A family should continue having children, their farm should continue getting larger by clearing and acquiring more land, the herds should be larger each year, and irrigation water consumption will increase accordingly, of course. More tractors, more barns, more .... At what point does that no longer work?
Jeremy Grantham tells us, "One of my new heroes is an economist called
Kenneth Boulding who, at 22, got a paper into
Keynes's journal. At the age of about 50 he realised that economics was not taking its job seriously, that it was not interested in utility, in real serious improvement in the world, but that it was increasingly interested in new, elegant mathematical theories designed to get career advancement over usefulness.
He said the only people who believe you can have compound growth in a finite world are either mad men or economists."
Thanks and a hat tip to Jeremy Grantham, Chief Investment Strategist, GMO
He also said: "Mathematics has brought rigor to economics.
Unfortunately, it also brought mortis."
The Black Swan. The impossibly improbable event that just cannot, cannot happen, really. Look at the math! Like when Greenspan said it would be impossible for the derivatives marketplace to lose so much as a dollar because it was balanced and buffered and perfect in every way. Just a few years later, of course, Greenspan turned out to be wrong to the tune of a several trillion (TRILLION) dollars.
Economists, one would hope, would see recent events as an opportunity to adjust and align their math models, their expectations, and certainly their decision making. One could hope in one hand and poo in the other, too.
On a side note, we're still waiting for the economists of the world and their financial industry BFFs to announce their great discovery. "We know what went wrong," they should say, "and we know how to keep it from happening again!" It's that pregnant pause when everyone expects someone to say something, but the awkward silence goes on and on. Not a peep; perhaps because they were racing ahead of the regulators and ahead of the law in a gray area of questionable ethics. They knew what they were doing was perhaps legal but unquestionably unethical and potentially destructive; a loophole they could exploit with impunity.
Next; economists vs. ecologists; that will be a fun match-up. You show me your latest economic theory, and I'll show you the missing piece.
Every national government, agreeing with every large scale economic model in play, presumes continuing compound growth, don't they. What does that suggest?
Macro applied to micro-system; a family should continue having children, the farm should continue getting larger by clearing and acquiring more land, the herds should be larger each year, and irrigation water consumption should increase accordingly. More tractors, more barns, more .... At what point does that no longer work?
Meanwhile, buyers like China are grabbing huge swaths of farmland in Africa, Ukraine (the EU breadbasket), Brazil, Moldova, etc. Known deals of about two million square kilometers have been part of the last decade's world-wide land grab; two-thirds of that has been in Africa. That's the equivalent area of Spain, France, Britain, Italy and Germany put together. China, with 20% of the world's population and only 9% of arable land, plans to farm and export back home to feed their own people. At what point does that no longer work?
