Economic Growth: The Real Hockey Stick

Great Debates
1

Here’s a chart from trusty Wikipedia:

There may be room for debate about where the temperature is headed, but it seems to me it’s pretty clear that the world’s wealth is rocketing upwards.

I claim the following:

(1) economic growth is likely to lead to more economic growth. Because growth in the economy is caused in large part by improvements in technology. Which leads to more technological improvements, and so on.

(2) Economic growth is the overwhelming trend of our age. In formulating policy, we need to keep this in mind, since many problems can be solved with money.

2

For those who are curious about the empty stretches, Wikipedia states “(Note the empty areas mean no data, not very low levels. There are data for the years 1, 1000, 1500, 1600, 1700, 1820, 1900, and 2003.)”. Also, “Western offshots [sic]” is Australia, New Zealand, Canada, and the United States.

3

[QUOTE=brazil84]
I claim the following:

(1) economic growth is likely to lead to more economic growth. Because growth in the economy is caused in large part by improvements in technology. Which leads to more technological improvements, and so on.

(2) Economic growth is the overwhelming trend of our age. In formulating policy, we need to keep this in mind, since many problems can be solved with money.
[/QUOTE]
Where’s the debate? Has anyone challenged either of these?

4

I’d challenge this a bit, in the sense that it’s always dangerous to extrapolate from short-term trends. You have to look beyond the chart and examine the underlying reasons for what the graph shows before you can make any intelligent claims about whether the trend will continue into the future.

Looking at the graph, you can see the following periods:

  1. The period of pre-industrialized civilization, when GDP was relatively flat. This lasts until about 1500 AD.

  2. The beginnings of industrialization in a few select countries. The world economy jumped up, but remained relatively flat from that point on, because not many countries took part in industrialization. If you had a graph of just American or British GDP, the graph would show a more marked slope during this period. Call it from 1600 to 1900.

  3. The rapid advance of industrialization into other parts of the world, from 1900 to 2000, which caused world GDP to jump. 1900-2000.

  4. The birth of the information age, the expansion of trade, and the rise of the global economy in the late 20th century and continuing today, which has caused an explosion in GDP throughout the world.

Now, the reason the trend line has been increasing geometrically is because there are two multiplying factors - the rise of industry and information technology is making us more efficient, and the spread of capitalism and industrial economy throughout the world is a multiplying effect.

But will that continue? Not really. There is still massive growth going on in places like China and India, because they’re still playing catch-up. But once they become fully integrated first-world economies, their growth rates will level off as the growth rates of other mature economies have leveled off.

I expect to see the world economy continue to grow at a rapid pace for a few years, then start to slow and eventually level off at the kind of numbers we see for western economies - maybe an average of 2.5% a year or so.

Also, adding that long period of essentially no growth to the chart really skews the data, because the effects you are trying to chart only began in the last third of it. An honest chart would start with 1500 or 1600.

So don’t start spending all that money you think you’re going to have.

5

Mark Twain, Life on the Mississippi

6

[QUOTE=me]
Also, if you plot population in each region,
[/quote]

Not by region, but here’s a hockey stick for you

7

umm…there’s was more to that post. Anyways, point was: population growing, more people make more stuff, graph of GDP/capita would be more informative.

8

That last one looks like it has a lie of 6.

9

[QUOTE=Malodorous]
umm…there’s was more to that post. Anyways, point was: population growing, more people make more stuff, graph of GDP/capita would be more informative.
[/QUOTE]

Actually, the plot he showed is GDP per capita.

Fine, so let’s take the example of climate change. How is it going to be solved with money? In a market system, it is going to be solved with money when the market recognizes there is a significant cost of greenhouse gas emissions. However, the market doesn’t now recognize the cost of greenhouse gas emissions because that cost is externalized. Therefore, we must internalize the cost through mechanisms such as a carbon tax or a cap-and-trade system.

So, what’s the argument here? I think we are all in agreement.

10

[QUOTE=Sam Stone]
I’d challenge this a bit, in the sense that it’s always dangerous to extrapolate from short-term trends. You have to look beyond the chart and examine the underlying reasons for what the graph shows before you can make any intelligent claims about whether the trend will continue into the future.
[/quote]

I totally agree with this.

