Skip to comments.Correcting The Growth Of Human History
Posted on 12/22/2011 12:20:16 PM PST by blam
Correcting The Growth Of Human History
By Bill Bonner
12/22/11 Baltimore, Maryland And so, yesterday, the northern hemisphere had its shortest day of the year. In Baltimore, the sun never rose and never set. It was gray all day. Then it was night again.
And so the days dwindle down to a precious few. In astronomical terms, the year is already over. We have passed the winter solstice. From here on out the days grow longer. In terms of the Gregorian Calendar, we still have a few more days to go in 2011. Then, we face a new year. New challenges. New crises. And new opportunities. Will 2012 be the year the human race goes into a downturn a slump a correction?
Time moves on. So do opinions.
Investors were all hot to put their money on stocks on Tuesday. They thought the euro debt crisis had been solved. And housing was looking up in the US.
But yesterday, there was no follow-through. It was as if they had forgotten what they were so excited about.
Thats the way it has been all year. One day, investors are sure recovery is right around the corner. Then, they turn the corner and theres nothing there.
2011 began with most people expecting a recovery. Now, they know; theres something else going on. Something more complicated something different from the typical recession/recovery pattern theyve been used to.
If they looked more closely, they would notice that each of the recoveries since the 80s has been a bit weaker than the one that preceded it. The feds still fight downturns in the same way with counter-cyclical fiscal and monetary policy. Each time output goes down, the Fed reduces interest rates. This cuts the price of credit, which usually gets people going again with new investments and new hiring.
But credit is not so different from everything else in the world of economics. The law of diminishing marginal utility applies. The first dollar you borrow pays off. You put it to work building new, more efficient and more productive businesses. The investment pays off. Later borrowings are less effective. Finally, they dont work at all.
Part of the explanation is merely that the borrowers shift from borrowing for very productive purposes to borrowing for less productive purposes to borrowing not to produce at all. Theres no payback when you borrow to consume. Zero.
Finally, the recession of 2001 was met with a muscular Fed response with much lower interest rates and a federal budget far in the red. But the recovery was the weakest ever. It was a jobless recovery, with an unusually slow rehiring pattern.
Now, 10 years later we have something new a jobless non-recovery! People are beginning to wonder. What is really going on?
Even Martin Wolf, chief intellectual at The Financial Times is beginning to ask questions. The future is not what it used to be, he writes.
Here at The Daily Reckoning we have known for a long time that the Great Correction is no ordinary recession. We didnt know exactly what it was correcting, but we had a list of possibilities.
Is it correcting the 60-year boom in credit that began after WWII? Seems like it is Credit, in the private sector, has been going down since 2008.
Is it correcting the bull market in stocks that began in August 1982? So far, not much sign of it but we think so. People are bound to realize, sooner or later, that business profits cannot expand when credit is contracting.
Is it correcting the power of the US empire? Yes perhaps but thats a long story for another time
Is it correcting the paper-currency, faith-based, centrally-planned monetary system put in place by Richard Nixon in 1971? Not yet. Instead, US debt denominated in those paper dollars gets more respect than ever. But we have a feeling that it will be corrected before this crisis complex is over.
On Monday, word got out that the European Central Bank has lined up with the Fed and other central banks to fight the debt crisis by yes creating more debt. And more paper currency. It will lend another half-trillion euros or so to the banks. The banks are supposed to make more new loans and buy up more old ones. Specifically, theyre expected to take money from the central banks and use it to buy government debt, thus keeping the chickens from coming home to roost as long as possible.
In the meantime, economic growth, it is hoped, will finally get into action. Growth, they think, is the mean to which the developed economies will revert which will raise GDP and tax receipts, reducing deficits and debts.
But what if growth itself were being corrected?
What if the entire period from the invention of the steam engine to the invention of the internet were not the normal thing, but the abnormal thing? What if the lost decade we have just gone through is actually the mean the usual the normal thing? And what if after nearly 3 centuries we have just now reverted to it?
Until about two weeks ago, we thought human beings had only existed for 100,000 years. Now, archeologists are guessing that weve been around as a species for twice as long.
You know what that means? It means that our mean rate of growth already negligible is actually only about half what we thought it was. In other words, it took not 99,700 years for humans to invent the steam engine, but 199,700. And now, what if we are not going on to something new, but back to something old? What if the New Age is really more like the Old Age where growth and progress were unknown.
Lets see, the typical person in 1750 lived better than the typical person in say 100,000 BC. The person in 100,000 BC lived in a cave or maybe a wigwam. The typical person in 1750 lived in a hovel. There were some great houses too, of course. By the 18th century, humans had been building with arches and columns and domes dressed stone with elaborate decoration for thousands of years. But most people had no access to those monuments. They lived in whatever they could put together usually of wood or mud.
