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Grow Or Collapse: Stasis Is Not a Long-Term Option

18 Wednesday Jan 2023

Posted by Nuetzel in Climate, Environment, Growth

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Asymptotic Burnout, Benjamin Friedman, Climate Change, Dead Weight Loss, Degrowth, Fermi Paradox, Lewis M. Andrews, Limits to Growth, NIMBYism, Paul Ehrlich, Population Bomb, Poverty, regulation, Robert Colvile, Stakeholder Capitalism, State Capacity, Stubborn Attachments, Subsidies, Tax Distortions, Thomas Malthus, Tyler Cowan, Veronique de Rugy, Zero Growth

Growth is a human imperative and a good thing in every sense. We’ve long heard from naysayers, however, that growth will exhaust our finite resources, ending in starvation and the collapse of human civilization. They say, furthermore, that the end is nigh! It’s an old refrain. Thomas Malthus lent it credibility over 200 years ago (perhaps unintentionally), and we can pick on poor Paul Ehrlich’s “Population Bomb” thesis as a more modern starting point for this kind of hysteria. Lewis M. Andrews puts Ehrlich’s predictions in context:

“A year after the book’s publication, Ehrlich went on to say that this ‘utter breakdown’ in Earth’s capacity to support its bulging population was just fifteen years away. … For those of us still alive today, it is clear that nothing even approaching what Ehrlich predicted ever happened. Indeed, in the fifty-four years since his dire prophesy, those suffering from starvation have gone from one in four people on the planet to just one in ten, even as the world’s population has doubled.”

False Limits

The “limits” argument comes from the environmental Left, but it creates for them an uncomfortable tradeoff between limiting growth and the redistribution of a fixed (they hope) or shrinking (more likely) pie. That’s treacherous ground on which to build popular support. It’s also foolish to stake a long-term political agenda on baldly exaggerated claims (and see here) about the climate and resource constraints. Ultimately, people will recognize those ominous forecasts as manipulative propaganda.

Last year, an academic paper argued that growing civilizations must eventually reach a point of “asymptotic burnout” due to resource constraints, and must undergo a “homeostatic awakening”: no growth. The authors rely on a “superlinear scaling” argument based on cross-sectional data on cities, and they offer their “burnout” hypothesis as an explanation for the Fermi Paradox: the puzzling quiet we observe in the universe while we otherwise expect it to be teeming with life… civilizations reach their “awakenings” before finding ways to communicate with, or even detect, their distant neighbors. I addressed this point and it’s weaknesses last year, but here I mention it only to demonstrate that the “limits to growth” argument lives on in new incarnations.

Growth-limiting arguments are tenuous on at least three fundamental grounds: 1) failure to consider the ability of markets to respond to scarcity; 2) underestimating the potential of human ingenuity not only to adapt to challenges, but to invent new solutions, exploit new resources, and use existing resources more efficiently; and 3) homeostasis is impossible because zero growth cannot be achieved without destructive coercion, suspension of cooperative market mechanisms, and losses from non-market (i.e., political and non-political) competition for the fixed levels of societal wealth and production.

The zero-growth world is one that lacks opportunities and rewards for honest creation of value, whether through invention or simple, hard work. That value is determined through the interaction of buyers and sellers in markets, the most effective form of voluntary cooperation and social organization ever devised by mankind. Those preferring to take spoils through the political sphere, or who otherwise compete on the basis of force, either have little value to offer or simply lack the mindset to create value to exchange with others at arms length.

Zero-Growth Mentality

As Robert Colvile writes in a post called “The Morality of Growth”:

“A society without growth is not just politically far more fragile. It is hugely damaging to people’s lives – and in particular to the young, who will never get to benefit from the kind of compounding, increasing prosperity their parents enjoyed.”

Expanding on this theme is commenter Slocum at the Marginal Revolution site, where Colvile’s essay was linked:

“Humans behave poorly when they perceive that the pie is fixed or shrinking, and one of the main drivers for behaving poorly is feelings of envy coming to the forefront. The way we encourage people not to feel envy (and to act badly) is not to try to change human nature, or ‘nudge’ them, but rather to maintain a state of steady improvement so that they (naturally) don’t feel envious, jealous, tribal, xenophobic etc. Don’t create zero-sum economies and you won’t bring out the zero-sum thinking and all the ills that go with it.”

And again, this dynamic leads not to zero growth (if that’s desired), but to decay. Given the political instability to which negative growth can lead, collapse is a realistic possibility.

