This from NPR today:

The United States economy continued to expand modestly toward the end of 2011. The Commerce Department says it grew at an annual rate of 2.8 percent in the fourth quarter and 1.7 in all of 2011.

This means that the economy has expanded for the last two years, after a 3.5 percent decline in 2009. The economy did slow down in 2011. It grew 3 percent in 2010.

Unemployment is still high and not budging.

Here’s my question for you: Is there a point at which “recovery” becomes “growth” and wouldn’t that be good because we worship “growth”? Extra credit question: Should we really be worshiping “growth”?

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9 thoughts on “Recovery and Growth

  1. No we should not be “worshipping” growth. We should be concerned about “sustainability” instead. There’s a long way to go yet.

  2. The economist Kenneth Boulding is supposed to have said, “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” The physicist Albert Bartlett has noted, “The greatest shortcoming of the human race is our inability to understand the exponential function.”

    To the extent that we worship growth, we will eventually find that it is the god that failed. We have experienced rapid economic growth since the 18th century. Because it has gone on for a quarter of a millennium, we have come to regard it is normal. What we do not yet realize is that the 21st century will be the century when economic growth comes to an end, and that it is virtually inevitable that we will then be subject to some kind of “new normal.”

    There is plenty of room for debate over precisely when, in the 21st century, economic growth finally shudders to a halt. My own guess is that it will be around 2030, and that its proximate cause will be a global inability to continue increasing the extraction rate of fossil fuels of all kinds – oil, not coal, natural gas. Production of those fuels will level off, and then go into decline, leaving us as a species with the likely prospect of having to live on fixed and even declining amounts of net energy.

    Call me a pessimist, but I expect that our political and societal leaders will fail to recognize this problem until it is too late to prevent a very hard landing indeed.

  3. Let me ask a different question. How long do you think we can continue to improve technology? Moore’s law seems set to continue for another decade or two. And on the heels of that will come quantum computing and photonics. Is that sustainable? I suspect the computers you use in twenty years will be smaller and use less power, despite large increase in what they do.

    While not as flashy, we’re at the start of a lighting revolution. Lighting devices are getting smaller, smarter, longer-lasting, and less power hungry. That’s sustainable, right? Or at least, more so than continuing to use the older, shorter-life, more power-hungry technology.

    Then, there is biotechnology. I see at least a century of technological progress there. Is that sustainable? What great resources (other than human) do you think it will consume?

    When do people think our technological advance will stop? Become unsustainable?

  4. I a world with over 7 billion people and finite resources, counting on ever increasing growth for a healthy economy is likely to eventually become a problem. It is not a problem for our Governor here in Texas. He seems to believe that everything can be solved with prayer. He prayed for rain and we got wildfires. I wonder what we will suffer when he prays for more growth.

  5. Because I find it quite curious. At the notion of economic growth continuing for another century or two, people object: “finite world,” “exponential functions,” harumph, harumph.

    But ask who thinks technological advance will come to a halt, that it’s not sustainable, and the silence is noticeable.

  6. The ultimate limit on technological advance is nature — that is to say, reality. Human ingenuity has proven itself to be a wonderful thing, but it cannot, for example, circumvent the Second Law of Thermodynamics.

    “Technological advance” is not a single thing. There’s this particular technological advance and that one, technological advance in this area and in that one. Moore’s Law holds that “the number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every two years.” While Moore’s Law is not a real law, there is no doubt that advances in computing over the past couple of generations have been absolutely amazing. However, there is no corresponding Moore’s Law of Aeronautics that says that, because of improvements in fuel efficiency, the distance an aircraft can fly on a gallon of fuel doubles every two years, no Moore’s Law of Medicine that says that, because of medical advances, the average human life span doubles every two years. Hey dude, where’s my immortality?

    If you want to argue that a particular technological advance that is actually on the drawing boards can provide a solution to a particular problem that might threaten economic growth, fine. Let’s look at it and see if it’s technically and economically feasible and can actually scale up to solve that problem. But if you want to argue that some vague thing called “technological advance” is going to solve all the problems that threaten economic growth, then one suspects that you are merely engaged in a form of faith-based reasoning, placing your faith in “technology” rather than in “the gods.” That kind of “technology” is not the solution to real problems, it’s a Star Trek plot device.

    Technological advance helps drive economic growth, but the relationship is reciprocal — economic growth permits technological advance. When economic growth ceases, the effect on technological growth will be profound. To put it more concretely, the research needed to continue technological advance is dependent on the ability generate sufficient surplus resources to fund research.

  7. I’d argue that, at least in the larger, more prosperous nations, that there is a very large surplus of otherwise wasted money that could spur technological development to amazing heights.

    For example: In 2009, NASA held a symposium on project costs which presented an estimate of the Apollo program costs in 2005 dollars as roughly $170 billion. This included all research and development costs; the procurement of 15 Saturn V rockets, 16 Command/Service Modules, 12 Lunar Modules, plus program support and management costs; construction expenses for facilities and their upgrading, and costs for flight operations. (from wikipedia: Butts, Glenn; Linton, Kent (April 28, 2009). “The Joint Confidence Level Paradox: A History of Denial, 2009 NASA Cost Symposium”. pp. 25–26

    However, the 2010 US budget had $660+ billion for defense. Imagine if just 1/6 of the defense budget were shifted to scientific research.

    That would create a lot of growth in high value jobs, scientists, equipment manufacturers, etc.

    Personally, it almost seems to me that the US doesn’t want to be a leader of the world. We’re trying everything we can to not be leaders.

    Anyway, take that $100 billion or so per year and get humans back into space. You want resources? Asteroids are full of carbon, nickel, iron, and all kinds of trace elements. You need power? The sun shines 24/7 outside of the atmosphere.

    Yes, I’m describing a pipe dream, but there is no fundamental reason why those resources cannot be gotten to, even with state of the art 1950s technology, much less what we have now.

  8. Sqrat says:

    To put it more concretely, the research needed to continue technological advance is dependent on the ability generate sufficient surplus resources to fund research.

    So, you’re predicting not just the end of economic growth, but a catastrophic decline, where we can no longer have some fraction of the population dedicated to research and the dissemination of technology.

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