The sideways view

5 thoughts on “Hyperbolic growth”

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3. “We have been in a period of slowing growth for the last forty years. That’s a long time, but looking over the broad sweep of history I still think the smart money is on acceleration eventually continuing, and seeing something like this (though I have little idea whether it will start in 2025 or 2045 or 2075)

   20 (ending in 2025)
   10 (ending in 2035)
   5 (ending in 2040)
   2 (ending in 2042)
   1 (ending in 2043)
   0.5 (ending in June 2043)…”

   Perhaps it would be worth noting that various economic reports (e.g. https://www.pwc.com/gx/en/world-2050/assets/pwc-the-world-in-2050-full-report-feb-2017.pdf; https://www.oecd.org/eco/growth/Long-term-projections-of-the-world-economy-a-review.pdf — the latter is “a review of publicly available
   projections of GDP per capita over long time horizons” ) do not predict that growth will be accelerating by 2050. Indeed, they in fact predict a continual decline in growth. These projections may be wrong, of course, yet they do at least cast doubt upon the notion that the smart money is on a growth acceleration occurring within the next few decades. (I’m aware your main claim is not that it will happen over the next few decades in particular, but that was the example you gave.)

   “This kind of curve extrapolation is speculative. That said, I think that it’s less speculative than simply extrapolating the last 40 years of slowing growth into the indefinite future—the fact that we’ve lived through one trend doesn’t make extrapolating it any more responsible, it just makes it feel more like common sense.”

   I’m curious why you consider higher future growth less speculative, also considering the fact that Moore’s law seems likely to end within a decade, and the fact that progress has already slowed down (cf. >>”Our cadence today is closer to two and a half years than two.” Intel is expected to reach the 10 nm node in 2018, a three-year cadence.<< https://en.wikipedia.org/wiki/Moore%27s_law#Near-term_limits ). This is not a very strong reason against believing in higher future growth rates, of course, but the question is what (stronger) reasons we have that would favor a belief in such growth rates. Referring to the larger pattern across history does not provide a very strong reason, IMO, and I think one can even argue that a careful examination of this broader trend actually weakly suggests that peak growth lies in the past, cf:

   “A relevant data point here is that the global economy has seen three doublings since 1965, where the annual growth rate was around six percent, and yet the annual growth rate today is only a little over half — around 3.5 percent — of, and lies stably below, what it was those three doublings ago. In the entire history of economic growth, this seems unprecedented, suggesting that we may already be on the other side of the highest growth rates we will ever see. For up until this point, a three-time doubling of the economy has, rare fluctuations aside, led to an increase in the annual growth rate.

   And this “past peak growth” hypothesis looks even stronger if we look at 1955, with a growth rate of a little less than six percent and a world product at 5,430 billion 1990 U.S dollars, which doubled four times gives just under 87,000 billion — about where we should expect today’s world product to be. Yet throughout the history of our economic development, four doublings has meant a clear increase in the annual growth rate, at least in terms of the underlying trend; not a stable decrease of almost 50 percent. ”
   https://foundational-research.org/the-future-of-growth-near-zero-growth-rates/

   Reply

4. I think you have an error in your list of doublings.

   You have one ending in 1995, and list that the next doubling is still being awaited in 2017. But GWP was 33 trillion in 1995 and got to 78 trillion in 2014 (https://en.wikipedia.org/wiki/Gross_world_product), so the doubling time was less than 20 years.

   Reply

   1. Good catch! I took these numbers from Brad De Long’s estimates here (https://delong.typepad.com/print/20061012_LRWGDP.pdf). His GDP estimates are split into an “ex-nordhaus” figure, measuring wealth in terms closer to “how much food could you make?”, and then a separate bonus for the introduction of new types of goods (which become an important part of the typical consumption bundle and are rapidly falling in price).

      I used his ex-nordhaus estimates, which gives lower growth estimates than reported GDP, because I had more confidence in its comparability to historical figures and it may be more directly relevant to the possibility of explosive growth. Brad deLong prefers to use the full figure.

      But I haven’t sanity-check this very much and don’t know how he produces those numbers.

      Hopefully it doesn’t change the basic picture too much / doesn’t undermine the basic perspective in this post.

      Reply