I liked Colville’s essay, but it probably should have been titled “The Immorality of Non-Growth”. It covers several contemporary obstacles to growth, including the rise of “stakeholder capitalism”, the growth of government at the expense of the private sector, strangling regulation, tax disincentives, NIMBYism, and the ease with which politicians engage in populist demagoguery in establishing policy. All those points have merit. But if his ultimate purpose was to shed light on the virtues of growth, it seems almost as if he lost his focus in examining only the flip side of the coin. I came away feeling like he didn’t expend much effort on the moral virtues of growth as he intended, though I found this nugget well said:

“It is striking that the fastest-growing societies also tend to be by far the most optimistic about their futures – because they can visibly see their lives getting better.”

Compound Growth

A far better discourse on growth’s virtues is offered by Veronique de Rugy in “The Greatness of Growth”. It should be obvious that growth is a potent tonic, but its range as a curative receives strangely little emphasis in popular discussion. First, de Rugy provides a simple illustration of the power of long-term growth, compound growth, in raising average living standards:

This is just a mechanical exercise, but it conveys the power of growth. At 2% real growth, real GDP per capital would double in 35 years and quadruple in 70 years. At 4% growth, real GDP would double in 18 years… less than a generation! It would quadruple in 35 years. If you’re just now starting a career, imagine nearing retirement at a standard of living four times as lavish as today’s senior employees (who make a lot more than you do now). We’ll talk a little more about how such growth rates might be achieved, but first, a little more on what growth can achieve.

The Rewards of Growth

Want to relieve poverty? There is no better and more permanent solution than economic growth. Here are some illustrations of this phenomenon:

Want to rein-in the federal budget deficit? Growth reduces the burden of the existing debt and shrinks fiscal deficits, though it might interfere with what little discipline spendthrift politicians currently face. We’ll have to find other fixes for that problem, but at least growth can insulate us from their profligacy.

And who can argue with the following?

“All the stuff an advocate anywhere on the political spectrum claims to value—good health, clean environment, safety, families and quality of life—depends on higher growth. …

There are other well-documented material consequences of modern economic growth, such as lower homicide rates, better health outcomes (babies born in the U.S. today are expected to live into their upper 70s, not their upper 30s as in 1860), increased leisure, more and better clothing and shelter, less food insecurity and so on.”

De Rugy argues convincingly that growth might well entail a greater boost in living standards for lower ranges of the socioeconomic spectrum than for the well-to-do. That would benefit not just those impoverished due to a lack of skills, but also those early in their careers as well as seniors attempting to earn extra income. For those with a legitimate need of a permanent safety net, growth allows society to be much more generous.

What de Rugy doesn’t mention is how growth can facilitate greater saving. In a truly virtuous cycle, saving is transformed into productivity-enhancing additions to the stock of capital. And not just physical capital, but human capital through investment in education as well. In addition, growth makes possible additional research and development, facilitating the kind of technical innovation that can sustain growth.

Getting Out of the Way of Growth

Later in de Rugy’s piece, she evaluates various ways to stimulate growth, including deregulation, wage and price flexibility, eliminating subsidies, less emphasis on redistribution, and simplifying the tax code. All these features of public policy are stultifying and involve dead-weight losses to society. That’s not to deny the benefits of adequate state capacity for providing true public goods and a legal and judicial system to protect individual rights. The issue of state capacity is a major impediment to growth in the less developed world, whereas countries in the developed world tend to have an excess of state “capacity”, which often runs amok!

In the U.S., our regulatory state imposes huge compliance costs on the private sector and effectively prohibits or destroys incentives for a great deal of productive (and harmless) activity. Interference with market pricing stunts growth by diverting resources from their most valued uses. Instead, it directs them toward uses that are favored by political elites and cronies. Subsidies do the same by distorting tradeoffs at a direct cost to taxpayers. Our system of income taxes is rife with behavioral distortions and compliance costs, bleeding otherwise productive gains into the coffers of accountants, tax attorneys, and bureaucrats. Finally, redistribution often entails the creation of disincentives, fostering a waste of human potential and a pathology of dependence.

Growth and Morality

Given the unequivocally positive consequences of growth to humanity, could the moral case for growth be any clearer? De Rugy quotes Benjamin Friedman’s “The Moral Consequences of Economic Growth”:

“Growth is valuable not only for our material improvement but for how it affects our social attitudes and our political institutions—in other words, our society’s moral character, in the term favored by the Enlightenment thinkers from whom so many of our views on openness, tolerance and democracy have sprung.”

