Hacker News Reader

Comment by simonbarker87 | Hacker News Reader

Isn't the primary reason to worry becuase our global economy is founded on debt? Debt only works if the future is more valuable than the present by at least the interest rate on the loan writ large across the global economy.

The easiest way to make sure the future is more valuable than the present is to have more people than we have now, more people working, more people generating value, more people consuming etc.

If there are less people then we need to find a different way to make the future more valuable than the present to pay off that debt.

View on HN

>the future more valuable than the present to pay off that debt.

Your comment seems to imply something negative about debt, when in fact it's exactly the answer you're looking for. Debt allows people to build things now at the expense of future earnings; it pulls forward technological advances.

Surely there are better ways to organize society, but easy debt is not inherently terrible.

"Your comment seems to imply something negative about debt, when in fact it's exactly the answer you're looking for. Debt allows people to build things now at the expense of future earnings; it pulls forward technological advances."

Yes, but wealth and energy are linked. And debt can only be paid off with more debt. This is no problem, as long as the future is getting better and richer. In a finite world, this must come to an end at one point.

"Surely there are better ways to organize society, but easy debt is not inherently terrible"

Nobody has been able to come up with a better way. And there is some inherent danger in this. https://ourfiniteworld.com/2011/02/21/there-is-no-steady-sta...

Theoretically if AI, fusion power, asteroid mining etc. come to pass, many resources we think of as finite might become functionally unlimited. A post-scarcity society could optimise for human happiness, rather than optimising for workers to keep the machines turning.

This only works if we all change our attitudes and values. But if we changed our values, we could optimize for human happiness today.

Also, reframing only slightly, to a preindustrial person who spent all their time producing calories or spinning/weaving fiber for clothes, we're a post-scarcity society. We have so many calories it's making us sick and so much clothing we have to export discarded unused clothes. That hasn't meant we stopped chasing ever greater wealth just bc we can more than supply our needs. We just find more and more extravagant things to want.

Once we have asteroid mining, a generation of wealthy people will want their own space stations, or fusion-driven space craft or something.

Nope

https://dothemath.ucsd.edu/2011/07/galactic-scale-energy/

"But let’s not overlook the key point: continued growth in energy use becomes physically impossible within conceivable timeframes. "

And

Wealth And Energy Consumption Are Inseparable

https://www.declineoftheempire.com/2012/01/wealth-and-energy...

Track the total energy used by humanity and it’s almost all sunlight used to grow plants the same way it’s been used for thousands of years. It looks nothing like the 2.3% exponential curve pulled out of a hat by that article.

There’s little reason to suspect future advanced societies will even vaguely approach a 0.1% increase in total energy demand per year when human population stalls out. Nobody wants to heat their house to 10,000f or cool to cryogenic temperatures. Energy demand is therefore simply a question of technological progress and rates of growth in energy use is surprisingly slow for the top economies.

Nope

Reminds of the NYT article on the impossibility of flight.

Care to elaborate? Are you envisioning some decoupling of energy and economic growth?

The chart at the beginning already shows we don’t fit the trend anymore. So the whole premise is nonsense

Shades of https://xkcd.com/605/

> The merciless growth illustrated above means that in 1400 years from now, any source of energy we harness would have to outshine the sun.

Cool, we can worry about this in 1000 years?

This article is silly because the whole point of the OP is that population growth will not continue, so it's reasonable to assume that energy consumption will also plateau.

That 2012 article is obsolete, as GDP and energy usage has now been decoupled in advanced economies (e.g. https://ourworldindata.org/energy-gdp-decoupling) as nowadays improved consumer goods tend to require less physical resources than the earlier devices they replace, and various physical services get replaced with software.

> debt can only be paid off with more debt

This is totally untrue. Debt can be paid with new debt or growth.

Debt can also be simply written off.

There is a long practice of mass debt relief called a jubilee:

https://en.wikipedia.org/wiki/Debt_jubilee

In the Bible, references are made to a Hebrew jubilee every 49 years when “slaves and prisoners would be freed, debts would be forgiven, and the mercies of God would be particularly manifest.”

The permanence of debt is an illusion created by our current political and economical system.

> long practice of mass debt relief called a jubilee

The concept has long heritage. In reality, very few actual debt forgivenesses are documented.

Note, too, that in a Malthusian economy, debt has a tendency to be wealth transferring: the capital capacity of the system is limited. In a growing economy, that need not be the case.

> permanence of debt is an illusion created by our current political and economical system

We continuously poof debt. It’s called bankruptcy.

