperity, and there is certainly growing evidence to suggest this is the case, then monetary policies and measures as a means to control the general demand and pricing for outputs – goods and services, may become redundant. Inputs are in such short supply that prices and demand can no longer be affected by interest rate increases – the borrowing costs are the least of concerns. Imagine that the price of oil doubles every year as the known reserves shrink by 25% or more. A frightening yet possible situation, - what impact would interest rates have in such a case.


What Next for the Mess? – Surviving Progress? 

Considering the real events of Easter Island, Nauru and the situations countries appear to be facing in Europe and elsewhere, there is a need to better understand what stages of the economic life cycle are applicable to these nations and the planet. Accepting the “The Nauru Paradigm” and the idea that economies will at some point achieve “Peak Prosperity” and then drift or speed towards the last stage – Destitute Existence, where for all practical purposes the usable mass and energy of the economy would be exhausted. Usable mass and energy are the inputs that create activity, outputs and then utility for existence; without them it is impossible for the later outcomes to occur.

How to avoid this fate? For starters, there should be a general acceptance of The Nauru Paradigm and its economic stages, so that situations may be better understood and analyzed. Moreover, that historical economic abstracts, measures and ideas may have varying impacts in the different stages. Accepting theses stages further recognizes that all nations and the planet itself, reach a point of Peak Prosperity that is caused by physical constraints imposed by the depletion of finite units of usable mass and energy – resources. Increasing populations and growth policies act to move us towards and past Peak Prosperity at a much more rapid pace. And it should not escape our imagination that the whole planet itself could be left with the conditions of The Nauru Paradigm.

To avoid this destiny we have a lot of thinking, work and actions to take. The human effort required may be a thousand fold the focus and resources deployed on the Manhattan Project – the urgency and importance perhaps even greater. To conclude; with this mess, we face our greatest challenge ever - to Survive Progress...


First Financial Insights Inc.
Toronto, ON
February 27, 2012

@FirstFinInsights




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