While I have to agree with Ed Weick's earlier comment that people will
inevitably "do economics"-- I do after a fashion, and I'm no professional
economist -- nevertheless Jay Hanson may be right that it's time to start
screaming and being abusive because the business community and their tame
economists are just not hearing anything about LIMITS TO GROWTH.
Jay Hanson writes:
>Our present economic-political system is rushing full speed into the brick
>wall known as LIMITS TO GROWTH (LTG). LTG assumes many forms: depletion of
>nonrenewable resources, pollution and perturbation of natural systems, and
>simply reaching a level of complexity that is too great for our energy base
>to sustain.
I used precisely the same metaphor in a short essay I wrote for my own
website, and I think if we look at the assumptions of the business
community, the situation is even scarier than Jay presents it to be. Here is
part of what I wrote:
Royal Bank blamed weak stock markets and narrowing interest rate margins for
third-quarter profits of $464 million that were unchanged from the prior
three months. However, those earnings were 8 per cent higher than the 1997
third quarter. [my emphasis] Analyst Nick Majendie said, "It will be tougher
to increase earnings overall 10 per cent for the group, the growth rate set
by analysts for the banks."
Do you see the incredible assumption? Unlimited growth. At the ten per cent
growth rate that banks want their profits would have to double every 7.2
years. Even at a "mere" 8 per cent it would only take nine years.
Any high school student who has been introduced to the concept of geometric
progression should be able to understand that this is impossible in the real
world. When I learned about geometric progression many years ago, it was
introduced by a fable from ancient India.
The story goes that a young hero had performed a great service for the king.
In gratitude the king offered to give him a large sum of gold. No, said the
young man modestly, all he wanted was this: Take a chess board of 64
squares, and on the first square put 1 grain of rice, on the second square 2
grains, on the third square 4 grains, on the fourth square 8 grains, and so
on. The king agreed with a smile at the simplicity of the young man, but his
accountants soon informed him that he had promised more than the entire rice
harvest of the kingdom.
The profits of banks and businesses of all kinds can only come from
providing products or services to people, and those people can only get the
money to pay a bank or business from two sources, either from being
wage-earning employees or dividend-earning stockholders of those same banks
and businesses. To ask that their profits should double in infinite
geometric progression is to demand more than the entire harvest of the
kingdom.
The bank presidents and stockbrokers and currency speculators who demand an
unending geometric progression of profits are all multi-millionaires. Their
real physical wants were long ago satisfied. The latest status symbol among
many of them is a $230,000 wrist watch that keeps time no better than a $30
Timex.
What drives them on?
No more eloquent and haunting words can be found than those penned by Samuel
Johnson, poet, essayist, lexicographer and sage, to explain the building of
the Great Pyramid: "It seems to have been erected only in compliance with
that hunger of the imagination which preys incessantly upon life, and must
always be appeased by some employment."
The Great Pyramid must have been a terrible drain on the GNP of ancient
Egypt for perhaps 20 years, leaving little enough for the welfare of the
common people. However, the project of our modern pharoahs of the business
world is far more frightening. The Great Pyramid was finite. Once the
surveyors had staked out the sides, it was determined that a certain
enormous amount of stone would finish the project. However, the scheme of
doubling profits every 10 years or 20 years is without limits.
Our business leaders are best compared to an idiot driving a turbocharged
Lamborghini, whose only goal is to go faster than he is driving at the
moment. Doubling profits every 7.2 years requires that they reach 64 times
their current level in half a century and 8196 times their current level in
one century.
I see no hope that business leaders are capable of rational analysis of
their insanity.
They will be stopped only when the passenger (all the rest of us) reaches
over and stamps on the brakes.
This could be done, for instance, if the governments of the world were to
act in concert to introduce several forms of taxation: higher corporate
taxes to put a brake on profits; a Sales Tax on stock market transactions to
stop the flipping of equities for short term profit-taking; and the Tobin
tax to rein in the currency speculators who profit from human misery as
surely as an arms dealer does.
I have little hope that any government will do this. The major parties in
every nation are all funded by precisely the people who need to be checked.
Nor is there much hope that the nations could be brought to act in concert;
too many will think their advantage lies in cooperating with the insanity of
the money men.
The most Iikely outcome I foresee is that the Lamborghini driver will round
a curve very soon and run into a brick wall before he can stop.
After that a revolution.
Victor Milne
Visit FIGHT THE BASTARDS! an anti-Harris, anti-neoconservative website
at http://www3.sympatico.ca/pat-vic/pat-vic/
