Someone I know posted a picture of an empty rolodex today, saying that they'd moved their friends to 'the cloud.' I'm sure you can look at your phone apps and see other things that would've been physical objects ten or twenty years ago. So, that's one way material use has, at least, shifted.
There are two other trends that worry me more. One is visible in the freezer section at the grocery store; a "half-gallon" of ice cream is no longer actually a half-gallon. Many other food items have shrunk. The article's example of lighter buildings is what I view as the same category, something blogger Yves Smith terms 'crapification.' We've now had at least two generations of spreadsheet-wielding MBA's optimizing corporate costs to reduce what is spent on materials and labor. Evidence of their success is showing up across the economy, and politics, and society at large.
The other trend is money supply; One of the chief problems leading to the 2008 financial crisis was that much more credit had been extended than could ever be paid back by those to whom it was loaned. The 'solution' was to have central banks 'pay back' the loans that never should've been made. That put a lot of credit in to the economy, which shows up as economic growth. I'd like to see an analysis of 'economic growth' where the contributions of resources and credit are accounted for separately.
In the EU, shops are required to display the price per <appropiate round value>, i. e. all coffees have a (usually smaller, but readable) Euro/500g price.
There used to be an even more drastic law proscribing certain sizes and disallowing all others. Flour would only be available in 500g and 1kg bags, for example. They got rid of it, possibly because they got sick of people making fun of EU regulations (that's what happened with the famous banana ratings)
This little video of a an 80's desk versus a contemporary one has been bouncing around Twitter today...it's a really great visual showing how apps have slowly been replacing everything that used to clutter a desk.
A lot of it is due to sticky prices. Customers don't like seeing the number on the label go up, so the companies do what they can to keep the product quality the same at the same price point, which results in reduced quantity. The alternative is to reduce quality, which usually results in a death spiral.
I'm only slightly surprised that a comment full of anecdote without a shred of actual scientific evidence is the top comment in this story.
MBA's have optimized everything... which is great! We don't need to spend incredible amounts on labor. We don't need to buy incredibly large homes. Make work more efficient... its the only way to compete with low cost emerging economic markets. Specialization and efficiencies are the only way to remain competitive.
From my perspective, the only real structural damage has been done by the success of concentrated moneyed interests in regulatory capture. We need to tax these efficient corporations and individuals fairly, and use those tax dollars to invest in universal healthcare, environmental protection and education.
'That put a lot of credit in to the economy, which shows up as economic growth.' - Unfortunately its not quite true!
Fractional reserve banking (FRB) as is taught in most econ textbooks and courses is a myth. There's a very nice paper by the bank of england debunking this (Money creation in the modern economy). The idea behind QE and bailing out the banks was to create lending and liquidity in the market largely via the FRB mechanism however that failed to materialise for reasons the bank of england paper goes into but basically banks don’t lend out their reserves as the theory expects but it’s the process of lending that creates deposits not the other way around. The money given to banks didn't result in increased lending but instead went into financial markets buying up assets. There was some wealth effect going on so people with some assets got richer and then spent more but overall it was a really trickled down effect.
> There are two other trends that worry me more. One is visible in the freezer section at the grocery store; a "half-gallon" of ice cream is no longer actually a half-gallon. Many other food items have shrunk.
A half-gallon seems like an absolutely obscene volume of ice-cream. That's over two litres! Why would anyone possibly need ice-cream measured by the gallon? Isn't it good that sizes are reducing from that much?
> We've now had at least two generations of spreadsheet-wielding MBA's optimizing corporate costs to reduce what is spent on materials and labor. Evidence of their success is showing up across the economy, and politics, and society at large.
Or on other hand we are enjoying more from life with less resources. Not only it helps more companies to be more profitable thus keeping more people employed, it also does a great service to the planet and the future as we continue to reduce our footprint.
I agree with your point about the loan paybacks which of course is off topic.
It is not "crapification", my take on is "replaceability". People hail washing machines from communism era as really good, working for 30 years (they don't take into account survivorship bias but that is another point).
Earlier you could afford only one pair of shoes for your entire life. Lots of physical things could be inherited because they were valuable and they were really expensive.
You would not let your kids inherit your shoes now. The same with buildings. Kids will probably want to have their "own dream house" not stick with their parents dreams. Those kids probably will also have to move to other state or other city because jobs their parents did will no longer be there, and they will have to find their own place to get a job. Son of a carpenter is not going to be a carpenter. You want buildings easily replaceable. Buildings should last not more than 100 years and be easy to recycle.
That said, all stuff that would be replaceable, should also be easy to repair
Exactly. And we have that magnesium and other macro-nutrients are declining in fruits and vegetables (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6163803/). Unregulated capitalism will grow "food" in the form of apple shaped buckets of water and sell as many as they can as the soil is exhausted.
From the article: It suggests that economic growth in a mature economy does not necessarily increase the pressure on the world's reserves of natural resources and on its physical environment.
Jesse Asubel has been looking at "dematerialization" for a long time[1] but it has only been relatively recently, now with a couple of decades of additional data to look at, that it is getting the attention I think it deserves.
One of the consistently annoying things, for me, in science reporting is the extrapolation of a given set of ratios out to some point where the result is very click-baity. The systems guy in me has experience that all exponential trends are s-curves, and so I feel that one must at least acknowledge that fact in your reporting. I understand it, it means that the predicted outcome might not happen at all, but it is important to the story.