They lived on what they could grow with their own hands, or with the help of domesticated draft animals. They hunted wild animals or got their calories from their own herds and flocks.
The person from 100,000 BC was a hunter-gatherer. But his life was not all bad. At least he got plenty of fresh air and didnt get caught in traffic jambs or have to watch television.
But the progress between 200,000 BC, when mankind is now thought to have emerged to 1765, when Watt produced his first engine was extremely slow. In any given year, it was nearly negligible imperceptible. Over thousands of years there was little progress of any sort, which was reflected in static human populations with static levels of well-being.
Then, after 1765, progress took off like a rocket. Over the next 200 years, the lives of people in the developed countries, and the human population, generally, changed completely.
It took 199,700 years for the human population to go from zero to 125 million. But over the next 250 years it added about 6 billion people. Every five years, approximately, it added the equivalent of the entire worlds population in 1750. Progress made it possible. People had much more to eat. Better sanitation. Better transportation (which eliminated famines, by making it possible to ship large quantities of food into areas where crops had failed). The last major famine in Western Europe occurred in the 18th century when crops failed. After that, the famines in the developed world at least have been intentional caused largely by government policies.
Progress abolished hunger. It permitted huge increases in population. And it brought rising real wages and rising standards of living.
By the late 20th century, people took progress and GDP growth for granted. Governments went into debt, depending on future growth to pull them out. So did corporations and households. Everyone counted on growth. Spending and tax policies were based on encouraging growth. The enormous growth in government itself was made possible by economic growth. After all, as weve seen in our Theory of Government, beyond the essentials, government is either parasitic or superfluous. The richer the host economy, the more government you get.
Today, there is hardly a stock, bond, municipal plan, government budget, student loan, retirement program, housing development, business plan, political campaign, health care program or insurance company that doesnt rely on growth. Everybody expects growth to resume after we have put this crisis behind us.
Growth is normal, they believe.
But what if it isnt normal? What if it was a once-in-a-centi-millenium event, made possible by cheap energy?
Where am I going?
Merry Christmas to everyone.
Busy body. Let him hunt and gather if it’s “not all that bad”. Damn fool. He forgets to mention that people were dead by 35 at that time, in spite of eating all organic free range food.
Sierra Madre, CA
Excellent article, although flawed in its premise. What the author does not address, is cycles. Maybe we are in a decline to a new normal. But to be such a pessimist to say its all over? Even if there is a lot of suffering, and perhaps a mass die-off, I like to think the human race will bounce back and make life even better than it has been. Why all this self-importance to think this particular point of the timeline of humanity is “it”? People probably felt that way in the late 1800s, when there were major recessions and problems. Life is good, and can continue to be good in the future. Merry Christmas!
According to a Smithsonian article hunter gathers lived longer than we do today. Think about that.
The flower with the world’s largest bloom is the Rafflesia arnoldii. This rare flower is found in the rainforests of Indonesia. It can grow to be 3 feet across and weigh up to 15 pounds! It is a parasitic plant, with no visible leaves, roots, or stem. It attaches itself to a host plant to obtain water and nutrients. When in bloom, the Rafflesia emits a repulsive odor, similar to that of rotting meat. This odor attracts insects that pollinate the plant.
Another enormous flower found in Indonesia is the Amorphophallus titanum, or Titan arum. It is also known as the “corpse flower” for its unpleasant odor. Like the Rafflesia, the Titan emits the smell of rotting flesh to attract pollinators. Technically, the Titan arum is not a single flower. It is a cluster of many tiny flowers, called an inflorescence. The Titan arum has the largest unbranched inflorescence of all flowering plants. The plant can reach heights of 7 to 12 feet and weigh as much as 170 pounds!
Where am I going?
Merry Christmas, blam.
You’re going to the Rose Bowl, aren’t you? ;’)
Actually, it was a bit more than that at some periods. Longevity declined with the advent of farming, because it was so hard and frequently unreliable.
I arrived in Sierra Madre about 9:00PM last night.
A little bit too artsy-fartsy for me but tolerable.
All is well.
What would 6,000 years do to an SUV? How do we know for sure that there weren’t billions of humans on the earth at any one time before 6,000 years ago?
Where’s the edge of the universe? What is outside of that?
There arent't enough fosssilized bones or remnants of human activity on that scale.
|GGG managers are SunkenCiv, StayAt HomeMother & Ernest_at_the_Beach|
The left is anti-humanity in its efforts to deny mankind the energy that has allowed for the dramatic raise in the standard of living --- not to mention the dishonesty of the reasons the left uses as rationale for their efforts (e.g., global warming, fracking contamination).