De Rugy also paraphrases Tyler Cowen’s position on growth from his book “Stubborn Attachments”:

“… economic growth, properly understood, should be an essential element of any ethical system that purports to care about universal human well-being. In other words, the benefits are so varied and important that nearly everyone should have a pro-growth program at or near the top of their agenda.”

Conclusion

Agitation for “degrowth” is often made in good faith by truly frightened people. Better education would help them, but our educational establishment has been corrupted by the same ignorant narrative. When it comes to rulers, the fearful are no less tyrannical than power-hungry authoritarians. In fact, fear can be instrumental in enabling that kind of transformation in the personalities of activists. A basic failing is their inability to recognize the many ways in which growth improves well-being, including the societal wealth to enable adaptation to changing conditions and the investment necessary to enhance our range of technological solutions for mitigating existential risks. Not least, however, is the failure of the zero-growth movement to understand the cruelty their position condones in exchange for their highly speculative assurances that we’ll all be better off if we just do as they say. A terrible downside will be unavoidable if and when growth is outlawed.

New Theory: Great Woke Filter Conceals Life In the Cosmos

03 Friday Jun 2022

Posted by Nuetzel in Central Planning, Extraterrestrial Life, Space Travel

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Asymptotic Burnout, Baumol's Disease, Club of Rome, Equilibrating Process, Fermi Paradox, Grabby Aliens, Hard-Step Model, Homeostatic Awakening, Innovation, Interstellar Travel, Limits to Growth, Market Incentives, Michael L. Wong, Robin Hanson, Selection Bias, Singularity, Stuart Bartlett, Superlinearity, Thomas Malthus, Unbounded Growth, Unidentified Aerial Phenomena, William Baumol

A recent academic paper seeks to explain the Fermi Paradox by asserting that all civilizations must either collapse or reach a point of homeostasis. The paper cites tensions between population growth, resource scarcity, limits to technical innovation, and ultimately political resistance to growth. The Fermi Paradox (FP) is the observation that by now, we should have detected or heard from an alien civilization if the universe has so much potential for intelligent life. But if those civilizations fail to advance beyond a certain level, they don’t develop the technical prowess to explore outside their own stellar neighborhoods or even become detectable from great distances.

The new paper, by Michael L. Wong and Stuart Bartlett (WB), says these outcomes might be the result of “asymptotic burnout” — followed by either civilizational collapse or a “homeostatic awakening”. Never has “get woke, go broke” been so palpable! Certain sections of the WB paper read like an encyclopedia of leftist apocalyptic speculation, dressed up in mathematics and assumed to generalize to any civilization of intelligent beings in the universe. The incredible vastness of outer space suggests that it might never be possible for us to detect these kinds of homebound, low-tech civilizations, whether constrained by scarcities and moribund technologies or hamstrung by their own politics. Similarly, they might not be able to detect us.

Great Filters

There are other, similar explanations of FP. All of those fall under the heading of “Great Filters”, and I’m not sure WB have come up with anything new in that regard except for the “woke” spin. Great filters can be extinction events, such as intra-planetary hostilities culminating in the reckless use of weapons of mass destruction. Or unfortunate collisions with massive asteroids, which are a matter of time. Malthusian outcomes have been discussed in the context of great filters as well. In the past, I’ve discussed the limitations imposed by collectivist social structures on a civilization’s potential to achieve interstellar travel. I’m not the only one. The kind of “awakening” posited by WB would certainly demand the centralization of economic decision-making, though they envision conditions under which the “awakening” is a rational and enlightened decision.

Grabby Civilizations

A bit of a digression here: one of the most interesting explanations for FP that I’ve heard is from economist Robin Hanson and several co-authors. Hanson, by the way, wrote the original paper on great filters. His more recent insight is the likelihood of an earth-bound selection bias: there must be reasons why we haven’t seen alien activity in earth’s backward light cone, assuming they exist. The light cone defines an area of space-time we have observed, or could have observed had we been looking. To have been within our light cone, an event coordinate’s distance from us in space must have been less than or equal to the time it takes for its light to arrive here. For example, we can see what happened on the surface of the Sun fifteen minutes ago because at the Sun’s distance, it takes just ten minutes for its light to reach us. However, an event on the Sun that occurred five minutes ago is still outside our backward light cone. Likewise, if a star is 100,000 light years away, we cannot see events that occurred there within the past 99,999 years.