So economists do the same thing, they take some ratio of numbers that seem to be tracking the 'size' of the economy and then run that trend out 50, 100, 500 years. It really doesn't matter, but what is important, and this article and other papers on de-materialization have demonstrated, is that neither the economic growth rate, or the relationship between that growth rate and some other factor, are ever really constant. Thus any point that depends on them being constant for more than a decade or so, is really stretching it.
Its nice to see this reality (of how extrapolating is bad because things change) demonstrated in a clear and convincing way.
> So economists do the same thing, they take some ratio of numbers that seem to be tracking the 'size' of the economy and then run that trend out 50, 100, 500 years.
Very few academic economists do 30+ year extrapolations, let alone 50, 100, 500. The vast majority of long-term growth macro-economic literature are attempts to explain/model the large observed differences in outcomes in GDP/capita between different countries, and hopefully distill some useful policy advise from that. Forecasting beyond even 5 years or so is a very niche activity in academic economics. (Source: PhD economics and former model builder for pension fund and souvereign wealth funds)
Buckminster Fuller made a similar observation or prediction even earlier, in the late 1930s. He called it ephemeralization, https://en.wikipedia.org/wiki/Ephemeralization, the idea that increasing technological efficiency will allow us to do evermore with less.
A possible counter-acting force is Jevon's paradox (a generalized economic form of Wirth's Law) but the linked empirical result suggests ephemeralization is the stronger force. Although, it is likely true we can do much more to counteract Jevon's Paradox like phenomena.
> The systems guy in me has experience that all exponential trends are s-curves
A friend of mine visited a financial planner inquiring about saving for his children's university education.
The planner took the last the last 20 years of education inflation and extrapolated it out 15 years, and recommended my friend put away 2.5k per month today per child today to cover it.
My friend didn't hire the planner, on the reason that we will probably be post-revolution (which would cause this curve to become an S) before we get to the point where you need to save 30k per kid per year over 15 years to pay for university.
Did they consider that the USA send all their production to China due to cheap labor and few environmental regulations? Now they are consuming more but using less raw materials. Compare the number of toys that a child has today to one 30 years ago.
Some people say growth can't happen forever, and all growth comes at environmental cost, but that simply isn't true. I can create digital goods and services which people buy, and this increases GDP, and it doesn't hurt the environment and is indeed economic growth in the realest sense. I can even give massages all day, and this also doesn't destroy the environment.
This is incorrect. Every economic output requires material inputs.
> I can create digital goods and services which people buy
Your digital goods and services require physical machines to run on. These machines are made of physical materials, including some rare earth minerals that are costly to extract. These machines require energy to run, which also requires material inputs.
> I can even give massages all day, and this also doesn't destroy the environment
Human beings like yourself require material inputs to live – food, shelter, energy, to name only a few. Just by being alive on a biosphere, you are impacting the environment in some way.
The size of that impact depends on your individual lifestyle.
There is simply no such thing as "immaterial" economic production.
There an upper bound created by the limits of possible human time spent. You can raise them with technology or population growth, but there again, you're bumping up against ecological constraints.
Even if this is would be true, is the idea that everyone shall work as and end in itself because of a dogmatic growth goal? At what point do we realise that it's based on artificial scarcity?
But doesn’t economic growth means an increase in consumption, however immaterial the product is? Meaning, there will still be a limit in what people can (not to mention want to) consume at the point we are saturated in Content™, so more people will just have to be made to increase economic growth.
If technological efficiency had any effect on lowering overall consumption, we would see that now. But we don't. Consumption in real terms is increasing at an exponential rate. This is called The Great Acceleration.
Turns out people use the efficiency of technology to just consume more. Your internet goods and services might increase consumption somewhere else. Some of it is even explicit. Google Ads is a digital service that explicitly is designed to increase consumption. In fact, all the great technology companies (Microsoft, Google, Apple) are designed around the idea that people will consume more. The tech industry, in aggregate, has been designed around getting people to consume more. Even Tesla, a green play, is designed around more consumption. Tesla could have been a company where you paid them, and they took your car and converted it to be an electric car by stripping the engine and adding batteries. This kind of play could have reduced real consumption. But that's not what Tesla is about.
It really only makes sense to understand the world economy as a whole. On this scale, consumption (e.g. steel production or oil consumption) continue to grow [1,2]. Americans are in the fortunate position of selling services (e.g. finance, advertising, information management) and consuming finished products from the rest of the world, but the American economy should not be considered a closed system.
Your point is well taken, insofar as manufactured goods, but does not explain the decline in agricultural and construction inputs. In agriculture we're (currently) a net exporter and construction is non-traded.
Yes, leaving out the consumption of materials in the form of goods manufactured elsewhere is such a giant, glaring hole in the logic that it strains credibility to believe it's mere oversight. It looks like deliberate misinformation.
This reads to me mostly as the US importing more, so the increased material use doesn't show in statistics. The article also mentions increase in use of plastics.
One thing I'm curious about though - how come energy use stopped being correlated with economic growth? That's new.
Wages have been mostly flat, so consumers have no extra money to engage in additional buying. Since the Great Recession of 2008, the top 1% of the income distribution have absorbed 125% of productivity gains. This is the reverse of what we saw in the 1940s and 1950s and 1960s when strong labor unions were able to win 110% of productivity for workers, so that the share of national income going to labor increased. Now the opposite is happening, with the share of national income going to labor decreasing.
> Wages have been mostly flat, so consumers have no extra money to engage in additional buying.
Check out [1] and scroll down to Table A-7 (it's an Excel file). It's the real earnings data (in 2018 dollars), by gender, from 1960 to 2018 (though it's kind of spotty before 1967). What sticks out to me:
* For men (looking at Total Workers), real earnings are currently around 10% higher than they were in the 70s (moving from low-$40K's to recently just past mid-$40K's, with some peaks and valleys along the way). Doesn't sound like much, but...
