Divine Neutrality

The essential premise: Prosperity is desirable.

Austerity is undesirable. Everyone wants prosperity. Austerity brings violence and unrest.

What is prosperity?

Prosperity is the ability to buy what you need – or what you may not need.

It is everyones desire – this ability to buy what you need.

When there is much buying and selling we have prosperity. Those are times when people are employed. They sell their time and buy goods and services with their earnings. Thus causing other people to be employed and, themselves, to buy things. Prosperity is connected to economic activity; the vigorous exchange of goods and services.

To be able to buy things is the ultimate measure of prosperity. So to ask for prosperity is to ask for economic activity.

Of course, the benefits of economic activity may not fall equally on all, but those who prosper do so from economic activity. Governments try to create prosperity. Adversity drives Governments from office.

Fundamental equation:

spending minus revenue = deficit = must be borrowed

Any government – municipal, national – is an economic unit. During the year it spends an amount called ‘spending’. The taxes and the fees it collects are its ‘revenue’. The difference between these two is called the ‘deficit’. A negative deficit is called a surplus.

The deficit is the amount of money that must be borrowed in order for the government to pay its spending bills for that year.

Government borrowing takes the form of bonds. These are promissory notes sold on the open market. In the U.S. all such borrowing is done only with the consent of the electorate. It is we who permit government to borrow; either directly, by vote on a bond issue, or indirectly as when Congress raises the Debt Limit.

(more…)

  Consider the number of human beings on the surface of the earth; the population of the world. Reasonably researched data exists for this number over the course of several thousand years. And accurate data exists for most of the last 110 years – often year by year.

I’ve plotted some of the data in the graph.

The horizontal axis covers the years from 1900 to 2007. Where data was available, the blue points display the estimated number of people in the world in billions. (The number 4 on the vertical axis means a population of 4 billion people)

The red points represent the percentage increase in population per year as calculated from the blue population data. For the red data the numbers on the vertical axis mark the population increase in percentage points per year. (The same number 4 means, for this curve, a growth rate of 4%/year)

From data not plotted here it is clear that before 1900 the growth rate was always lower than 0.7%/yr and usually significantly lower. At the time of the Bubonic Plague in 1400 the human population growth rate was negative. In 1778, when Malthus published “On Population”  the growth rate was about 0.4 %/year.

So we see from the graph that the greatest percentage growth rate in the recorded history of humanity happened between the years 1963 and 1972! And that was about 2%/yr – a doubling time of 35 years.

The dip in the curve around 1960 is due entirely to the population drop of 10 million people in China. This was the time of the great famine caused by Mao Tse Dung’s “Great Leap Forward”.

Where do the numbers come from?

(more…)

Living cells multiply. Their number grows exponentially. The more there are the faster they increase. An exponentially growing population has a doubling time: the time it takes for the population to double. Having a doubling time is a characteristic of exponential growth. In the time it takes each individual cell to divide into two cells, the whole population of cells doubles. The population doubles because each of its members doubles. Anything that is growing will eventually double in size and then double again and then again if one waits long enough. But only exponential growth has a single characteristic period of time that is the same for every doubling.

Things that do not grow exponentially are the distance the train carries you away from the train station or the amount of coffee in the cup you are pouring. These increase only linearly with time. The increase has a rate of growth but no characteristic doubling time. The time for the second doubling is not the same as that for the first doubling. Rather it is twice as long. The third doubling takes four times as long. So, in linear growth, no single period of time characterizes a doubling.

An amount of money invested at a compounded interest rate of, say, 7%/year, grows exponentially. It has a doubling time. Ten years. After 10 years the return on the investment will be as much as the original investment itself. The original investment will have doubled in value. Each of the dollars in it will have doubled. In the next ten years the money will have doubled again – to four times the original investment. The next doubling – to eight times the original amount – again takes ten years. The rate of growth, r, is related to the doubing time, T, by the simple formula: rT = Ln 2 = 0.7 (approx). At a growth rate of 10%/yr the doubling time is 7 years.

The motion diagram shows exponential growth through four doubling times at the rate of 7% per second. The exponentially growing brown bar doubles in size every 10 seconds. The green bar increases in size linearly at 7% per second. Clicking on GO starts the growth. Clicking on STOP freezes time. You can assess the doublings by stopping at 10 seconds (first doubling), 20 seconds (two doublings) and 30 seconds (three doublings) etc.

No matter what mathematics governs its increase, any physical quantity must eventually stop increasing. Nothing goes on increasing forever. Eventually the mathematics of growth fails to describe the phenomenon. Growth is never sustainable.

See Can growth be sustainable?