Growth is Not the answer :P

16 facys about x. I noticed on my facebook newsfeed this latest 'tagging' trend where you write 16 facts about yourself then tag 16 friends who would then write 16 facts about themselves. Not only are the three facts I read stuff I'd never want to know about (because its boring) even from a lover.
Anyway the chain letter phenomena makes a certain reassuring point about the human race to make this point some not so random numbers.

1, 2.
2, 4.
6, 64.
10, 512.
35, 17,179,869,184.

Of course, you would by now have guessed that the isomorphism for these strings of numbers of the form x, n. could be interpret as x = days and n = number of something.

In this case it might be the amount of people that respond to a chain letter with the terms 'within 24 hours you must forward this letter to 2 people or you will die. If you forward it 2 people your crush will ask you out.'

If it was real by the 35th day of circulation it should have been forwarded to a number of people that equates to 3 times the population of the world.

Now to check ourselves before we wreck ourselves.

Firstly we are wise to remember that the majority of people on earth alive today have never even made a phonecall. Less than 1% of the earths population own a computer.

Secondly typically chain letters ask you to forward them to at least 20 people or so. If people actually did this like the facebook tagging note '16 facts' by day ten it would already have to pass to over 68 billion people. Or almost 10 times the earths population.

Because 16 people for every one respondent is the equivalent of a 1600% daily compounding interest rate, of which I forget the formula to figure out the annual effective interest rate is, but it would be the sort of interest rate I imagine is circulating around Zimbabwe at the moment.

But again to check myself before I wreck myself. The high multiplication factor inherant in most chain mails is a countermeasure necessary for a very low compliance rate.

As hopefully I (or a minute on excel can demonstrate) tagging 2 people for every respondant is incredibly aggressive growth.

So really the 16 respondandts necessary represents a built in assuption that from every 16 people approximately 15.68 people choose to ignore being tagged. And this innocuosly boring replicating meme flounders and splutters around until it is eventually vanquished.

What this 16 number tells us is that on the whole, people just aren't that stupid.

Or are we?

Let's instead spread a new virus through the net now. I call it 'the cake game' all you need is a cake.

Take the cake, and gather 4 to 6 friends. Also procure a knife that is sharp enough to cut the cake.

Once you have friends, a cake and a knife you can proceed to round 1 of the game.

Rules for round 1: Every body cuts a slice of cake and eats it, never to be eaten again. Once this is done proceed to round 2.

Rules for round 2: Every body cuts a slice of cake and eats it, however the aim is to consume a slice of cake that is bigger than the slice of cake in the previous round. If you eat a smaller or same sized slice of cake, you are considered a loser and should agressively try and imitate your oponents strategy in the next round. proceed to round 3 either way.

Rules for round 3: Repeat round 2 but call it round 3 and then proceed to round 4.

Rules for round 4: Repeat round 3 but add 1 to the name of the round you proceed to, then follow the rules for round 4 again.

There you go, a neat and tidy self referential game you can play forever.

Except some 'moron communist hippies' will point out that at some point you may run out of cake. This seems obvious and easily predictable, however fans of the cake game should not worry about running out of cake, that will happen sometime in some unforeseeable future. Just play the game and we'll cross the 'out of cake' bridge when we get to it.

Other 'maverick' or 'out there' or 'renegade' thinkers that are too 'academic' and not 'politically pragmatic' may also note that someone who takes a really small slice in round 1 then takes a slice twice as big looks great compared to someone who takes a big slice in the first round and then only increases it by 4%. Really in matters of eating cake, one is better off just by having more cake, not how much bigger the slice is compared to the last one.

Yet more may point out that eating cake is unhealthy, and we shouldn't build rules that guide our behaviour around the notion of increasing our cake consumption. These people are 'hippies' and need to 'lay off the weed'.

One could even point out that leaving your cake out in the rain, or soaking it in water so that it becomes bigger and heavier (but less enjoyable) under the rules of the cake game look like a sound strategy, but that in practice it is infact a terrible thing to do with cake.

Yet more 'spoilsports' might suggest that if you compare two friends and one eats all the cake he gets while the other saves his cake for future rounds, the one eating all his cake right now looks better off but we all know who we'd want to be when cake is short in supply.

Lastly though, most economist would agree that the cake game is plainly terribly designed, consumption is an incredibly poor measure of well being and a hollow meaningless aim for a game to be based around.

And yet, we still all play the cake game, even though plainly it doesn't work, cannot work and really doesn't deliver anything. At all. Ever.

The cake game is infact GNP. GNP you may not know this but economic growth as reported by the media and used as the scorecard for every nation outside of Butan (who use Gross National Happiness) maybe it was Burma, I don't know and don't care enough to check.

Anyway, GNP measures consumption. It doesn't however descriminate on what consumption.

So for example, if we grow a bunch of trees one year, cut them down, pulp them and turn them into $10,000 worht of paper that is sold and consumed, then that is captured as GNP the year on change represents economic growth so we might consume $10,000 worth of paper one year, then $11,000 worth of paper the next year which is a whopping 10% growth much like China has experienced over the past decade.

Except you could also just light a fire in the Malee and the CFA spends $11,000 putting it out. A smaller fire the year before only cost $10,000 to put out. This means that you have acheived a whopping 10% growth in GNP.

So here are things that are great for GNP

1. Using a whole role of toilet paper for each whipe instead of just one sheet.
2. Burning down your own house and rebuilding it at tremendous personal cost.
3. Selling your car to your friend for $100. Then imediately offering them $17,000 to buy it back.
4. Firing a torpedo into an oil tanker in proximity to the great barrier reef incurring a huge expense in cleaning up the oil spill.
5. Declaring war on indonesia because you didn't enjoy your last Indo-Mie noodles as much as you though you would.
6. Selling your children to middle eastern sex slavers.