* For women, earnings have roughly doubled in that timespan
* The number of men in the workforce has increased by almost 50%
* The number of women in the workforce has increased by almost 100%
From a certain perspective, it's kind of amazing that real earnings haven't gone down significantly.
Well... just last night, I was planning a trip. There was a place I could see on Google Maps (satellite view) that looked interesting, but it wasn't clear that I could turn onto it (there might be a barrier or an elevation difference). But Google Street View made it clear that I could turn onto this little dirt road in the middle of nowhere. For free.
That isn't wage growth. And yet, I am better off for being able to do that - not better off in terms of dollars, but better off in terms of being able to more easily do the things that I want to do.
Did you read the article? Some of the resources hit peak use in the 1970s. With respect to crops, we're producing double the tonnage we did in 1980 with the same level of water and fertilizer, and greatly diminished acreage. There are also signs that new construction uses fewer materials to produce similar amounts of building.
There are similar indicators for Germany as well, and their wage picture is pretty different.
>This is the reverse of what we saw in the 1940s and 1950s and 1960s when strong labor unions were able to win 110% of productivity for workers, so that the share of national income going to labor increased. Now the opposite is happening, with the share of national income going to labor decreasing.
Yeah, but this is a good thing. The labor class is a very strong supporter of the political party that pushes policies which increase the income gap, and votes strongly against anyone who tries to change this or go back to the policies you're talking about. So they're getting exactly what they're voting for.
I wonder what this will look like in a renewable energy world where the cost of energy on the margin drops to the the small operating cost + the principal/interest on the capital expenditure.
We might actually see a reduction in GDP in that case, especially if coupled with ever increasing production efficiency for energy consuming processes.
In that case, we might have to re-evaluate how we define "success" to be less weighted for GDP, or include the reduction in fossil fuel externalities in the definition.
New Zealand is a model to follow [1]. As you mention, of course GDP will plummet as renewables and technology act as enormous deflationary forces (good luck Central Banks trying to inflate against those forces). Software is eating the world, there is no marginal unit cost for delivering that benefit to the world. For example, consider what was previously spent across the world on TLS certs that now Let's Encrypt provides to the world for a few million dollars a year. Every opportunity for a Unicorn is an opportunity for a lean, well functioning non-profit to deliver similar consumer excess (or as a Human would say in behavioral econ, "happiness") very inexpensively (another example I love: Watsi.org [2]).
Margins for many of the oil, coal, and gas companies are already negative. The world subsidies those industries to the tune of $5 trillion a year. US subsidies it's fossil fuel industry to about $600 billion a year. In other words, energy is already cheap and GDP is still increasing.
Falling costs of similar goods and inputs are treated as deflation in economic statistics. "Nominal" GDP would fall in that case, but "real" GDP, which is the number everyone cares about, would still rise.
Considering how much of the economy is derivatives, options, and futures trading, this isn't exactly a surprise.
I'm no economist but the fact that we're using less of the most fundamental resources available despite a growing population doesn't seem like improving efficiency in aggregate, it just seems like decreasing activity masked by the inflated aggregated metrics about the 'economy'. A lot of money moves around nowadays and relatively little of it is actually put toward something "real", instead being diverted to quant firms' operational costs and their employees' bank accounts.
Define “real”. If I replaced your spreadsheet with a bunch of Python scripts, vastly improving your productivity, and you paid me for it, did something “real” get created in the process?
I didn’t see it addressed in the article so I’ll slip on my tinfoil hat for a moment...
Could this be related to growing income and wealth inequality? Poor people buy less stuff, and presumably rich people get rich by not buying more stuff commensurate with their incomes. Even the falling fertilizer consumption might be explained if poorer people are shifting to more processed junk food.
The article notes 1970 as the critical turning point, which is the same year Piketty identifies in his book Capital as the inequality turning point in the U.S. and Europe
This reminds me of the phrase "if you only have a hammer, every problem is a nail".
> Poor people buy less stuff, and presumably rich people get rich by not buying more stuff commensurate with their incomes
One implication of the above statement would be that everyone is now buying less and yet somehow the economy is growing? Those two ideas aren't strictly necessarily opposed to one another but it certainly doesn't seem like a good place to start. The economy could only be growing through investment if this were the case.
> Even the falling fertilizer consumption might be explained if poorer people are shifting to more processed junk food.
Is there any junk food that isn't composed of organic matter primarily? Most "junk" food in the US that I can think of is corn based which would of course still require fertilizer...
This is actually what I was thinking, but I live in opioid infested flyover country, so my mind always goes there.
Not many people out here buying new cars, or washers and dryers, or even homes right now. And then in the other world I live in, tech, people not only do all that, but they also fly to Greek Islands for vacations. It's really kind of bi-polar right now. At least around here it is.
I don’t know enough about economics, nearly enough, in fact I’ve decided after listening to an economics podcast for the past month (still working through the backlog) that I’m essentially a know-nothing today.
That said, I have some questions if there’s an economics know-something around here, because there might be an alternative explanation than just a rise in inequality. For one thing, to maintain the standard of equality/inequality that exists today, I would think even the richest would need something to dump their money into. Right now that seems to be the United States economy, mostly, and a few fairly solid foreign markets, Japan, the EU, Hong Kong, Britain, and for the less risk averse, there’s also the PRC and various developing economies. Mostly the US is where you get your safest ROI.
So a massive growth in investment, would seem to also suggest a massive growth in the financial services market. Not to mention the massive amounts of money sloshing around throughout the Bay Area. At the end of the day, you still need bankers handling all the transactions.
