Economics and Earth
I had a very fruitful discussion with one of my close friend after dinner tonight.
It revolves around one huge topic which I have always been interested in: economics
And it all started with this very simple question:
Is the world economy constantly growing, or is it constantly depreciating, or is it staying constant all the time?
We all know that world economy, in general trend, is always constantly growing. There may be some market crashes or economic depression once in few years, but eventually after those corrections, world economy will grow to yet another higher level never tested before.
Then another question kicks in. How can the economy keep growing? Does the world economy follow the law of conservation of energy, that is energy can neither be created nor destroyed? In this case, does economy can keep growing by itself? Or does it grow in the expense of something else to keep it running? What is that something else?
A very tricky question.
We both conclude that the world economy does follow the law of conservation of energy. Economy cannot constanly growing without feeding on something, which, according to us, is our own earth. The world economy indeed grows in the expense of our beloved earth. Earth is the source of all raw materials needed in all industries, which move the economic wheel of a country, and eventually move the economy of the whole world.
A very scary fact, considering that we only have one earth.
Then the question, how long can the world economy keep growing? Or in other words, when will our earth fail to feed us?
What’s in your mind?
There might be some other driving sources of economy.
I was thinking of something which may not be related directly to the consumption or processing of raw materials.
Try “Services” as opposed to the conventional “Goods”.
Services may not necessarily require any direct needs of raw materials. Well, one can argue that brain or muscle needs food anyway, but can it be quantitatively measured?
The new economy seems to be driven much faster by services industry. This, in turn, might bring in even faster declining of earth resources.
At the same time, some might use it to create awareness, or hopefully, some salvations to our tiny planet.
You choose!
Johannes
May 1, 2007
It is true that nowadays service industry is growing as an inseparable part of the economy. Yet eventually for all kind of industries, including service, to grow and contribute to economy, they need to draw a certain amount of resources despite how little they are, be it the electricity, gas fuel, etc. In the end, we are back to square one, that we need these earth resources to move the economy.
Only when the economy can be driven completely only by renewable resources in the earth, then we can be confident that the economy has the power to keep growing?
Sutono
May 1, 2007
Before we can answer whether or not world economy obeys something like law of energy conservation, we need to know what we means by world economy.
What do we define econonomic activity anyway? As we commonly defined, I think it is just a measure of dollar value added to any human activities. The world economy depends pretty much on how much we value things.
The physical mass and energy combined is, as we understand it now, of course constant. But physical mass and energy on earth may not be constant, considering the showering of energies from the sun and other sources.
So is the world economy constant after taking into account the raw materials consumed? I think it’s not. It depends on how we value things.
But I do agree that the bigger the world economy, the more it tends to consume raw materials. But it does not necessarily true for the future. Population may decline. Lifestyles may change. People may value the environment much more highly in the future than we do now. In that scenario, the world’s economy may still be growing without the necessity for increased raw materials consumptions.
Bahar
May 1, 2007
Have you watch Serenity/Firefly? It might gives you insights about how the future economy will be. It’s almost the same, it’s just the trade is now runs in inter-planetary/galactic scale.
I think the Sun is relatively renewable resource. One industry that affected by the Sun is definitely the farming industry. I’ve read news that in Brazil they are now using ethanol as the fuel. So it might be the answer of the statement in your last paragraph.
Hardono Arifanto
May 1, 2007
Thanks Bahar and Hardono for the sharing.
I will try to discuss further on my next topic.
One thing I like about Hardono’s comment regarding using ethanol as fuel. It is a very ingenious engineering solution to current limited amount of fossil fuel. Hopefully it will gain popularity worldwide soon enough.
Sutono
May 1, 2007
Few things about using ethanol as fuel which was highlighted in the economist and I think that ideas are somewhat true (I’ll try to summarise as accurate as possible):
- There was a study to calculate the cost (to the environment) to process corns (the main ingredients of ethanol) to ethanol. The result was surprising. If I’m not wrong, the total cost to the environment is almost the same or more than the fossil fuel
- By processing corns to ethanol, there’s a shortage of supply of corns for consumption. Thus, the price of corns is rising which hurts the end customers
So, in my opinion, there’s still much to do to replace fossil fuel to ethanol. One of the examples is how to improve the process of producing ethanol from raw materials without hurting the earth too much.
What about hydrogen? Hydrogen + oxygen = water ^_^. But I’m not sure the process of extracting hydrogen.
I think, earth won’t fail to feed us. One thing about human which fascinates is that, our body is the result of optimisation for millions of years. Maybe when one day the earth fails to feed us, there will be a new organism which is going to dominate the earth, replacing Homo Sapiens. Or we evolute to a new form
.
And if it’s caused by nuclear war, as far as I know, the species which has better resistance to radiation than human is: COCKROACH. It’s time to imagine how cockroach will dominate the earth, or we evolute into a cockroach-like creature =P.
Made
May 2, 2007
[...] posted a comment to respond Sutono’s post. He mentions his opinion about world’s economics vs the earth. And in the end, he posted [...]
Made’s Blog » Blog Archive » Earth, Ethanol, Homo Sapiens and Roaches
May 2, 2007
Oh well, this is a very interesting topic to miss.
Much more enviromentally friendly energy sources have existed for awhile now.
Electric and Solar. The technologies have existed.
Why didn’t they go boom?
I think : “The Status Quo: Oil & Gas”
Electric cars (they are limited in production currently, you can guess why) would struck down all the Oil Companies and Countries. Do you realize how big they are?
Those economic powers are just too big, too fat, too bad, and too risky to be left out. How many people would get unemployed? How much $$ need to be reallocated?
What kind of political disorder this would cause?
World Economy belongs to the rich and some lucky fellas.. ^_^
Johannes
May 3, 2007
The oil industry is indeed very very big… The biggest company in the world is Saudi’s oil company. The biggest earning companies in the world? Many of them are oil based. Exxon, etc.
Over time… it will change (once it economically makes sense to use the more environmentally friendly energies). Never underestimate the power of connected global citizens. No political, superpower propaganda can resist that. *_^
>> World Economy belongs to the rich and some lucky fellas..
Hahaha.. we have debated it before.
Bahar
May 4, 2007
http://en.wikipedia.org/wiki/Who_Killed_the_Electric_Car
^_^v
Johannes
May 4, 2007
Now that we’ve got Wikipedia and WordPress, we won’t be so easily manipulated
If the electric car can really be commercially viable now, i dont see any reason why the auto industry is holding themselves back. The competition in this area is stiff, especially from Japanese, Korean, and now Chinese manufacturer. I pressume the Republican does not have much sway over what the Chinese manufacturers can or can not do.
If electric car is commercially viable, it is just be a matter of time. I suppose, with increasing energy costs, it will increasingly be more viable.
Bahar
May 4, 2007