Hanson and his co-authors focus on the timescales and “hard steps”, or critical evolutionary transitions, necessary for intelligent life to develop in a solar system. They construct a probability model suggesting that the birth of human civilization was likely on the early end of the time distribution of civilizational beginnings in the universe. That means there probably aren’t many distant civilizations we could possibly have seen in our light cone. We’d be more likely to detect them if they are sufficiently advanced to be so-called “grabby” civilizations, but that kind of technological development takes a long time. “Grabby” civilizations (or their machines) are capable of expanding their reach across the stars at high speed, some significant fraction of the speed of light. They can be expected to visibly alter the volume of space they control by settling, mining, building large structures, etc…. An interesting (and perhaps counterintuitive) result is that the faster such a civilization expands, the less likely we’d have seen them in our backward light cone. And we haven’t, which argues for a higher speed of alien conquest, all else equal.

In another post, Hanson estimates that the time until we meet another grabby civilization centers on about 1 billion years if we expand. So grabby civilizations are quite rare if they exist. That doesn’t rule out the possibility that we might detect or encounter a much less technically advanced civilization. Nevertheless, Hanson strongly believes in the reality of Great Filters and believes that human civilization is likely to encounter certain filters that we cannot even anticipate.

The explanation for FP offered by Hanson, et al is nuanced, and it is my favorite, given my fascination with the possibility of extraterrestrial life. Even if the development of human civilization is not especially “early”, the number of interstellar civilizations, grabby or not, is probably still quite small at this juncture. And no doubt space travel is tough! These civilizations and their interstellar pioneers might not endure long enough to cover the distances necessary to reach us. Even more pertinent is that we’ve really only been “looking” in earnest for maybe ten decades at the most, and without complete coverage or much precision. Alien origins or spatial conquests within the last 100 years at distances exceeding 100 light years would not yet be visible to us. And again, it’s remotely possible that there is a grabby civilization whose expansion will intersect with us sometime in the near future, but it is still too distant to be within our backward light cone. If closing on us fast enough, it could have been within a single light year six months ago and we would not yet know it!

Do Civilizations Scale Like Cities?

Now let’s return to the kind of great filter put forward by WB. They first appeal to the observation that cities scale superlinearly. That is, in cross-sectional data, the relationship between city population and various measures of income or output (and other metrics) are linear in logs with a coefficient greater than 1. That means a city with twice the population of another would generate more than twice as much income.

There are reasons why we’d expect city size to be associated with greater productivity, such as an abundance of collaborative opportunities and economies of agglomeration. However, WB assert that it is impossible for a city to sustain a superlinear growth relationship over time, requiring “unbounded growth”, without periodic bursts of innovation. Otherwise, a city encounters a growth “singularity”. WB maintain that the inability of innovation to sustain unbounded growth manifests in a cascade of failure in such a city, or at least homeostasis.

WB go on from there to claim that a civilization, as it advances, will become so interconnected via technology that it can be treated analytically like a single super-city. This assumption, that whole worlds scale like cities, offers WB an analytical convenience. They assume that population growth outstrips the supply of finite resources with an inadequate pace of innovation. WB further propose that civilizations confronting these barriers might undergo “awakenings” under which zero growth is accepted as a goal.

Of course, the growth of a city will stagnate when its size overwhelms its ability to meet demands. A city might be under severe resource constraints. There are external phenomena that can cause a city to languish. All this depends upon the unique vulnerabilities of individual cities. Certainly a widespread dearth of innovation could do the trick. A planetary civilization might be subject to similar constraints or limiting events. Some planets might be resource poor or have especially hostile natural environments. Aliens unfortunate enough to be there will not and cannot become “grabby”. But WB’s hypothesis amounts to the assertion that no civilization can hope to achieve “grabbiness”.

Faults In the Clouds of Delusion

The WB argument is misguided on several levels. First, there is only limited evidence that the scaling of cities is time invariant — that the relationships hold up as cities grow over time —no singularity required! After all, the super-linear relationship referenced by WB is based almost entirely on cross-sectional data. Moreover, the scaling assertion is atheoretic. Rationales are offered based on human social connections and presumed, fixed technical relationships between city population and such things as energy use and infrastructure requirements. However, the discussion is completely devoid of the equilibrating processes found in market economies and the guidance of the price mechanism. Instead, growth simply rages on until the pace of innovation and limited resources can no longer support it.