And that’s just it, the United States today, near as I can tell and certainly this is what I was taught and the dogma of today, is a services-based economy. Banking, health care, government, etc, not to mention the usual suspects among tech: Google, Facebook, Amazon, Apple, Uber, Lyft, Doordash, Microsoft, Netflix, etc.
Now between them, there’s a lot of products getting designed, and built, and shipped, and sold. Computers, phones, and I’m sure even the cars drivers use for fares and deliveries are consuming a fair amount more resources than your average car. In providing their services, they are charging a premium, and in return you get convenience. If you use AWS or Azure, you’re still using something tangible and real, you just don’t own the infrastructure. But the people that do are benefitting from economies of scale large enough that there are ultimately fewer servers and data center than there otherwise would be if all of their customers bought their own. So in a real sense, it really does seem like more value is being created with less resources that way.
So now that whoever is reading this knows where I’m coming from, here is my question to economics know-somethings (fair warning, my jargon might even be off or used incorrectly): does our economic shift away from agriculture and manufacturing towards a service and information-centric economy have a possible causal effect on our ability to grow the economy with seemingly fewer resources? If so, is there one part of the services sector which seemingly has an outsized influence in decreasing our resource use while growing the economy, be it financial or tech or something else?
In the 1970es the usd is also delinked from the price of gold. This allows for rampant inflation which should be filtered out from the growth figures but maybe it is not quite the case ...
I think the subtext here is obvious to people on HN, but isn't this because so much value is generated using electrons on increasingly efficient computer systems?
A parallel to this concept is that of "decontenting" a product. Nissan did this in the 1980s and 1990s to the Maxima to keep prices in line with the Camry and Accord.
I read those and conclude "Physics is not a particularly relevant constraint on economic growth."
His energy analysis concluded that at 2.3% growth rate and current technology, we would need to use the entire energy supply falling upon the earth's surface within 275 years. Improving technology might be able to stretch that to 400 years. Within 1400 years, we would need to use the entire energy of our solar system.
But we have a number of more pressing demographic constraints. As countries develop, fertility falls; fertility rates are currently below replacement in the entire developed world [1] with all regions other than Africa falling below replacement rate by 2050. Within 80 years, population is likely to start falling, with some studies predicting this within 30 years. Worse, there's a worldwide demographic bulge of 18-30 year old males that's hitting just about now; such demographics have been associated with a higher likelihood of war in the past.
There's plenty of other problems that these bring: if you don't get killed in war and manage to find a mate, you're not likely to see your social security or 401(k) worth all that much, nor will you find health care unless your rich or lucky or both. But they'll happen way before we reach physical limits on growth. Our threat model should be stupid politicians doing stupid things at the behest of frustrated populations, not the laws of physics.
Also analyzed are building materials and agricultural inputs. Buildings can't be off-shored, and if anything, we're a net exporter of agricultural products. So the analysis holds.
Moving an economy from real things to services and ideas begs many questions, not the least of which is "what does price even mean" because the cost/price nexus had some meaning with real goods, but has almost no meaning with services and ideas.
A perfect cure for age related death is worth so much, it probably has undefined value. A TV show as a bitstream is worth nothing (bits ephemerally have no value), can be infinitely copied, and yet IPR law defines its value as a function of the lock on the disney vault.
Economic treatment of costs varies, but there are two principle variants.
The mainstream view is that "all costs are opportunity costs", which is to say, the best alternative use of some input. This is probably best further expanded to the notion that an opportunity cost is based on the consumer value received from the use stream defined by the alternative use, which is a bit abstract, but generally tractable.
An alternative, with antecedants to Adam Smith, is that costs are based on the factor inputs to production. The mainstream views these as labour and capital (or increasingly, simply capital), but a more comprehensive view would be for a number of inputs: material, energy, knowledge, capital (itself reserved production from earlier periods), labour, organisational services, and sinks. An early version of this appears in Leo Tolsty's What is to be Done? (1886).
Service and information are distinct from material production (goods, construction, capital) in several regards, but are not fully immune to physical considerations. In particular:
- Services require labour, capital, and energy inputs.
- Services are, in the words of one of the early economists (Smith or Mill as I recall) "immediately extinguished". That is, in the most fundamental sense, services are non-capitalist in that one cannot reserve production of services as capital. (The results of services may be.)
- Information has numerous characteristics which make its pricing virtually completely incompatible with market-based systems as information is a pure public good, in the econonomic sense: nonrivalrous and nonexcludable.
The upshot is that service-and-information economies neither spare us from physical resources, nor are amenable to the management and explanatory concepts that have guided most of the past 200 or so years of economic development.
I had a friend who was gloomy about resource extraction one time. I comforted him by saying there are few limits on the number of masseuses and story tellers we need.
As we get better and better at producing the necessities, we'll desire more luxuries, some of which are experiences.
I would like to know how much of American dematerialization is just exporting materialization to China. They make our stuff, we import it. Does that count as materials consumed by Americans? Note that they mention the great reversal starting in 1970. Nixon went to China in 1972.
Not only that, what about the end of infrastructure? Timber, steel, copper, asphalt, cement -- these are signs of a country investing in its infrastructure. Other than copper, if we saw a trillion dollar infrastructure package, our de-materialization would vanish in a heartbeat, and our carbon emissions would shoot WAY up.
The a16z podcast recently had an interesting episode featuring the author of this article. It discussed the divergence of the GDP + energy usage curves as well as some of the other stuff in his book.
