I generally enjoy his evidence-based approach to investing and this video is particularly good at addressing common FUD about today's situation being unique compared to the past.
The GDP is itself exponential. A growth of +2% a year is an example of an exponential curve. Sure there are "limits to growth" (see Meadows et al.) but it's not clear whether those limits are reached yet.
Unless we find a way to 'produce' (the P in GDP) without increasing entropy by digging up stuff (oil, metals, whatever) and then releasing them into our ecosystem once we're done with them, those limits seem to be pretty close though.
That's not just me thinking that. That's the Club of Rome, in the 70's.
As long as the Sun shines on (and this is essenty “for ever”), there is an increasing accumulation of energy in the planet: that is where the possibility of exponential “growth” comes.
Your point is invalid because it would require an exponential growth of the sun power (the derivative of an exponential is an exponential). While the sun power is exponential around a billion years, it is a constant over a year. So you would reach at most a linear GDP growth.
Not so fast. Entropy is decreasing. There might be more energy, but useless energy. Energy low enough, spread out enough or with too little temperature differential that you can't do much or anything with it.
The Earth is getting solar energy sure. But it also emits energy. And a lot of what stays here is just useless heat.
The population isn't growing exponentially anymore and most productivity gains per capita are linear. It's only the big breakthroughs that made it exponential by getting rid of old professions and replacing them with new ones.
GDP rising exponentially is also clearly unsustainable.
We have IMO reached a paradigm shift in central bank policy after decades of low rates and low inflation. The recent past is not a good guide to the near future in markets.
The entirety of human history since prehistoric times to the present gives evidence contrary to your claim. Human societies have experienced exponential growth since forever, with only occasional brief temporary setbacks. Even the Black Death is a blip on the exponential curve of economic progress.
> The entirety of human history since prehistoric times
Extrapolating from the past doesn't always work. There are real limits.
Take the rate of energy consumption of human civilization for example, which is currently about 17 terawatt[1]. Thermodynamics tells us that after doing useful work, practically all of that energy ends up as waste heat. (A small fraction is stored, e.g. aluminium stores some energy. I assume this is negligible.)
The power received by the Earth from the sun is about 170,000 terawatt[2], a factor 10,000 more. So plenty of room for growth, right?
But now take a modest 2% yearly growth. This is a factor 1.02 each year. So 500 years of 2% growth would be a factor 1.02^500 = about 20,000.
Maybe we could actually do that with fusion power. But then we'd have two suns(!) worth of extra waste heat to deal with. This cannot work. Current concerns about global warming pale in comparison. Even if we found a way to radiate all that heat into space as infrared, e.g. by concentrating the heat into country sized radiator panels, 35 years of 2% growth would double the waste heat again.
A similar calculation can be done for the growth of anything physical. And even if you continue growth off Earth, you'll soon hit the limits of the solar system. Even the volume of an expanding sphere at light speed cannot keep up with an exponential function.
Technology can produce goods with greater intrinsic value for less energy and fewer materials. A modern CPU is vastly more capable that the supercomputers of the 90’s, but costs less to produce and consumes far less energy. More importantly it means the market for CPUs and their contribution to GDP has exploded.
There are ultimate physical limits to how much information can be processed with a fixed amount of energy, but we aren’t near those limits yet. I’d argue that if you factor in technological growth you could go for much longer than 500 years before running out of energy, even if you limit yourself to a type 1 civilisation.
That's not correct. At a scale of a century, economic growth has been a zero sum game https://ourworldindata.org/economic-growth. Only recent abundance in cheap energy sources has allowed a HUGE economic boost.
Past performance is not a predictor of future results. If we continue to grow GDP (~energy consumption) at about 1%/y, we’ll boil oceans in 400 years. That’s what exponential growth means.
With a long enough time horizon, the GP consideration ("If we continue to grow GDP (~energy consumption) at about 1%/y, we’ll boil oceans in 400 years.") will still come true even if expanding in space. A sphere expanding around earth at the speed of light grows quadratically in the outer boundary and cubically in volume, and will be overcome eventually by any exponent > 1.
I'm pretty convinced that increasing human activity so much to increase the background radiation to 373K is never going to happen, the point is more that any exponential energy growth eventually can't continue.
In a way though it's already happening, the GDP ~ energy consumption equivalence from the GP assumption does not hold (https://data.worldbank.org/indicator/EG.GDP.PUSE.KO.PP). We'll just keep inventing ways for the GDP number to keep growing exponentially in questionable ways for the system to keep going, until we can't anymore.
the dataset is interesting, thanks for linking to it. the relationship is for now linear, which I believe doesn't invalidate the point that you and I both make that exponential is not sustainable. the GDP-energy consumption decoupling must also become exponential, which I lack vision for how to achieve.
Hand-wavy predictions like this scare me - it suggests people don't understand space travel or the distances involved at all.
Sure, if you think of the Earth as a game of SimCity plus Kerbal Space Program, these discussions about exponential growth are interesting. However, they miss the part where the intervening 30-100 years become literal hell on Earth while space travel ramps up.
I started my career at NASA. I'm working on an asteroid mining startup. I'm well aware of the vastness of space :)
The GP said 400 years. That's the time since the age of exploration until now. That's a vast era of time, and exponential technology development goes both ways.
Exponential growth, indeed economic growth at all, started with the industrial revolution. For instance, many places in Eurasia had the same GDP in 500 that they had in 1400.
Nope. The industrial revolution was a phase change in how economies operated and how wealth was distributed, but if you chart back thousands of years you get the same exponential trends.
>Human societies have experienced exponential growth since forever, with only occasional brief temporary setbacks.
If that were true why haven't we conquered the galaxy yet? It would only take 3% growth per year for 2000 years (numbers from memory). Oh right, it didn't happen because exponential growth is a fairy tale. It's always been logistic growth with breakthroughs increasing the upper bound.
https://www.wolframalpha.com/input?i=y+%3D+1.05%5Ex+from+1+t...