Not just bankruptcy, as there are other, less drastic kinds of write-offs that commonly occur.

You’re right, I should have said restructuring.

Jubilees are a crude predecessor to lawful restructuring.

We write off debt via two methods: bankruptcy and inflation. The latter effectively writes down the principal of all outstanding debt.

If we hit hard limits to growth it might actually look like a boom for a while, a very inflationary one where number go up a lot. In reality a lot of debt is being vaporized and prices are going up.

> latter effectively writes down the principal of all outstanding debt

Emphasis on outstanding. The aggregate indebtedness doesn’t change with inflation; that’s only restructuring. (The new money is created with debt—loans create money.)

There is at least two ways to use debt.

One is to build a machine, a road or whatever that increase productivity. So invest a million and you manufacture 10% more a year with same labour or even material input. This is great.

And then there is getting debt to pay your daily expenses or something not productive, see credit cards when used when there is no excess.

It seems that lot of debt on global level even with nations is in second category... This might have worked with growing population and productivity from first kind, but without that population growth it might become bad...

People are really missing this point within this whole issue.

Falling demographics is also more than a single total number, the age ranges matter as well.

I think you miss the point there as it relates to the article.

No intentionally implied negativity towards debt at all, it’s a great tool. Just a statement.

if it's used for productivity increases only.

We are well past that point.

You are exactly right. The only reason these articles pop up is because the current economic system is founded on debt and relies on future generations paying up for current assets.

It is merely accounting. The planet would prefer fewer people or a different economic system.

Assuming old people get less and less capable to do things for their own survival, and old people are owed help from non old/able bodied people, then the debt exists whether or not it is recorded on a ledger.

Hence if the population pyramid turns upside down, then that assumption needs to be revisited. Or automation needs to be invented to offset it.

> The easiest way to make sure the future is more valuable than the present is to have more people than we have now, more people working

Or the same people generating more work, value.

Or tune most people to value more things that needs less work/energy.

> tune most people to value more things that needs less work/energy

They will be outcompeted and eventually replaced by those who value growth. (Plenty of the world has similar living standards to a hundred years ago.)

Making progress on sustainability doesn't mean regression to the past, but progress towards a globally sustainable future. Hard to say if it's possible, but it if isn't humanity's days are numbered.

> if isn't humanity's days are numbered

This is hyperbole. (As a causative line. Of course, everything’s days are numbered in the long term.)

>> if isn't humanity's days are numbered

>This is hyperbole.

Not at all.

Work 80 hour weeks because people aren’t making kids. Got it

Absolutely not in that sense.

I don't know that debt is the main problem. I can see more "valuable" (tricky word - for a different thread) economics run by fewer people. That happens all the time when you compare businesses: some are manpower intensive (sometimes for reasons hard to understand) while others are super lean.

I had the impression that harder issues are conventional retirement being paid for by the people working for the people retired. Even in an era of more valuable work, shrinking the working population while growing the retired population compounds the difficulty. The second is one of manpower outright: where do all the people come from who are supposed to provide services or living assistance to the older population? This is again an issue of compounding: several effects going in the same direction at the same time when any one might be easy to handle.

Investing in restoration of the natural world would be a convenient and prudent way to continue those dividends through the peak. By then some changes to the social order will start to kick in and we cannot predict how those will play out. That's for them to navigate.

It will be war, it's always war that changes the social order.

Changing the financial network cannot be solved by planting a few more trees, you need to have a solution that values labor over rents again.

I don’t think so. Debt it fundamentally a human construct, while growth is, mostly, a manifestation of physical reality. Debt is simply used to guide human collective action. If we find this construct no longer works, we can at will change it and use something else to guide collective action. We currently use debt because, in conjunction with other property rights (such as those enabling market economy), it seems to align everyone’s incentives in a way that is beneficial (eg when people tried central planning it was much worse). The benefit of debt is that it helps collective action whose benefits are reaped in the future while stratifying risk/benefit (vs just equity investment).

"Isn't the primary reason to worry becuase our global economy is founded on debt? Debt only works if the future is more valuable than the present by at least the interest rate on the loan writ large across the global economy."

Yes, but very few people know this.

https://ourfiniteworld.com/2011/02/21/there-is-no-steady-sta...

>https://ourfiniteworld.com/2011/02/21/there-is-no-steady-sta...

That article is so riddled with issues it's hard to take it seriously even if you believe the underlying conclusion.