With information age I'd assume those things with more predictive logistics and transparency would get more efficient. We should add in data transported too in these metrics and I'd guess the correlation would become more obvious.
I'm no gold bug, but, looking at the graphs in the article, it's interesting how GDP decouples from resource use around the same time that the US went off of the gold standard.
Andrew McAfee did an interview last week w/ Sam Harris [1] that was a fun listen if you are interested in a conversational understanding before reading his book.
Increasing profits necessitates reducing one's demand for supply. Using less steel, paper, fertilizer, and energy to achieve same/better results while tautologically using less resources is indeed good all around (mostly).
While I don't disagree that capitalism is at work. It is almost a given that the reduction in steel is due to auto manufactures and many other industries have moved to aluminum or composite materials. Neither one of them offers a great environmental or energy savings over steel.
Paper is most likely digitization which again just transfers the energy use into computing every time the document is viewed and is almost certainly a net negative in relation to energy consumption.
Fertilizer I don't know but a half ass guess would be GMO's. As they are able to target traits that allow them to use less fertilizer and pesticides to produce the same amount of crop yield.
Or maybe we just haven't accounted for inflation and the rampant advent of landlords and landlord-like start ups which consumes greater and greater slices of the consumer's money.
Growth for who? Interestingly the words poverty, austerity, unemployment, education and health cuts are all missing from this "economics" article. There has been a single trend since Capitalism began centuries ago - the rich have been getting richer and the poor poorer. Yield curve's looking good today dear, we're being evicted, but damn it looks good.
This seems to be the flip side of designing things to be no more durable than necessary. With the highly regulated exception of cars, the profit motive is driving companies to use the least amount of material, whether it’s a washing machine made of stamped metal or a tissue-thin plastic bag.
On the other hand, well-meaning socialist interventions are driving additional environmental impacts, as people buy “reusable” bags or higher-CO₂-impact paper bags instead of changing their behavior the proper way.
This feels right to me. At the peak material usage highlighted in the graphs, around 2000, consumer products seemed to built considerably more ruggedly than they are today - possibly over-built, really, in some cases. If you shave off 1 or 2% of the material going into a product year over year, that really amounts to something after two decades.
pjmorris|6 years ago
There are two other trends that worry me more. One is visible in the freezer section at the grocery store; a "half-gallon" of ice cream is no longer actually a half-gallon. Many other food items have shrunk. The article's example of lighter buildings is what I view as the same category, something blogger Yves Smith terms 'crapification.' We've now had at least two generations of spreadsheet-wielding MBA's optimizing corporate costs to reduce what is spent on materials and labor. Evidence of their success is showing up across the economy, and politics, and society at large.
The other trend is money supply; One of the chief problems leading to the 2008 financial crisis was that much more credit had been extended than could ever be paid back by those to whom it was loaned. The 'solution' was to have central banks 'pay back' the loans that never should've been made. That put a lot of credit in to the economy, which shows up as economic growth. I'd like to see an analysis of 'economic growth' where the contributions of resources and credit are accounted for separately.
IfOnlyYouKnew|6 years ago
There used to be an even more drastic law proscribing certain sizes and disallowing all others. Flour would only be available in 500g and 1kg bags, for example. They got rid of it, possibly because they got sick of people making fun of EU regulations (that's what happened with the famous banana ratings)
analogwzrd|6 years ago
https://twitter.com/SteveStuWill/status/1181708302943539200?...
xyzzyz|6 years ago
Reason077|6 years ago
This is a common phenomenon in the UK, and there’s a name for it: Shrinkflation.
It’s a way to raise prices by stealth by not actually changing the price, but by shrinking the product instead.
pm90|6 years ago
MBA's have optimized everything... which is great! We don't need to spend incredible amounts on labor. We don't need to buy incredibly large homes. Make work more efficient... its the only way to compete with low cost emerging economic markets. Specialization and efficiencies are the only way to remain competitive.
From my perspective, the only real structural damage has been done by the success of concentrated moneyed interests in regulatory capture. We need to tax these efficient corporations and individuals fairly, and use those tax dollars to invest in universal healthcare, environmental protection and education.
safgasCVS|6 years ago
Fractional reserve banking (FRB) as is taught in most econ textbooks and courses is a myth. There's a very nice paper by the bank of england debunking this (Money creation in the modern economy). The idea behind QE and bailing out the banks was to create lending and liquidity in the market largely via the FRB mechanism however that failed to materialise for reasons the bank of england paper goes into but basically banks don’t lend out their reserves as the theory expects but it’s the process of lending that creates deposits not the other way around. The money given to banks didn't result in increased lending but instead went into financial markets buying up assets. There was some wealth effect going on so people with some assets got richer and then spent more but overall it was a really trickled down effect.
chrisseaton|6 years ago
A half-gallon seems like an absolutely obscene volume of ice-cream. That's over two litres! Why would anyone possibly need ice-cream measured by the gallon? Isn't it good that sizes are reducing from that much?
anon1m0us|6 years ago
KorematsuFred|6 years ago
Or on other hand we are enjoying more from life with less resources. Not only it helps more companies to be more profitable thus keeping more people employed, it also does a great service to the planet and the future as we continue to reduce our footprint.
I agree with your point about the loan paybacks which of course is off topic.
ozim|6 years ago
Earlier you could afford only one pair of shoes for your entire life. Lots of physical things could be inherited because they were valuable and they were really expensive.
You would not let your kids inherit your shoes now. The same with buildings. Kids will probably want to have their "own dream house" not stick with their parents dreams. Those kids probably will also have to move to other state or other city because jobs their parents did will no longer be there, and they will have to find their own place to get a job. Son of a carpenter is not going to be a carpenter. You want buildings easily replaceable. Buildings should last not more than 100 years and be easy to recycle.
