Most economic growth comes from innovation, not the accumulation of capital or labor. And innovation rates are mostly due to two competing factors. One the one hand, we pick the low hanging fruit of the easiest highest-payoff innovations to try first. On the other hand, we can more easily pursue innovation ideas when our world is richer, has better tech, and knows more.
A: "If the world economy reaches a peak and then falls to a level that is only X% of that peak, but stays within the same growth mode, then at that point the rate of innovation would be no more than X% of the prior peak rate. Fewer than X% of N typical innovations would be found per year."
B: "That is, in a shrinking economy, innovation grinds to a halt!"
How does B follow from A? Isn't the correct conclusion that innovation decreases? It doesn't grind to a halt. It just isn't happening as quickly.
As long as people are around, innovation still occurs. It just happens at a slower pace if there are fewer of us.
It follows from this that innovation drops to X% of what it was at peak GDP from this model (granting its assumptions), but not that it stops entirely, which is what "grinds to a halt" means.
"Assume total innovation so far as an integral over all past econ activity" -- I don't find that assumption compelling. As an obvious counterexample, imagine several populations that don't communicate; innovation rate is likely to be highly sublinear in the number of such populations.
An alternate explanation I propose for the observation of roughly constant rates of innovation over time is a limit to how much innovation (change) a given person will accept. As in "science advances one funeral at a time". If that is true, the threat to future innovation isn't population decline, but long lifespans/immortality, for example by the invention of ems.
If we continue on the current trajectory there’ll begin a long period of economic decline/stagnation within two generations. Am I understanding the implications correctly?
If within 200 years entire economies develop with producers/consumers that are 100% virtual maybe the slump can be avoided.
Robin, are you familiar with the work of Dr John Parmentola?
I found this talk he presented in 2019 at a MIT Physics Colloquium ("The Great Mystery of Economic Growth") to be quite fascinating and novel: https://www.youtube.com/watch?v=sx-55BhuFks
From what I understand, the viewpoints expressed therein are very much congruent with your thoughts in this post, especially the opening statement ("Most economic growth comes from innovation, not the accumulation of capital or labor.")
"The world’s population is expected to increase by nearly 2 billion persons in the next 30 years, from the current 8 billion to 9.7 billion in 2050 and could peak at nearly 10.4 billion in the mid-2080s."
*Under*population is not a problem coming soon, unless some major catastrophe happens (global thermonuclear war, maybe).
Also, even if the population does eventually shrink, that doesn't mean the *economy* is less than it is today. Productivity per capita is increasing because of technology.
Greed is unlimited, which bodes well for economies of scale. If the world economy had just 100 people, each of them a ruler of a techno-empire of robots, some of those 100 people would still want to do megalomaniacal things with the available resources (moonbases, Matryoshka brains, etc), which would still create demand for large-scale production.
I'm not sure I understood the model: are you assuming that twice as many people figure out twice as many innovations in same period of time?
My intuition is that it's more like a coupons collecting problem: most ideas are found multiple times by multiple people, but only the first inventor counts.
What is the right shape of InventionsPerYear(Population) curve?
I've just added to the post.
A: "If the world economy reaches a peak and then falls to a level that is only X% of that peak, but stays within the same growth mode, then at that point the rate of innovation would be no more than X% of the prior peak rate. Fewer than X% of N typical innovations would be found per year."
B: "That is, in a shrinking economy, innovation grinds to a halt!"
How does B follow from A? Isn't the correct conclusion that innovation decreases? It doesn't grind to a halt. It just isn't happening as quickly.
As long as people are around, innovation still occurs. It just happens at a slower pace if there are fewer of us.
It follows from this that innovation drops to X% of what it was at peak GDP from this model (granting its assumptions), but not that it stops entirely, which is what "grinds to a halt" means.
"Assume total innovation so far as an integral over all past econ activity" -- I don't find that assumption compelling. As an obvious counterexample, imagine several populations that don't communicate; innovation rate is likely to be highly sublinear in the number of such populations.
An alternate explanation I propose for the observation of roughly constant rates of innovation over time is a limit to how much innovation (change) a given person will accept. As in "science advances one funeral at a time". If that is true, the threat to future innovation isn't population decline, but long lifespans/immortality, for example by the invention of ems.
Even Piketty who urges a return to the Stone Age would disagree with the logic here.
If we continue on the current trajectory there’ll begin a long period of economic decline/stagnation within two generations. Am I understanding the implications correctly?
If within 200 years entire economies develop with producers/consumers that are 100% virtual maybe the slump can be avoided.
Robin, are you familiar with the work of Dr John Parmentola?
I found this talk he presented in 2019 at a MIT Physics Colloquium ("The Great Mystery of Economic Growth") to be quite fascinating and novel: https://www.youtube.com/watch?v=sx-55BhuFks
From what I understand, the viewpoints expressed therein are very much congruent with your thoughts in this post, especially the opening statement ("Most economic growth comes from innovation, not the accumulation of capital or labor.")
https://www.un.org/en/global-issues/population
"The world’s population is expected to increase by nearly 2 billion persons in the next 30 years, from the current 8 billion to 9.7 billion in 2050 and could peak at nearly 10.4 billion in the mid-2080s."
*Under*population is not a problem coming soon, unless some major catastrophe happens (global thermonuclear war, maybe).
Also, even if the population does eventually shrink, that doesn't mean the *economy* is less than it is today. Productivity per capita is increasing because of technology.
Greed is unlimited, which bodes well for economies of scale. If the world economy had just 100 people, each of them a ruler of a techno-empire of robots, some of those 100 people would still want to do megalomaniacal things with the available resources (moonbases, Matryoshka brains, etc), which would still create demand for large-scale production.
I'm not sure I understood the model: are you assuming that twice as many people figure out twice as many innovations in same period of time?
My intuition is that it's more like a coupons collecting problem: most ideas are found multiple times by multiple people, but only the first inventor counts.
What is the right shape of InventionsPerYear(Population) curve?