WB appear to assume that a planet’s finite pool of resources places a hard limit on the advancement of civilization. This is more than a bit reminiscent of the Club of Rome and it’s “Limits to Growth”, or the popular understanding of Thomas Malthus’ writings. That understanding is based on a purely biological model of human needs. which was spectacularly wrong in its prediction of worldwide famine. But that was only a starting point for Malthus, who believed in the power of markets. And even in primitive markets, the very scarcity with which biological needs conflict is what incentivizes greater efficiencies and substitutes. When something gets especially scarce, the market signals to users that they must conserve, on one hand, and it also incentivizes those able to commandeer resources. The latter act to fill the need with greater supplies, close substitutes, or inventive alternatives. Again, these kinds of equilibrating tendencies don’t seem to be of any consequence to WB.

The focus on super-linearity and the relationship between population and economic and other metrics obscures another reality: global fertility rates have been declining for decades and are now below replacement levels in many parts of the world. In addition, we know that birth rates tend to decline as income rises, which directly undermines WB’s concern about super-linearity. The unsustainable population growth envisioned by WB is unlikely to occur, much less overwhelm the ability of resources and innovation to provide for growth in human well-being. WB also ignore the fact that in-migration to cities is a primary contributor to their population growth, whereas in-migration has not been observed at the global level… at least that we’re aware!

What is never in short supply is human ingenuity, if we allow it to work. It enables us to identify and extract new reserves of resources previously hidden to us, and every new efficiency increases the effective reserves of resources already available. Mankind is now on the cusp of an era in which mining of scarce materials from the moon, asteroids, and other planets will be possible.

WB are correct that there are obstacles to urban growth, but they seem only dimly aware of the underlying reasons. Cities must provide myriad services to their residents. Many of those services will experience meager productivity gains relative to goods production, and consequently increased costs of services over time. This is an old problem known among economists as Baumol’s disease, after William Baumol. While it is not limited to cities, it can be especially acute in urban areas. The cost escalation may be severe for services such as education, health care, law enforcement, and the judicial system, which are certainly critical to the economic viability of cities. However, there will be future innovations and even automation of some of these services that boost productivity. Still, they are bound to mostly rise in cost relative to sectors with high average growth in productivity, such as manufacturing. Baumol’s disease is unlikely to tank the world economy. It is simply a fact of economic evolution: relative prices change, and low productivity sectors will suffer cost escalation.

The kind of “awakening” WB anticipate would only occur if individuals are willing sacrifice their liberties en masse, or if elites coerce them to do so. Perhaps there are beings who never imagine the kinds of liberties humans expect, or at least wish for. If so, I’d wager their average intelligence is too low to accomplish space travel anyway. We’ve learned from theory and history that socialism imposes severe constraints on growth. That’s why I once proposed that civilizations capable of interstellar travel will have avoided those chains.

Conclusion

Wong and Bartlett attempt to explain the Fermi Paradox based on the “asymptotic burnout” of civilizations. That is, they believe it’s extremely unlikely that any civilization can ever advance to interstellar travel, or as Hanson would put it, to be “grabby”. WB rely on an analogy between the so-called super-linearity of city scales and the scales of planetary civilizations. They generalize super-linearity to the time domain. In other words, WB make the heroic assumptions that the economic aggregates of planetary civilizations scale over time as cities scale cross-sectionally.

WB then claim that civilizations will confront limits to advancement based on their inability to sustain their pace of innovation. This amounts to Malthusian pessimism writ large. Today, human civilization, while not without its problems, is nowhere near the limits of its growth, and we are nearly ready to reach out beyond the confines of our planet for access to new stocks of resources. There are vast stores of unexploited energy even here on earth, and there are a number of relatively new energy technologies that are either available now or still in development. And there will be much more. Like the Club of Rome, WB lack an adequate appreciation for the power of markets and incentives to solve economic problems, which includes spurring innovation.

Finally, WB make the wholly unsupported conjecture that some civilizations will undergo “awakenings”, choosing to adopt homeostasis rather than growth. WB might or might not realize it, but this implies an abandonment of market institutions in favor of centrally-planned stagnation, and not a little coercion. Perhaps we should view WB’s hypothesis as a cautionary tale: get woke, go broke! Certainly, a homeostatic civilization that relies upon the ignorance of central planners will never develop the capacity for interstellar travel. It simply cannot generate the wealth or expertise necessary to do so. In fact, they are more likely to suffer bouts of mass starvation than any sort of middling prosperity. We probably haven’t seen other civilizations yet, and maybe we’re “early” on the development time-scale for civilizations, but when and if aliens arrive, it won’t be thanks to socialist “awakenings”. WP are at least correct in that regard.

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