That said, all stuff that would be replaceable, should also be easy to repair
impatientduck|6 years ago
We're doomed.
ChuckMcM|6 years ago
Jesse Asubel has been looking at "dematerialization" for a long time[1] but it has only been relatively recently, now with a couple of decades of additional data to look at, that it is getting the attention I think it deserves.
One of the consistently annoying things, for me, in science reporting is the extrapolation of a given set of ratios out to some point where the result is very click-baity. The systems guy in me has experience that all exponential trends are s-curves, and so I feel that one must at least acknowledge that fact in your reporting. I understand it, it means that the predicted outcome might not happen at all, but it is important to the story.
So economists do the same thing, they take some ratio of numbers that seem to be tracking the 'size' of the economy and then run that trend out 50, 100, 500 years. It really doesn't matter, but what is important, and this article and other papers on de-materialization have demonstrated, is that neither the economic growth rate, or the relationship between that growth rate and some other factor, are ever really constant. Thus any point that depends on them being constant for more than a decade or so, is really stretching it.
Its nice to see this reality (of how extrapolating is bad because things change) demonstrated in a clear and convincing way.
[1] "Materialization and Dematerialization: Measures and Trends" -- https://www.jstor.org/stable/20027375?seq=1#page_scan_tab_co...
em500|6 years ago
Very few academic economists do 30+ year extrapolations, let alone 50, 100, 500. The vast majority of long-term growth macro-economic literature are attempts to explain/model the large observed differences in outcomes in GDP/capita between different countries, and hopefully distill some useful policy advise from that. Forecasting beyond even 5 years or so is a very niche activity in academic economics. (Source: PhD economics and former model builder for pension fund and souvereign wealth funds)
Cybiote|6 years ago
A possible counter-acting force is Jevon's paradox (a generalized economic form of Wirth's Law) but the linked empirical result suggests ephemeralization is the stronger force. Although, it is likely true we can do much more to counteract Jevon's Paradox like phenomena.
wpietri|6 years ago
danans|6 years ago
A friend of mine visited a financial planner inquiring about saving for his children's university education.
The planner took the last the last 20 years of education inflation and extrapolated it out 15 years, and recommended my friend put away 2.5k per month today per child today to cover it.
My friend didn't hire the planner, on the reason that we will probably be post-revolution (which would cause this curve to become an S) before we get to the point where you need to save 30k per kid per year over 15 years to pay for university.
neves|6 years ago
dehrmann|6 years ago
What does this mean for the stock market? And debt? Or really, what does an economy look like when it's done growing, but stable?
LoSboccacc|6 years ago
...but when they do that same thing on earth temperature everyone loses his mind
seibelj|6 years ago
qsymmachus|6 years ago
> I can create digital goods and services which people buy
Your digital goods and services require physical machines to run on. These machines are made of physical materials, including some rare earth minerals that are costly to extract. These machines require energy to run, which also requires material inputs.
> I can even give massages all day, and this also doesn't destroy the environment
Human beings like yourself require material inputs to live – food, shelter, energy, to name only a few. Just by being alive on a biosphere, you are impacting the environment in some way. The size of that impact depends on your individual lifestyle.
There is simply no such thing as "immaterial" economic production.
darkerside|6 years ago
jahaja|6 years ago
undershirt|6 years ago
mempko|6 years ago
https://en.wikipedia.org/wiki/Great_Acceleration
Turns out people use the efficiency of technology to just consume more. Your internet goods and services might increase consumption somewhere else. Some of it is even explicit. Google Ads is a digital service that explicitly is designed to increase consumption. In fact, all the great technology companies (Microsoft, Google, Apple) are designed around the idea that people will consume more. The tech industry, in aggregate, has been designed around getting people to consume more. Even Tesla, a green play, is designed around more consumption. Tesla could have been a company where you paid them, and they took your car and converted it to be an electric car by stripping the engine and adding batteries. This kind of play could have reduced real consumption. But that's not what Tesla is about.
twoslide|6 years ago
[1] https://en.wikipedia.org/wiki/List_of_countries_by_steel_pro...
[2] https://www.eia.gov/beta/international/data/browser/#/?vs=IN...
rdiddly|6 years ago
JackFr|6 years ago
nostromo|6 years ago
vannevar|6 years ago
TeMPOraL|6 years ago
One thing I'm curious about though - how come energy use stopped being correlated with economic growth? That's new.
freeflight|6 years ago
The US, as many other developed countries, has been shifting out of manufacturing economies to service economies for a while now.
Case in point: Nothing at Disney stipulates a correlation between their "economic output" and their energy consumption.
Meanwhile, a steel/aluminum plant in China will have a pretty direct correlation between economic output and energy input.
chrisco255|6 years ago
ch4s3|6 years ago
georgeburdell|6 years ago
lkrubner|6 years ago
evunveot|6 years ago
Check out [1] and scroll down to Table A-7 (it's an Excel file). It's the real earnings data (in 2018 dollars), by gender, from 1960 to 2018 (though it's kind of spotty before 1967). What sticks out to me:
* For men (looking at Total Workers), real earnings are currently around 10% higher than they were in the 70s (moving from low-$40K's to recently just past mid-$40K's, with some peaks and valleys along the way). Doesn't sound like much, but...
* For women, earnings have roughly doubled in that timespan
* The number of men in the workforce has increased by almost 50%
* The number of women in the workforce has increased by almost 100%
From a certain perspective, it's kind of amazing that real earnings haven't gone down significantly.
