By 2020 the investors of the world will see their self-interest and stop compounding their returns, allowing the global economy to climax at a high stable rate of change, forestalling the climax of investment with a loss of resilience, expectation failures, environmental collapse, conflict and mistakes.
The real limit of economic growth is the loss of resilience from accumulating mistakes. I mention this because exponentials are spookily explosive, seem like nothing & follow w/ major affects. If you see a road sign saying ‘Curve Ahead’ you know if the car starts tipping it’s too late to slow down. The curve of an exponential gets ever more radical the further you take it, and it’s a mistake not to slow down.
The explosively increasing complications of growth are already quite evident. Look at how nearly all responders to Katrina were disabled by confusion. That’s what information overload does when things really matter. I think many people failed miserably, but can’t entirely fault them for being dumbfounded with deciding what to do in the midst of a general system failure. That’s what Katrina was, and it can go global. Soon we’ll see this as inherent in the exploding complexity of endlessly accelerating change, and that it is an absolute and dangerous limit to economic growth.
Seeing growing errors from making huge decisions too fast brings the problem home. Look at global warming and the historic frequency of radical climate change. Long Island is just a sand bar after all, and it’s not outside reasonable possibilities that we’d have to significantly abandon it. Take the 30 year failure of wage growth and exploding deficit spending and completely impossible long term budgets that disguise it. We have all kinds intractable problems that are different in kind from any that humans have ever dealt with, like the one addressed here. How do we calm explosive economic change when all the financial drivers of it seem so inviolate? Self interest. Our great problems are too big, changing too fast and seemingly hopeless, it’s all bad news, over our heads, and most people are just not interested. It becomes apparent that we will be making major changes in how we live, either the easy way or the hard way. Against all indications, I think we’ll choose the easy way. Having to cope with a failed global system is simply not part of the standard business model, and someone’s going to notice.
Fortunately an actual ‘easy’ way exists, and it’s kind of cool, more than a little radical, but possible and cool, and matches the core problem to a ‘T’. There’s a built-in control valve. We can choose to cap our historic cultural and economic leap from the Middle Ages (starting 600 years ago when growth began) and maintain a high stable rate of change. It can be done with a suspiciously potent but simple change of habit, spending investment returns. Multiplying the returns on investment by reinvesting them is the direct mechanism of exponentially driven change. Letting go of only the multiplying part would allow the economies, otherwise largely unaltered, the freedom to continue rapidly evolving. Government will give us better information about natural systems, but there would be no threat to free market individual or business decisions. We’d go forward with fresh purpose and vision earned from the experience.
Spending the returns is also the one non-disruptive way to bleed excess pressure from economic bubbles (if you can identify the parts). It might be done in massive emergency quantities in order to reverse the collapse of what you could call the 600 year bubble, presently building. It might be possible to turn the clock back a little after otherwise irreversibly beginning a collapse. More study of the option would clearly be needed, but it’s basically just the readily available option for individuals to ask their investment fund mangers for their gains in order to spend or donate them. One simple way to start would be a tax policy to eliminate taxes on investment returns that are consumed, i.e. passed on to others with no lingering strings attached.
That and further steps in the same direction would raise sales, employment and incomes, reducing government expenses and raising government revenue, and by rejuvenating them, slow disinvestment in established businesses, methods, skills, plans, purposes and people… maintaining the real level of investment at or near it’s highs, allowing continued rapid change. What makes it possible to see all this, is considering the system as a whole, and studying the kinds of evolving systems that achieve changes of state, that we might copy.