>But overall, there is no evidence that fossil fuel use, or even oil use, can be divorced from economic growth. If there is a big decline in fossil fuel use, it will translate to a decline in economic growth.

Yes there is: https://ourworldindata.org/co2-emissions#many-countries-have...

>The need for economic growth in order to pay back debt even applies to our money supply itself. Money is loaned into existence. This happens when a commercial bank makes a loan and deposit at the same time. The problem is that when the money is created, not enough money is loaned into existence to pay back the interest as well. So economic growth is needed to create the additional money so that the debt can be paid back with interest.

This ignores the existence of a central bank, which can print money at will.

>The problem with going to a system without fossil fuels and with much less debt than we have today is the fact that the world supported fewer than one billion people in 1750. There are now nearly 7 billion people in the world.

The world supported less than 1 billion people in 1750 because the industrial revolution and the green revolution wasn't a thing yet. Both vastly increased productivity and thereby the amount of people the world could support.

>If governments were to take away fossil fuels, or even reduce their use significantly, it would likely cause a crash of the financial system

"In a recent poll of climate economists conducted by Reuters, most agreed that getting to net zero would cost only 2% to 3% of annual global GDP. Other estimates put the cost of decarbonizing the economy a bit lower or a bit higher, but they are all in the low single digits of annual global GDP."

https://time.com/6132395/two-percent-climate-solution/

"That article is so riddled with issues it's hard to take it seriously even if you believe the underlying conclusion."

I consider this person to be one of the smartest persons I know.

"This ignores the existence of a central bank, which can print money at will."

This does not solve the underlying problem. You will get hyperinflation but the money is useless.

https://ourfiniteworld.com/2020/11/09/energy-is-the-economy-...

"The world supported less than 1 billion people in 1750 because the industrial revolution and the green revolution wasn't a thing yet"

We can only sustain this with modern technology that is developed by capitalism. Production is pre-financed in expectation of a higher return. If the growth model collapses, so will capitalism. Capitalism is not the same as a market economy. We had a market economy before capitalism. The point Gail makes is that a society without capitalism may fall to a technology level seen before the industrial revolution. A society like the Amish is basically stable in contrast to our model.

"In a recent poll of climate economists conducted by Reuters, most agreed that getting to net zero would cost only 2% to 3% of annual global GDP."

Which does not change the underlying mathematics. See also: https://dothemath.ucsd.edu/2011/07/galactic-scale-energy/

"But let’s not overlook the key point: continued growth in energy use becomes physically impossible within conceivable timeframes. "

And

Wealth And Energy Consumption Are Inseparable

https://www.declineoftheempire.com/2012/01/wealth-and-energy...

Smart people can be wrong when they lack domain knowledge.

That article is riddled with basic errors. Steady-state economies can exist with debt—it’s how ancient non-imperial economies worked. Debt jubilees aren’t the only way to erase debt—we use bankruptcy, which is more targeted and continuous.

As for energy, look up energy intensity of GDP. It’s falling. (The author seems to conflate fossil fuels and energy.)

"Smart people can be wrong when they lack domain knowledge." Do you know her background?

"Steady-state economies can exist with debt—it’s how ancient non-imperial economies worked"

Yes sure. An economy like the Amish can. But we talk here not about a market economy but about capitalism that basically starts with the industrial revolution. The giant pre-financing of production.

"As for energy, look up energy intensity of GDP. It’s falling."

Energy intensity of Which GDP? That of the US? Sure. Do you know why? I actually read an article from a professor from a well known University (might have been MIT) that claimed the same. What he did not take into account is that the US has been outsourcing energy hungry production in the last decades. (The article appeared before the re-shoring of production in the US started). I send him a statistic showing, how the energy intensity of the US sank, while China's increased. I asked him if this contradicts his thesis. Unfortunately he did not reply.

Here, Gail also mentions this:

Why does world energy intensity remain flat, while energy intensity for many individual countries has been decreasing?

We are dealing with a large number of countries with very different energy intensities. The big issue would seem to be outsourcing of heavy manufacturing. This makes the energy intensity of the country losing the manufacturing look better. Outsourcing transfers manufacturing to a country with a much higher energy intensity, so even with the new manufacturing, its ratio can still look better (lower). It is hard to measure the overall impact of outsourcing, except by looking at world total energy intensities rather than individual country amounts.

https://ourfiniteworld.com/2011/11/15/is-it-really-possible-...

> economy like the Amish can. But we talk here not about a market economy but about capitalism that basically starts with the industrial revolution. The giant pre-financing of production.