[1] https://www.census.gov/library/publications/2019/demo/p60-26... (Census report that came out last month)
AnimalMuppet|6 years ago
That isn't wage growth. And yet, I am better off for being able to do that - not better off in terms of dollars, but better off in terms of being able to more easily do the things that I want to do.
ch4s3|6 years ago
There are similar indicators for Germany as well, and their wage picture is pretty different.
magduf|6 years ago
Yeah, but this is a good thing. The labor class is a very strong supporter of the political party that pushes policies which increase the income gap, and votes strongly against anyone who tries to change this or go back to the policies you're talking about. So they're getting exactly what they're voting for.
jseliger|6 years ago
danans|6 years ago
We might actually see a reduction in GDP in that case, especially if coupled with ever increasing production efficiency for energy consuming processes.
In that case, we might have to re-evaluate how we define "success" to be less weighted for GDP, or include the reduction in fossil fuel externalities in the definition.
Could be be best race-to-the-bottom ever.
toomuchtodo|6 years ago
[1] https://www.vox.com/future-perfect/2019/6/8/18656710/new-zea... (Forget GDP — New Zealand is prioritizing gross national well-being)
[2] https://docs.google.com/spreadsheets/d/1tZq47h6jg7NX4ddhTS_H... (Watsi.org Transparency Log)
mempko|6 years ago
azernik|6 years ago
uoaei|6 years ago
I'm no economist but the fact that we're using less of the most fundamental resources available despite a growing population doesn't seem like improving efficiency in aggregate, it just seems like decreasing activity masked by the inflated aggregated metrics about the 'economy'. A lot of money moves around nowadays and relatively little of it is actually put toward something "real", instead being diverted to quant firms' operational costs and their employees' bank accounts.
lovecg|6 years ago
georgeburdell|6 years ago
Could this be related to growing income and wealth inequality? Poor people buy less stuff, and presumably rich people get rich by not buying more stuff commensurate with their incomes. Even the falling fertilizer consumption might be explained if poorer people are shifting to more processed junk food.
The article notes 1970 as the critical turning point, which is the same year Piketty identifies in his book Capital as the inequality turning point in the U.S. and Europe
h3throw|6 years ago
> Poor people buy less stuff, and presumably rich people get rich by not buying more stuff commensurate with their incomes
One implication of the above statement would be that everyone is now buying less and yet somehow the economy is growing? Those two ideas aren't strictly necessarily opposed to one another but it certainly doesn't seem like a good place to start. The economy could only be growing through investment if this were the case.
> Even the falling fertilizer consumption might be explained if poorer people are shifting to more processed junk food.
Is there any junk food that isn't composed of organic matter primarily? Most "junk" food in the US that I can think of is corn based which would of course still require fertilizer...
bilbo0s|6 years ago
Not many people out here buying new cars, or washers and dryers, or even homes right now. And then in the other world I live in, tech, people not only do all that, but they also fly to Greek Islands for vacations. It's really kind of bi-polar right now. At least around here it is.
cpursley|6 years ago
SllX|6 years ago
That said, I have some questions if there’s an economics know-something around here, because there might be an alternative explanation than just a rise in inequality. For one thing, to maintain the standard of equality/inequality that exists today, I would think even the richest would need something to dump their money into. Right now that seems to be the United States economy, mostly, and a few fairly solid foreign markets, Japan, the EU, Hong Kong, Britain, and for the less risk averse, there’s also the PRC and various developing economies. Mostly the US is where you get your safest ROI.
So a massive growth in investment, would seem to also suggest a massive growth in the financial services market. Not to mention the massive amounts of money sloshing around throughout the Bay Area. At the end of the day, you still need bankers handling all the transactions.
And that’s just it, the United States today, near as I can tell and certainly this is what I was taught and the dogma of today, is a services-based economy. Banking, health care, government, etc, not to mention the usual suspects among tech: Google, Facebook, Amazon, Apple, Uber, Lyft, Doordash, Microsoft, Netflix, etc.
Now between them, there’s a lot of products getting designed, and built, and shipped, and sold. Computers, phones, and I’m sure even the cars drivers use for fares and deliveries are consuming a fair amount more resources than your average car. In providing their services, they are charging a premium, and in return you get convenience. If you use AWS or Azure, you’re still using something tangible and real, you just don’t own the infrastructure. But the people that do are benefitting from economies of scale large enough that there are ultimately fewer servers and data center than there otherwise would be if all of their customers bought their own. So in a real sense, it really does seem like more value is being created with less resources that way.
So now that whoever is reading this knows where I’m coming from, here is my question to economics know-somethings (fair warning, my jargon might even be off or used incorrectly): does our economic shift away from agriculture and manufacturing towards a service and information-centric economy have a possible causal effect on our ability to grow the economy with seemingly fewer resources? If so, is there one part of the services sector which seemingly has an outsized influence in decreasing our resource use while growing the economy, be it financial or tech or something else?
Seriously, thanks in advance.
mempko|6 years ago
chvid|6 years ago
eutropia|6 years ago
sp332|6 years ago
codesushi42|6 years ago
jdkee|6 years ago
See https://en.wiktionary.org/wiki/decontent
dredmorbius|6 years ago
SolaceQuantum|6 years ago
[0]. https://www.cnbc.com/2019/07/29/buybacks-companies-increasin...
spodek|6 years ago
The Do The Math blog by Caltech-trained UCSD astrophysicist Tom Murphy is the best resource in this area.
