Saturday, January 7, 2012

Can the economy keep growing? This paper says no

I just finished reading the rather short yet very interesting journal article Entropy, Substitution and Sustainable Economic Growth found in the open access journal Research in World Economy.

In the debate over sustainable economic growth, two critical issues are elasticity of substitution and technical change. Due to entropy increasing law in MEI system, the elasticity of substitution between any two resources must decline to zero and the efficiency improvement of resources from technical change is also limited. Therefore, substitution and technical change can not sustain economic growth forever.

This paper is only 5 pages long and is an example on how brevity can sometimes make things less clear.  Essentially it argues that economic growth can not continue forever due to entropy.  As we use more capital and labor we will see more entropy which will result in the use of more capital and labor for maintenance of capital and labor.  This results in decreasing efficiency of production which means that there is an upper limit on how much we can increase economic growth.
The paper goes on to argue that technological change faces the same issue.  Fundamentally technology change doesn't increase efficiency but rather moves from using one resource to another to create the same output.  This means it would be subject to the same forces of entropy and thus, in the long run, would not be capable of sustaining economic growth.
I'm honestly nor sure what to make of this argument.  Again it is just too short of a paper to really be able to tell if this is a valid critique of long term economic growth.  Statements like this one "As a double-edged sword, technical change can’t fundamentally improve the efficiency of resources." are just not well backed up and need a much longer explanation.   
My feeling is that it might be a valid issue, but the theoretical future end of economic growth due to increasing entropy is so far away as to not be a realistic concern for centuries.  Still it is an interesting and short paper that I hope others will properly evaluate.

Friday, January 6, 2012

What I have been thinking about all day: The Future of History

I got my first issue of Foreign Affairs today (Thanks! @shultzc) and i can't stop thinking about the article The Future of History: Can Liberal Democracy Survive the Decline of the Middle Class?

Essentially Fukuyama argues that we have a serious lack of new ideas for our political and economic systems which could cause us to lose our Liberal Democracy and with it a Middle Class.  Without some type of new ideology we might see the developed world become more unequal and move toward either a totalitarian political system like China or a more nationalist/populist regime.

I can't stop thinking about this.  I think the link above is gated, please post in the comments if you find an ungated version.  

Wednesday, January 4, 2012

Never read any Philip K. Dick? Now is a great time to start for FREE!

Philip K. Dick is widely regarded as one of the best Science Fiction writers ever.  He also might have been insane, which would explain many of his stories.  Even if you have never read a single one of his stories you have undoubtedly watched one of the many movies based on his books such as Minority Report and Blade Runner.

Now you can read 11 of his short stories for free!!!  So if you have no yet checked him out, now is your chance.

Free Philip K. Dick: Download 11 Great Science Fiction Stories

Tuesday, January 3, 2012

Things I want to learn more about: The Incan Economy

During my daily internet browsing I found this interesting article on io9.

The greatest mystery of the Inca Empire was its strange economy

In the fifteenth and sixteenth centuries, the Inca Empire was the largest South America had ever known. Centered in Peru, it stretched across the Andes' mountain tops and down to the shoreline, incorporating lands from today's Colombia, Chile, Bolivia, Equador, Argentina and Peru - all connected by a vast highway system whose complexity rivaled any in the Old World. Rich in foodstuffs, textiles, gold, and coca, the Inca were masters of city building but nevertheless had no money. In fact, they had no marketplaces at all.

The article mostly focuses on the fact that the Inca did not use money, nor did they have marketplaces.  Anyone who has visited ancient Greek and Roman cities usually see how central the marketplace was in those societies.  So this makes the utter lack of a marketplace very unusual for such an advanced society.

The article bases it's information from the book The Incas: New Perspectives by Antropologist Gordon McEwan.  I am curious if any economic historians have written books about this.

Monday, January 2, 2012

My review of Consider Phlebas by Iain Banks

This might be the first book I have finished and cannot think of a reason why I stuck with it to the end.

Consider Phlebas is the first book of the well regarded Culture series from Iain Banks.  It is about a small event that happens during a huge intergalactic war between the religious zealot race called the Idirans and the Culture who is an anarchist/socialist utopian society largely run by AI's.

The main character is a human(ish) who works for the Idirans because he feels that the Culture is philosophically wrong and a dead end for humanity.  He is to track down an AI that has hid itself on a dead world and is important to both sides.  While attempting to do his mission he gets side tracked into a variety of different adventures that allow us to see more of the universe and the insidious effects that the war has had on it.

The issue I have with this book is that it is essentially a ton of distracting side quests that I never felt really gave the reader much more insight into what was happening in the universe.  At the same time the bigger questions of why Horza, the lead character, is so anti-culture is never truly explored nor is the reason that the AI is so important.

I will admit that the writing is good and the book is fast paced.  For being Banks first scifi novel, it is a worthy effort.  But in the end i just can't recommend this book to anyone.  The big ideas that this book does have are great, but they are few and far between.  It is mostly a lot of running around that it just gets boring and repetitive.