Ocean Hermit – sailing, solitude and stories

My plans to retrace Captain Cook's unfinished voyage have been postponed a year while I work on the next Marine Diesel Basics book and get my new boat SV Oceandrifter ready for sea.

* World economic output could double by 2027

If you think we have environmental and energy problems now, take a look at what modest annual economic growth of 4.4% could do to this planet by 2027.

National economies around the world are expected to grow in 2011 by an average of 4.4% – much more in China, India and the rest of Asia, and much less in Europe and America, the IMF (International Monetary Fund) announced this week (read BBC report).

Doesn’t sound a tremendous amount. But what does 4.4% growth in the global economy actually mean?

Ever since the sociopath bankers, and their cohorts in governments, caused the global economic meltdown in 2008, politicians and global leaders have been straining their every effort to get national economies growing again.

Even reform of the financial sector (to remove the sometimes more than 40 to 1 leverage with bank deposits guaranteed by taxpayers, and the “too big to fail” structure of the present-day financial industry) has played second fiddle to getting the economy growing again. Everyone at the recent Davos Economic Forum seemed pledged to renewing economic growth as fast as possible.

But what does an annual growth rate of 4.4% per year actually mean?ENDLESS ECONOMIC GROWTH

Economic growth will “lift poor people out of poverty” we are told endlessly. But in America, for example,between 2002 and 2007, 65% of all income growth went to the top 1% of the population. Growing the economy to end poverty maybe be the slogan, but having 65% of all growth (plus the associated increased claims on natural resources and increased pollution)  going to people who are already extremely wealth is incredibly inefficient. (Never mind any moral arguments or even common sense about social stability.)

The counter argument is that the richest 1% of the population are the brains behind the growth. Much of that growth in the last decade came from the financial sector, which in the end has not benefitted society but pauperized millions of people and impoverished governments with massive debts.

Global growth of 4.4% per year sounds like a return to sensible, steady, sustainable growth, does it not? What used to be called the “Goldilocks economy” of Alan Greenspan – not too hot and not too cold. Few people will be aware, or conscious of the implications of this modest number.

An annual growth rate of 4.4% means:

1) the global economy would be TWICE as big as it is today by 2027.

2) the global economy in 2027 would be LARGER than the total of ALL the previous doublings economic activity in HUMAN HISTORY.

These observations are not opinions but are simply the consequences of the exponential growth factor.

Verify for yourself.

a) Dividing 4.4% into 70 (the magic number to calculate the doubling time) gives a doubling time of 15.9 years.

b) Each doubling is bigger than the combination of all previous doublings.

(My thanks to Prof. Bartlett for his excellent lecture explaining this.)

Maybe 4.4% growth will not be sustained – I doubt that it can – but it is considered a modest target and no doubt global leaders will do their very best to maintain it if they can because:

1) it’s the easiest way to increase tax revenues and pay off their massive debts..

2) it raises the living standards of millions of people.

Endless economic growth is the paradigm we have lived under for almost 200 years, based on assumptions of an endless supply of raw materials and cheap energy.

IMPLICATIONS OF A GLOBAL ECONOMY TWICE AS BIG

What are the implications of a DOUBLING of the global economy within 16 years?

1) Vastly increased use of energy, primarily oil.

2) Vastly increased destruction of virgin/old growth forest and all other biospheres, including fish from the oceans.

3) Vastly increased release of carbon dioxide etc. into the atmosphere, increased acidity and temperature of the oceans.

4) Vastly increased use of fresh water.

Let’s take a look at these four consequences:

1) Yet, just last month, the IEA finally admitted the production of conventional crude oil PEAKED in 2006 and is now declining. So where are the vast new energy sources to come from?

A nuclear power station takes 10 years to built.

The oil sands and shales in Canada and Venezuela may be vast, but production is limited to the size of the mining operations, not the size of the resources. So far, it’s taken 40 years and enormous quantities of money, fresh water and natural gas for Canadian oil sands to reach 2 million barrels per day. Production is very unlikely to ever reach 6 or 8 million barrels of oil per day.

Meanwhile, global oil demand today is close to 90 million barrels per day and rising by about 1.8% per year.

2) How many forests, how many fish, species, glaciers or any other natural “resources” will be left if by 2027 human economic output becomes greater than the sum of all the previous doublings of economic output in all of human history?

Many will argue that only human happiness matters and that the natural world is expendable. Try living without breathable air for a day.

Surely, 50 years after the first photographs of the Earth from space and all the decades of scientific investigation and environmental campaigning, humans can at least recognize our utter dependence on the natural world.

Even if we live in a luxury condo in Singapore or New york, we are totally dependent on natural organisms for our food, and natural processes for breathable air and fresh water.

3) Climate scientists have been warning for more than a decade about carbon dioxide and other gases causing global warming. According to their models, the release of CO2by burning fossil fuels is causing glaciers and ice caps to melt. If CO2 levels rise enough, the planet will reach a tipping point after which ice melt will be unstoppable – and if all ice inthe Arctic and antarctic melted global sea levels would rise by 80 metres (read US Geological Survey).

4) In 2008 I returned to the banks of the Ganges to see for myself the story of India’s great economic development in the past two decades. What I found, 25 years after my 3000 kms walk along the banks of the Ganges, was:

a) the great river that should have been brim full of water at the end of the rainy season was showing sandbanks,

b) the level of ground water was falling every year as aquifers are being pumped down for crop irrigation and industry.

c) even after 25 years, not a single place along the Ganges – not Kolkata, not Varanasi, not small towns nor the villages beneath the huge transmission wires from the hydro dams in the Himalayas, had electricity 24 hours a day.

d) the government is planning 19 new industrial cities along the banks of the Ganges. Where will the water come from?

I wrote about my visit to India in 2008 in an essay called “Goodbye Mother Ganges” in which I stated that the dream of every Indian enjoying the same standard of living as people in the West was impossible; and that it was wicked to propagandize this lifestyle because it was unattainable and diverted energy and resources from the enormous improvements in people’s lives that are possible.

OTHER FACTORS AT PLAY

I recognize that the many factors already influence economic growth, so that an apparent growth rate of 4.4% is a blunt instrument to measure economies. For example:

1) Conservation, improved design and substitution will all play important parts in getting more economic growth using less resources. But overall energy use will continue to go up. (Much of the slowdown in the increase in energy use in the West has come from outsourcing so much to Asia!)

2) Much of the supposed “growth of the economy” is actually coming from inflation not increased economic activity.

Governments have been fiddling inflation statistics for years – because so much of their own spending is index-linked.

In America, for example, the government uses substitution and hedonics to alter the numbers. Substitution is saying that when steak costs more people buy mince, therefore the price of meat has not increased. Hedonics claims that when a computer is twice as fast as last year’s model, the price has fallen by 50%, irrespective of the sticker price. According to this notion, your taxes are falling as the size of government swells.

BELIEVING THE IMPOSSIBLE

Common sense suggests that doubling human economic output by 2026 in real terms (not inflated money measures) is impossible and that the model of endless growth with finite resources and growing population is also impossible – as many, many people are well aware.

But governments persist in the fallacy.  Why?

It’s easy to see why people in business do – they are forever hoping their “growth” will come from a bigger slice of the pie, not that the pie itself need get bigger.

Governments, on the other hand, need to focus on the MACRO situation, which is clearly unsustainable.

(I’ll delve into some possible answers as to “why” in another post.)

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This entry was posted on February 2, 2011 by in Current Affairs and tagged , , , , .
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