In particular the posts
- Galactic Scale Energy https://dothemath.ucsd.edu/2011/07/galactic-scale-energy
- Can Economic Growth Last? https://dothemath.ucsd.edu/2011/07/can-economic-growth-last
- The dinner conversation with an economist on this topic https://dothemath.ucsd.edu/2012/04/economist-meets-physicist
nostrademons|6 years ago
His energy analysis concluded that at 2.3% growth rate and current technology, we would need to use the entire energy supply falling upon the earth's surface within 275 years. Improving technology might be able to stretch that to 400 years. Within 1400 years, we would need to use the entire energy of our solar system.
But we have a number of more pressing demographic constraints. As countries develop, fertility falls; fertility rates are currently below replacement in the entire developed world [1] with all regions other than Africa falling below replacement rate by 2050. Within 80 years, population is likely to start falling, with some studies predicting this within 30 years. Worse, there's a worldwide demographic bulge of 18-30 year old males that's hitting just about now; such demographics have been associated with a higher likelihood of war in the past.
There's plenty of other problems that these bring: if you don't get killed in war and manage to find a mate, you're not likely to see your social security or 401(k) worth all that much, nor will you find health care unless your rich or lucky or both. But they'll happen way before we reach physical limits on growth. Our threat model should be stupid politicians doing stupid things at the behest of frustrated populations, not the laws of physics.
[1] http://worldpopulationreview.com/countries/total-fertility-r...
RenRav|6 years ago
http://longbets.org/user/amcafee/
throwawaysea|6 years ago
Obi_Juan_Kenobi|6 years ago
Also analyzed are building materials and agricultural inputs. Buildings can't be off-shored, and if anything, we're a net exporter of agricultural products. So the analysis holds.
todipa|6 years ago
swebs|6 years ago
ggm|6 years ago
A perfect cure for age related death is worth so much, it probably has undefined value. A TV show as a bitstream is worth nothing (bits ephemerally have no value), can be infinitely copied, and yet IPR law defines its value as a function of the lock on the disney vault.
dredmorbius|6 years ago
The mainstream view is that "all costs are opportunity costs", which is to say, the best alternative use of some input. This is probably best further expanded to the notion that an opportunity cost is based on the consumer value received from the use stream defined by the alternative use, which is a bit abstract, but generally tractable.
An alternative, with antecedants to Adam Smith, is that costs are based on the factor inputs to production. The mainstream views these as labour and capital (or increasingly, simply capital), but a more comprehensive view would be for a number of inputs: material, energy, knowledge, capital (itself reserved production from earlier periods), labour, organisational services, and sinks. An early version of this appears in Leo Tolsty's What is to be Done? (1886).
Service and information are distinct from material production (goods, construction, capital) in several regards, but are not fully immune to physical considerations. In particular:
- Services require labour, capital, and energy inputs.
- Services are, in the words of one of the early economists (Smith or Mill as I recall) "immediately extinguished". That is, in the most fundamental sense, services are non-capitalist in that one cannot reserve production of services as capital. (The results of services may be.)
- Information has numerous characteristics which make its pricing virtually completely incompatible with market-based systems as information is a pure public good, in the econonomic sense: nonrivalrous and nonexcludable.
The upshot is that service-and-information economies neither spare us from physical resources, nor are amenable to the management and explanatory concepts that have guided most of the past 200 or so years of economic development.
Also, nit, the question is raised but not begged:
http://begthequestion.info
unknown|6 years ago
[deleted]
mooreds|6 years ago
As we get better and better at producing the necessities, we'll desire more luxuries, some of which are experiences.
Glad to see it confirmed in the numbers.
jganetsk|6 years ago
dredmorbius|6 years ago
See:
The true raw material footprint of nations
https://web.archive.org/web/20130906063246/http://newsroom.u...
The material footprint of nations http://www.pnas.org/content/early/2013/08/28/1220362110
As of 2010, total global per capita energy consumption was rising:
http://i.imgur.com/5hO5Hep.png
Most of the above, plus further discussion:
Economic decoupling? The recent relationship between energy and growth
https://old.reddit.com/r/dredmorbius/comments/1vlksg/economi...
WhompingWindows|6 years ago
sime|6 years ago
https://a16z.com/2019/10/03/the-environment-capitalism-techn...
DeonPenny|6 years ago
pjmorris|6 years ago
grdeken|6 years ago
erva|6 years ago
[1] https://samharris.org/podcasts/170-great-uncoupling/
NTDF9|6 years ago
barnabee|6 years ago
s_y_n_t_a_x|6 years ago
Excel_Wizard|6 years ago
ctdonath|6 years ago
Increasing profits necessitates reducing one's demand for supply. Using less steel, paper, fertilizer, and energy to achieve same/better results while tautologically using less resources is indeed good all around (mostly).
kls|6 years ago
Paper is most likely digitization which again just transfers the energy use into computing every time the document is viewed and is almost certainly a net negative in relation to energy consumption.
Fertilizer I don't know but a half ass guess would be GMO's. As they are able to target traits that allow them to use less fertilizer and pesticides to produce the same amount of crop yield.
not_a_cop75|6 years ago
Or maybe we just haven't accounted for inflation and the rampant advent of landlords and landlord-like start ups which consumes greater and greater slices of the consumer's money.
Gibbon1|6 years ago
bronlund|6 years ago
Anyone with half a brain knows that something is fucky.
swiley|6 years ago
stevespang|6 years ago
[deleted]
seamyb88|6 years ago
Decade|6 years ago
On the other hand, well-meaning socialist interventions are driving additional environmental impacts, as people buy “reusable” bags or higher-CO₂-impact paper bags instead of changing their behavior the proper way.
thrower123|6 years ago