Let’s assume that you are right – and there is certainly good reason to believe you. 2.5% a year will still produce a massive hockey stick on a medium time scale. It means that in 100 years, world GDP will be 10 times what it is now. In 200 years, world GDP will be 100 times what it is now.

Now imagine plotting that growth on the graph I linked to before. Result: mega-hockey stick.

It depends what you are trying to show, I suppose. I just think it’s philisophically interesting to compare GDP to proxy temperature reconstructions, which are frequently done on a time scale of 1000 years or so.

11

[QUOTE=jshore]

Fine, so let’s take the example of climate change. How is it going to be solved with money?
[/quote]

Let’s suppose that the alarmists are right and that CO2 emisions will warm the earth by a couple degrees over the next 100 years, producing higher sea levels, more flooding, more extreme weather such as hurricanes, and so forth.

A world that is 10 times richer will be able to handle these problems a lot better. We will be able to to build better housing for people; communications will be better; evacuation will be easier, and so on.

A world that is 10 times richer will be easily able to set up advance warning systems for tsunamis and the like. A world that is 10 times richer will be much better positioned to fend off an asteroid that may wander our way.

Why has there been such a big drop in deaths caused by hurricanes and the like? I think the answer is that the world is richer now.

Perhaps . . .

12

[QUOTE=jshore]
Actually, the plot he showed is GDP per capita.
[/QUOTE]

Heh, sorry. No more posting before work

13

[QUOTE=Sam Stone]
There is still massive growth going on in places like China and India, because they’re still playing catch-up. But once they become fully integrated first-world economies, their growth rates will level off as the growth rates of other mature economies have leveled off.

[/QUOTE]

Can that even happen? The per capita resource demands of “fully integrated first world economies” are vastly beyond that of less developed economies. I realize this isn’t a zero sum game, and that new technology will open up new sources of energy and such, but barring a breakthrough on fusion or something I’m not seeing how China and India can attain full-fledged first world economies.

14

The thing is, “hockey stick” is a poor model for exponential growth, because no matter where on the exponential curve you look, the last few years will look like a hockey stick compared to the rest of the curve. You can make any exponential curve look like a hockey stick if you pick the correct scales for the x and y axes.

15

[QUOTE=Gorsnak]
Can that even happen? The per capita resource demands of “fully integrated first world economies” are vastly beyond that of less developed economies. I realize this isn’t a zero sum game, and that new technology will open up new sources of energy and such, but barring a breakthrough on fusion or something I’m not seeing how China and India can attain full-fledged first world economies.
[/QUOTE]

What time period are you talking about? The scale that thing is operating on will have the Mars Colonies reaching parity if you trend it out double.

16

[QUOTE=brazil84]
Let’s suppose that the alarmists are right and that CO2 emisions will warm the earth by a couple degrees over the next 100 years, producing higher sea levels, more flooding, more extreme weather such as hurricanes, and so forth.

A world that is 10 times richer will be able to handle these problems a lot better. We will be able to to build better housing for people; communications will be better; evacuation will be easier, and so on.
[/QUOTE]
In the other thread you were pretty adamant about separating the discussion of the hockey stick from everything else about global warming, including the other evidence which supports AGW theory.

Now, you are jumping from “global warming may not even be real, much less anthropogenic” to “even if global warming were real and anthropogenic, future generations will be much richer and money can solve all these problems.”

There’s at least 5 leaps of logic you skipped there, which more or less must be answered sequentially. To a large degree, the early questions are like introductory subjects like long division - straightforward with known answers - while the later questions are like upper division subjects like differential equations - with lots of conditional answers and many assumptions.

  1. Is global warming real? Is the temperature now significantly hotter than it was X years ago? (the only real question answered by the “hockey stick” graph)

  2. If real, is global warming anthropogenic?

  3. If global warming is real and anthropogenic, will it cause significant net harm?

  4. If global warming is real, anthropogenic, and harmful, is it cost-effective to solve the problem now?

  5. If global warming is real, anthropogenic, harmful, and not cost-effective to solve now, will it be easier to solve in the future?

