Thursday, May 6, 2010

Economic Growth Rate, Development, and Indicators of the Next 50 Years

Politicians have had a singular mind when it comes to economic growth rates and development over the last 150 years. The common man has used these political indicators as a personal guide toward economic success.

Since the mid 18th Century, economic growth has been defined as a growing Gross Domestic Product (GDP). The common man understands this as having more and more stuff as each year passes by. All this growth has been carried on the back of cheap energy, and more to the point, cheap carbon based energy: oil, natural gas, and coal.

The Industrial Revolution gave us mass production and the resulting wild swings in economic performance. By the 1920s, production grew so rapidly that demand could never keep up. The economy faltered and then collapsed as the machines produced more than people could possibly buy. WWII sopped up the excess production and the economy started humming again.

Since WWII, worldwide debt has exploded. The excesses of production ramped up each year and debt and mild to moderate inflation, mixed with crude oil, fueled the near straight line advance of Western economies.

The end of the era of cheap oil will create a paradigm shift in economic growth thinking. Growth rates are unsustainable. Oil is getting harder and harder to find as we see by the deep ocean drilling around the world just to keep up with demand.

The concept of more disposable stuff every day to amuse us will turn out to be a blip on the historic map. When one car was not enough, we bought two, then three, then Hummers and SUVs. A one thousand square foot home gave way to fifteen hundred, then two thousand, then three thousand square feet of living space. Many of us live in museums or grand cathedrals today.

More flat screen TVs, computers in every room, cells phones, iPods, are now the must have lifestyle. There is no more time in our lives to enjoy what we already have and the Earth cannot tolerate the abuse any longer.

Economic growth in the future will look much different. Occupations of tomorrow do not even exist today, but soon. A stable GDP will be the new successful economic norm. Living within our, and the planet’s, means will be the only acceptable way to live.

Some future jobs are here today with alternative energy. But the real jobs will come from zero energy homes, homes that produce more energy than they consume, while providing all the comforts of life. We already know how to build homes like this, even in cold climates. We got so used to cheap energy that we built our homes any way we felt and forced the interior environment to our liking by burning more oil.

Transportation has been a solitary event. We drive in our cars, alone. We build more and more highways. The more roads we build, the more we drive. In 2007, in the U.S. alone, we consumed over 22,000,000 barrels of oil a day, just shy of 1 billion gallons every day, day after day. We have come off the 2007 peak consumption year numbers, but not by much, and only because of a recession.

Future good-paying jobs will produce products that consume less. Future jobs will include consulting with businesses and the common man to do more with less. It is certain we will drive less. Once we stop running the rat race of more and focus on better, our lives will become less cluttered and hectic.

Think of some of the real benefits to our society when we produce more of what we consume locally. Electricity transmitted long distances from coal power plants lose a third or more of the electricity produced from transmission, and coal fired power plants are less than 50% efficient.

Think of it: local food that requires less shipping; cars that run on electricity produced by your own home, your home producing more electricity than you personally use. We will do less and get more in the form of a less anxiety-driven, hectic lifestyle. The engines of production will allow the entire human race to live a comfortable life.

We don’t need to work 40 hours per week. We work so much so we can buy all the gadgets, extra TV’s, SUV’s, 5,000 square foot homes, and all the trinkets we are told we must have. We need to work longer hours to pay for the extra car we need to get to work. We dine at restaurants because we are too tired after a long day at work; we work to pay for the added expense of dining out. The cycle never ends… unless you step off the hamster wheel yourself.

And oil, no longer easy to find, will not bail us out. Now we will work smarter or suffer the consequences. The old answer to every problem, “just burn more oil”, will no longer work.

It is a better world we will become. The environment will get a rest, heal, and then nurture us. We can live better by burning less. It is the new economic growth and development paradigm. If we know what is good for us.

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