All these things, would on the surface result in increases in GNP if they were instituted as government policy.

I'm not kidding. Our government would honestly be able to claim that they had delivered economic growth.

Furthermore thinking back to our chain letter example just forwarding a letter to two people who complied and forwarded it to two people represent day on growth of 200%. In 35 days we could see that the onerous growth rate had exhausted well and truly the resources this world has to offer. Put simply if there was a death curse attached to failure to comply, the worlds population would have completely died out within 20 days (allowing that a large percentage of the worlds population live in undeveloped nations without access to internet and are also on average younger).

So 4% GNP is considered 'on track' which is .04 respondants per day complying in a chain mail letter. This takes 586 days to deplete the worlds supply of people to respond to the letter.

Now the 'eco footprint' is a program that actually figures out how big the cake is in the cake game. An unprecedented move for economists. And guess what it calculates how much resources there are in terms of - surprise surprise area.

Here's the process of the eco footprint

1. Take the surface of the earth.
2. Subtract the surface of the oceans (roughly 2/3)
3. Subtract uninhabitable land (eg. Antarctica that generally cannot sustain human life by itself)
4. Devide the remainding habitable surface area by the human population of earth.

You get 1.4 hectares, or roughly 1 + 1/2 soccer ovals of landmass to support every human being on earth.

So you then take your 1.5 soccer fields and put a cow on it for milk, and it eats grass and shits. It produces waste, so you need to sustain that soccer field. A cow you can get away with. 10 cows might be more problematic. They may eat all the vegetation to the point that it can't grow back and your cows start starving to death.

Or you might want electricity on your space so you build a coal fire plant. But you chew through coal really quickly and it dirties up your air.

You can see already the challange.

Now I'm told that on average, an Australian citizen requires 7.2 soccer fields to sustain their lifestyle. This means for every Australian living an Australian lifestyle 7.2 - 1.5 = 5.7 / 1.5 = 3.8 people are missing out on anything to sustain their life at all.

And we live in a day and age where almost anything can be transported anywhere.

And here is the fundamental problem, the nuts if you will of todays world.

The pursuit of GNP is the cake game. It is the scorecard of all governments and thus the pursuit of the retention of power (the object of democracies and tyrannies alike) has become equated with the pursuit of GNP growth.

Australian's already consuming 5.7 more soccer fields of resources than the world can really sustain means that growth in consumption is infact a suicide pact by some emo teens for us.

Furthermore, I mentioned Australia pulping trees into paper. Manufacturing in economic terms is called 'value adding' Australia broadly speaking is great at digging shit out of the ground. Then we pulp it or chip it or refine it and ship it on to a manufacturing base like Japan and China. They actually value add by undertaking some truly productive activity on it.

Think if you will of two men who go to KFC. One of the men has $100 in his savings account. The other man has earnt $100 today through paid employment. The first man spends $10 on the fat bastard meal from his savings, the second man spends $10 of his days wages on the fat bastard meal.

GNP will tell you these two men are the same. But in truth, Japan and China are the second men, Australia is the first man.

Digging irreplaceble resources out of the ground is the same as spending savings. Australia has a natural savings account we missapropriated if you will. China and Japan work for a living, they have valuable skills and abilities to contribute that allow them to create money out of nothing.

Of course when the first man runs out of savings, he cannot consume KFC anymore and will appear extremely poor. The second may eat the exact same amount of KFC as the first but he won't run out of money.

Or will he?

You see, money is an abstract concept. A human invention to ease transaction, it is designed to represent value. Hence the constant adjustment of prices that generally speaking in the long run only adjust up.

And that is because there are less resources than before, so money doesn't buy as much as it could of before which means you need more of it to represent the same amount of stuff out there.

So it's all well and good China being able to turn steel into big buildings, and Japan turning wood pulp into high grade paper. But they are dependant on the man with savings injecting money into the system, that is they are dependant on Australia cashing in on the resources so that they can value ad.

Now what you are seeing is KFC with two men walking in. One has $100 in savings, the other works at KFC. The KFC employee needs men to spend their savings so that they can earn enough money to eat KFC themselves.

That pretty much sums up the state of the world. Except bizarely the man with savings needed the employee of KFC to keep lending him money to eat at KFC so the KFC employee could make enough money to someday eat KFC himself.

But the crux is, that America, Australia, England, Japan, France, Russia etc. did not become rich through productivity alone.

The developed nations are not wealthy because they are more productive than the undeveloped nations.

Think of it as the cake game. The developed nations simply command more cake.

That's why Australian's can live of 7.2 hectares of the world each and think there isn't any problem. The allocation of natural resources is a bigger determining factor than productivity.

If you don't believe me simply ask history.

Or the IMF.

Or the World Bank.

I know I sound like the socialist alternative or something. But I really have to stress the intrinsic flaws in GNP are well known, any economist will tell you that.

Paul Keating apparantly educated Australians on the economy. Before that presumably elections revolved around principles and integrity and what not. John Howard certainly entrenched GNP in the voter psyche.

I'm not saying you have to eat lentils and lima beans for the rest of your life. But you do have to know the cake game when you see it and realise that ultimately it is pointless.

Vote a government in or out for different reasons. ANy reason but not their economic performance in terms of GNP.

Keep in mind Australia really should be targeting shrinking it's GNP in line with it's role in the world. This is a sustainable outcome.

We then might start thinking of what is actually good to have and bad to have instead of just lumping consumption in together.

So instead of going 'all these coal sales to China are great for GNP' we would say 'well all the extra spending on education is great and all the lost consumption of coal is also great.' in raw terms GNP is meaningless because you don't know if the growth is of any actual benefit.

Work smart not hard. Think about your hectare and what you actually need on it.