What’s the difference? Steady state is steady state. Debt doesn’t require growth to be sustainable. It does require decay, but jubilees are a crude solution compared with bankruptcy.

In any case, you see why the article is riddled with errors. Foundational arguments, like debt is incompatible with steady-state, have exceptions. And that is before we recognise that restructuring exists.

> Energy intensity of Which GDP? That of the US?

Of the world [1].

> while China's increased

It’s been falling since 2006 [2].

[1] https://en.m.wikipedia.org/wiki/Energy_intensity

"What’s the difference? Steady state is steady state. "

From Gails article, capitalization from me: There is No Steady State Economy (EXCEPT AT A VERY BASIC LEVEL) So sure, a a steady state economy at a pre-industrialization level is no problem.

I am not able to spontaneously find data in your link for China, neither do I find my statistic since I am not at my desktop computer. But assuming you are right, what about https://en.wikipedia.org/wiki/Jevons_paradox

> There is No Steady State Economy (EXCEPT AT A VERY BASIC LEVEL)

This isn’t qualified for the debt statement. And again, it ignores restructuring. (As well as taxation and central banks’ arsenals for destroying money.)

As for Jevon’s paradox, sure. Total energy use is increasing. But it’s increasing alongside efficiency. That makes steady state at a future point more achievable. We are nowhere close to tapping usable energy, so pre-optimising for it is silly.

I like Gail’s writing, but this is a particularly bad article of hers. The problems it surfaces were largely addressed in the early 20th century, when the needs of industrialisation prompted monetary experimentation in the 19th century and yielded conclusions in the 20th. We have a debt-based fiat banking system because it works well for a positive-sum economy. There is also nothing inherent to it that requires growth; our need for growth comes from other parts of our economy, e.g. how we finance suburban infrastructure.

>I consider this person to be one of the smartest persons I know.

Mind elaborating why anyone else should think the same?

>"This ignores the existence of a central bank, which can print money at will."

>This does not solve the underlying problem. You will get hyperinflation but the money is useless.

Inflation is a spectrum. There's a vast range before you reach Zimbabwe/Venezuela levels of inflation, like the inflationary period we're seeing now in most developed countries. Reaching steady state and having slightly higher inflation isn't the worst thing in the world.

>https://ourfiniteworld.com/2020/11/09/energy-is-the-economy-...

How is this related to hyperinflation?

>"The world supported less than 1 billion people in 1750 because the industrial revolution and the green revolution wasn't a thing yet"

>We can only sustain this with modern technology that is developed by capitalism. Production is pre-financed in expectation of a higher return. If the growth model collapses, so will capitalism. Capitalism is not the same as a market economy. We had a market economy before capitalism. The point Gail makes is that a society without capitalism may fall to a technology level seen before the industrial revolution. A society like the Amish is basically stable in contrast to our model.

I don't get it, are you claiming that once we reached steady state, all of our technology will suddenly stop working and we'll go back to living like the Amish? It's unclear why advances like genetically modified crops, pesticides, and synthetic fertilizer will suddenly stop working if there isn't "pre-financed in expectation of a higher return".

>"In a recent poll of climate economists conducted by Reuters, most agreed that getting to net zero would cost only 2% to 3% of annual global GDP."

>Which does not change the underlying mathematics. See also: https://dothemath.ucsd.edu/2011/07/galactic-scale-energy/

>"But let’s not overlook the key point: continued growth in energy use becomes physically impossible within conceivable timeframes. "

I mean, if you extend your timescales arbitrarily far away you're going to be right eventually. After all, entropy and heat death of the universe is a thing. I don't think anyone seriously thinks we civilization can continue on for literally forever. Although I'm not sure what this does for the discussion about debt financing. Even without debt financing you're still going to run into heat death.

As long as we continue to either produce more value than before, or the same amount of value with less costs, it’s not a big deal. Population growth makes things easier but it’s not strictly necessary.

The biggest problem is dealing with the “transition” of the population pyramid. Public pensions and such usually don’t account for the shape - namely the ratio of economically productive people to economically unproductive (dependents and retirees) - changing. Most likely, whichever generation gets to be retirees along the demographic transition from positive population growth to neutral population growth will get a free ride in the form of lower taxes/contributions in their productive years relative to what they consume in their retirement years. This is kinda sorta happening with Boomers in many developed countries although it’s greatly mitigated in eg the US by immigration.

Debt has two sides. It’s a trade like any other. it should be arbitrage neutral, and both parties should be better off after the trade, or it doesn’t happen.

Reply on news.ycombinator.com