Before you were stuck on (1); now you’re ready to jump ahead to (5)?

This does not smack of intellectual honesty.

The first two points are pretty strictly scientific - and scientists are in good agreement about the answers: global warming is “almost certainly” real, and “very likely” to be at least partially anthropogenic and “likely” to be mostly anthropogenic (definitions from the IPCC report corresponding to 95%, 90%, and 66% confidence, respectively).

The third point is a lot more murky. Projections of effect show both good and bad effects; the distribution is not even across the globe and some places might see a net benefit from global warming. Eventually this may come down to a “rich, white temperate-zone” vs. “poor, black tropical” argument, although some people who would benefit from global warming might oppose doing so at the expense of others. Overall, it’s agreed without formal consensus that from a global view, global warming will be harmful.

We’ve only begun to touch on the fourth point. Estimates of the damage from global warming have varied wildly - from a few billion to tens of trillions. There is very little agreement, much less any sort of consensus, on this question.

The fifth point is completely untouched in any serious way.

If you want to have an intellectually honest conversation about global warming, I’d suggest bringing yourself up to speed on the first three questions, rather than attempting to solve differential equations because you’re unsure about long division.

17

[QUOTE=brazil84]
I claim the following:

(1) economic growth is likely to lead to more economic growth. Because growth in the economy is caused in large part by improvements in technology. Which leads to more technological improvements, and so on.
[/quote]

I would agree that more economic growth is likely, but certainly not guaranteed.

I would agree that economic growth does solve many problems, with two caveats. First, it also causes many problems, some large enough that they can’t be ignored. Second, it does not change basic facts about human nature.

Expanding on the first caveat, someone will no doubt request a list of the problems caused by economic growth. Those might include increased pollution, infectuous diseases having more chances to spread, increased corruption, more opportunity for organized crime on an international scale, higher income inequality, hostile ethnic groups being brought into conflict, and the destruction of local culture and autonomy.

Expanding on the second caveat, we should not assume that global capitalism is natural or that all people will readily agree to it. Such reasoning might lead us to do foolish things, such as invading a foreign country uner the belief that the people of that country will readily accept the government we impose on them.

18

[QUOTE=aptronym]

Before you were stuck on (1); now you’re ready to jump ahead to (5)?

This does not smack of intellectual honesty.
[/quote]

Whatever. Feel free to start another thread to discuss whether AGW is real. I promise to make my participation a priority.

19

[QUOTE=ITR champion]

I would agree that economic growth does solve many problems, with two caveats. First, it also causes many problems, some large enough that they can’t be ignored.
[/quote]

I agree to a certain extent, but let’s take a look at the problems you have listed:

food and water are cleaner than they were in the past. Air is probably cleaner than it was 50, 100 or 200 years ago. But obviously less clean than it was 1000 years ago.

I bet that deaths due to infectious diseases has dropped dramatically as the world has gotten richer.

Honestly, I doubt it. Certainly the US is a lot less corrupt now than it was in the past.

I’m skeptical of this too.

Maybe I watch too many British period pieces on public television, but it seems like back in the day, there were a few rich society dudes who lorded it over everyone else; legions of servants to serve the rich dudes; and loads of piss poor commoners.

Are incomes really more unequal today? Perhaps, but it would be interesting to study. How would you measure income inequality anyway?

This I totally disagree with. Tribes have slaughtering eachother since time immemorial. However, more recently, parts of the world have become somewhat more civilized.

I’m not sure whether this is good or bad. There’s a lot of value in Western Culture.

20

[QUOTE=aptronym]

The first two points are pretty strictly scientific - and scientists are in good agreement about the answers: global warming is “almost certainly” real, and “very likely” to be at least partially anthropogenic and “likely” to be mostly anthropogenic (definitions from the IPCC report corresponding to 95%, 90%, and 66% confidence, respectively).
[/quote]

A small correction here: The latest IPCC report’s statement is actually a bit stronger than you say here, i.e., the “very likely” qualifier applies to the statement that most of the warming is due to the anthropogenic increase in greenhouse gases, or to quote directly: